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The Kirk Report Interview Part 2

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:  So how did your early experiences transition from a hobby into a lifetime career?
Vervoort:  My professional career had nothing to do with finances. I started working for Bell Telephone after earning an engineering degree in electronics. There I installed, tested and trained people worldwide in private communications systems. Then about half way through my professional career I switched to Cerberus, a Swiss security company that invented the smoke detector. Later on this company was acquired by Siemens. During that time, I also took a training course to become a certified financial and credit broker. After that my free time was spent teaching many courses on technical analysis and options trading which also led me to publish my first book on technical analysis. That book was written in my native language, Dutch. Then at the age of 60 I decided to take an early pension with the idea that I would spend all my time studying technical analysis and trading. Now, very close to 65, I believe I am finally ready.

Kirk:  What have you learned the most from teaching your students?
Vervoort:  The good thing about teaching is that you have to be prepared. So you learn a lot while making materials for class and working out examples. Of course, there are numerous questions and remarks that you receive from students which help bring new ideas or things to try out. As a teacher, you also learn to continuously repeat and also adapt to new things and circumstances. What I learned also is that it is a good idea to review things now and then. Some good ideas only came after a second or third time looking at the same thing wondering why I did not notice that specific behavior previously.

Kirk:  Thinking back, what would you say has been instrumental in your development toward becoming successful in the market?
Vervoort:  Thinking back it has been a couple of things. One was my participation in an investment club. A guy there opened my eyes to the importance of money management. His trading strategy was based only upon money management and he was quite successful. As a technical analyst, I was skeptical at first but then learned from his example that money management is the most important part of any trading strategy.
Another thing that was instrumental was that the company I worked for used neural networks in our fire detectors. I also tried adapting this technology to stock prices but never managed to get better results than with classic methods. This was probably the start for me looking much more for trend-following methods instead of trying to detect the reversals before they occurred.
Now I usually wait for the reversal signal, unless I have a number of good technical reasons to step into a trade with very limited downside risk. For example, no greater than a 3% loss on a daily chart.

Kirk:  Do you trade full time right now?
Vervoort:  The idea is to devote as much time as possible to trading because I know it will be the only way to attain my final goal. Time is moving very quickly at my age and, of course, I have learned more during the last five years than ever before.
As you know, technology has changed so drastically and the trading possibilities are not comparable even with what was possible only five years ago. I am following the S&P 500 real time which was not possible before. When I am trading, it is mostly the Emini futures on a 2-minute basis or some selected stocks on an hourly basis. Up to now I have been spending most of my time writing my book, a number of articles for Stocks & Commodities magazine (a few more articles are coming), making contributions to the Traders’ Library blog, creating and maintaining my website and recently creating YouTube videos about technical analysis. Additionally, since I am the cook in the house, I must not to forget to prepare dinner. It is a good thing I’m retired. I just wish there were more hours in a day!

Kirk:  Tell us a bit more about how you trade and the time frames you operate in now.
Vervoort:  It was always difficult for me to trade in longer time periods. Because of my age now and wanting to see things change in a short period of time, I am now day trading mainly the Emini future on a 2-minute basis, the FOREX EUR/USD on a 1 minute basis (I would prefer 2-minutes, but unfortunately that is not possible yet with the MetaQuote MQL4 software package), and a number of selected stocks on an hourly basis.

Kirk:  What does an average trading day look like for you?
Vervoort:  Day trading the Emini or the EUR/USD pair means just switching on the real time charts each on a separate screen and trading at the first opportunity based on technical analysis and risk management. I will start trading these items about one hour before the opening of the European market until the closing of the US market. That makes 14 hours of possible trading time in a day.
Because I trade a number of selected US stocks on an hourly basis, I prefer to trade in the trend direction of the daily chart. Again the trading itself will be based on the hourly chart, all the while looking for good technical reasons to open a long or short position with a good risk to reward ratio. In general if the first trade is good I will stop trading that item for the day. If it is a losing trade, I will be looking for the next trading opportunity. This might be a trade in the other direction when it becomes clear that a turning point has been reached.

Besides the Emini and the EUR/USD pair I am looking at some 30 stocks. I keep a separate chart for each stock, so that I can note Elliott wave counts, trend lines, Fibonacci projections, pitchforks or anything else permanently on the chart.

Kirk:  How many positions do you usually manage in your trading portfolio? What are your average hold times?
Vervoort:  Emini and EUR/USD holding time ranges from several minutes to an hour. On hourly charts I hold from one hour to several days. Holding times for swing trades can be limited if the initial stop is broken. Otherwise they will last until the next technical analysis selling signal which is usually before breaking the trailing stop. If you want to know more about the technical analysis rules I apply with opening and closing positions, you can find specific details in chapter 7 in my book Capturing Profit with Technical Analysis. The maximum number of swing trading stocks in my portfolio is probably around twenty.

Kirk:  Do you trade ETFs?
Vervoort:  I do not, as I am only trading a limited number of stocks that have a history of bigger price moves over a longer time period.

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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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