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The Kirk Report Interview Part 12

The Kirk Report

Q&A With Sylvain Vervoort

Thursday, December 17, 2009 at 8:16 AM

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Interviewed by Charles E. Kirk from "The Kirk Report"

Kirk:  Effective performance tracking is always an area in which that I think traders need improvement. How do you track your performance and what ratios do you monitor most regarding your trading?
Vervoort:  With my method, not sharing any profit or losses between a limited number of stocks, and keeping notes on individual charts, the follow-up and the performance in every individual stock is very clear.

Kirk:  All good traders dedicate a lot of time and effort to improvement and toward reducing mistakes. How have your trading methods evolved and improved over the years?
Vervoort:  It is not my nature to take a lot of notes, because I know I will never read them or I won’t be able to find them when I need them. My advice is that you stay with a very limited number of stocks and that you keep an individual chart for each stock. That way notes on that chart with the buying and selling points are always at hand. You will always be able to look back at mistakes, but there will always be points where you have to conclude that your action was correct, but still the result was a losing trade.

Kirk:  Can you provide an example of something you thought was true when trading early in your career and now believe is just dead wrong?
Vervoort:  A lot of buy and hold investors using fundamental analysis will hold on to a stock that has good fundamental data. So, if that stock starts falling they will either do nothing or they start buying more of the same stock to lower their average buying price. This is one of the worst things you can do, ending up with a stock bought at $50 and continuing to hold it down to $2 hoping and praying to get back to even. Do this with leverage and you will be broke before you know it.

Kirk:  How much time and attention do you pay to other people’s strategies or stocks that they are trading?
Vervoort:  If I have the chance to be informed about other people’s strategies, I will look for useful ideas and test them out. If there is something good, I will use it in my own trading.

Kirk:  Most traders I know have a set of rules that they’ve learned from their past mistakes. What are a few of yours that you think most readers would benefit from?

Vervoort:  Besides the specific trading rules set out in my book with the LOCKIT principle, these are some general points that I would keep in mind:

  • Technical analysis is not an absolute science. Nothing is ever 100% certain! You are looking for a higher probability, but there is no guarantee. Do not interpret technical analysis as black and white, but with shades of gray. There is no Holy Grail!
  • Technical analysis is something you must learn with passion and a lot of practice.
  • There is no such thing as a fast overnight course that will teach you technical analysis.
  • The perfect solution does not exist. There will always be losing trades. Make sure you apply the proper money and risk management.
  • Do your homework. Know why you enter a trade, why and where you keep an initial stop and why and where you will close the trade. Keep a trailing stop as a last defense to close the trade.
  • Learn, trade with a demo account, and only start for real if you are making (paper) money consistently.
  • Stop listening to what others say. Make up your own analysis.
  • Trade when you have time to trade and trade on a regular basis. If you enter a trade now based on good technical analysis, and it is a losing trade, most probably the next entry will be the good one. Don’t miss it.

Kirk:  What kind of advice would you give a person just now beginning to trade the markets?
Vervoort:  Save your money until you are convinced that you can make money by trading based on technical analysis. And, of course, make sure you have my book at hand!

Kirk:  Can you give us some idea of what tools you use to monitor the markets, trading platform, software, websites, etc.?
Vervoort:  Since I am purely a technical analysis trader, I actually only use charting programs. For me this is MetaStock except for FOREX where I am using MetaQuote4. For trading I use the Interactive Brokers platform. I get data from eSignal.

Kirk:  Are there any good books or other resources that you highly recommend?
Vervoort:  There are certainly many good things out there. If I have to mention just a few that come to my mind, I like everything by Steve Nison and from Thomas Bulkowski, even though I do not always agree with Bulkowski’s test conclusions. Martin Pring is certainly a good start, especially on basic techniques.

Kirk:  I interviewed Thomas Bulkowsi back in February of 2008!
Changing the subject, what are some of your personal passions beyond the market?
Vervoort:  Most of my time is spent on technical analysis. What helps me is what has always been a hobby of mine, namely electronics, now mainly computers and all kind of applications and software. That way I never have to wait for somebody to help me if there is any hardware or software problem.
Sometimes it has been helpful that I can understand several languages. I can follow discussion boards in different languages. And it makes it easier to understand automatic translations available on the Internet these days because of the different grammatical structures in different languages. So, you can speak to me in Flemish (Dutch), English, Spanish, French and German. However, my writing is limited in some languages, but I am able to read Italian and Portuguese.

Kirk:  Wow! You are a man of many talents!
Finally, if you had one piece of advice to share, what would it be?
Vervoort:  Always try to make sure, at least proving it to yourself, that what you are saying in relation to technical analysis is tested and found to be correct, either by yourself or somebody you can trust. I always meet people who are convinced that something is true, simply because somebody said so or because they just want to believe it, while I can usually easily prove to them that it is not true. You can always find examples to prove something. But you have to look at longer time periods and different stocks to really find out that what is said is really consistent and profitable in the end.

Thank you, Sylvain. This has been an excellent interview. Please stay in touch!

Original of the interview:

Kirk Report Interview: Next -Previous -Part 1 -Part 2 -Part 3 -Part 4 -Part 5 -Part 6
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-Part 8 -Part 9 -Part 10 -Part 11
-Part 12

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Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

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