Trade For Life with Oliver Velez: Recent Comments

Comment on 10 Insights For Professional Traders

Oliver Velez — Mon, 21 Apr 2008 09:21:58 GMT

Dear Trader:

It appears you are trying to be a bit to specific with my comments which are only meant to serve as general guidelines. This is a common error on the part of those seeking trading success. Nothing in the world of trading can be too specific. General guidelines which provide the framework for proper action and thinking a good portion of the time are all we can hope for. With that said, let me try to clarify.

I feel that most traders attempt to focus on too many stocks. They do this in an honest attempt to try to be everywhere at once, hoping this broad approach will limit the opportunities they miss. While this makes sense theoretically, in the practical world it leads to the exact opposite, an increase of missed opportunities. This is why in the professional trading world, limits are placed on the number of stocks the trader is allowed to focus on. How many stocks does a NYSE Specialist focus on? Only one, right? And how many stocks do you think a single over-the-counter market maker gets assigned to? Perhaps only a very small handful, two, three, maybe five if he's a master veteran and some of the stocks are relatively inactive. Why do you think this is this case in the professional world of trading? Because it works. Instead of trying to create jacks-of-all trades, the major firms attempt to create specialists....Specialists who are trained to miss absolutely nothing in their own little world.

This is why my 800 traders are trained to create a small universe of stocks consisting of no more than 30. It is best if these 30 or so stocks span the vast majority of the key market sectors: semis, retail, gold, oil, internet, etc. You get the point. A few of these thirty stocks will change from time to time, but they represent the trader's personal stock market, his entire world. Opportunities will only be looked for within this universe.

As a trader deals each day with his thirty or so stocks, scanning, studying, trading, etc, a small handful will slowly began to emerge as the trader's favorites. this happens naturally. Maybe for one trader it's 3, for another it's 5 or 8, but a small number will began to rise above all the others as your most traded. I call this emerging list your "go-to-stocks." Why does this happen? It depends. Perhaps it's due to the sheer number of wins accumulated in some, or maybe its the desirable way one or two of them trades, or the price range, or maybe the personal industry knowledge the trader has. In a sense, the reason does not matter. It does not mean you ignore the rest of the list, mind you. It simply means you are likely to trade your favorite ones three times as much as the others...in all the time frames.

But don't force it. Don't force the favorites. As I'm fond of telling all my traders/students, "don't choose your stocks, rather let your favorite stocks choose you." I hope this helps.

Comment on A Month of Trading History Revealed

Oliver Velez — Thu, 28 Feb 2008 10:09:10 GMT

Steve:

Thank you so much for your kind words. And yes, you are quite correct. There are no catches to our program. We are simply fully dedicated to training an army of traders to trade our capital and are willing to pull out all stops to do so.

After more than 14 years of training traders to trade their own capital, I found that 4 major obstacles stood in the way of most traders' success:

1) Lack of professional training - There is plenty of retail based education out there, but almost none when it comes to trading as a professional, like a market maker or specialist on the NYSE. This we provide for all traders who will be trading our capital.

2) Lack of the proper capital - This undoes most businesses. It takes money to make money and that could not be more true in trading. When I decided to fund each of my students/traders (starting with $50,000), the success rate jump considerably. Many were trying to apply our trading principles with inadequate amounts of capital. It does not work. Our beginning traders start off with $50,000 and earn access to higher amounts. Our top trader now has $36,000,000 to trade with.

3) Lack of forced discipline - this is what does in even the traders with the right training and the right capital. Let's face it. Trading requires a degree of self-mastery. How many people in any endeavor truly master themselves? Not many. This is the number one reason traders fail. They cannot bring themselves to do the right thing in the face of hardship. So, we accomplish this though a combination of technology and a well-trained team of risk managers who force or compel the traders to do the right thing, until that coercion is not needed anymore. Many fail to realize that discipline is a learned concept. It must be taught. One does not wake up one day and miraculously have discipline. One is not born with discipline. It's learned; it's taught. And through a unique combination of technology and a well-trained risk-management team, we teach and force and coerce the proper discipline our traders need until it is completely learned and until they no longer need that coercion. This is one of the keys to our success.

And lastly, there is...

4) The fear of loss - if the above does not do the vast major of traders in, this one is almost sure to. Nothing can cure this disease but success, which builds the confidence that eradicates fear. But how does one get the success to eradicate the fear if the fear exists first and prevents the very success needed? It's a crazy catch-22 which I solved entirely by doing the unthinkable. I ABSORB 100% of the LOSSES for all my traders until they become consistently profitable. Many naysayers in the industry called me a lunatic for doing such a thing. They told me it would not work. VCM would be a flop. And I would fail. I begged to differ and last year's enormous success was true vindication for VCM. we went from 60 traders last February to over 600 today. And we are well on our way to the 1,000 trader mark I set out to accomplish in 2 years.

Steve, I dared to do the unthinkable. And so far, the results have been unthinkable. And I'm so grateful. Again, thanks for your kind words.

Comment on When Two is Better than One

Oliver Velez — Thu, 28 Feb 2008 09:25:51 GMT

Dear Jim:

Price, as in pattern recognition, along with some focus on volume at times and moving averages are all I feel a trader needs. Everything else is superfluous and in my experience training traders hurts more than helps. The trader who learns to identify the key supply/demand imbalances that show up via the same price patterns over and over again will never need complex mathematical formulas and confusing and often conflicting squiggly lines to trade.

Price (Charts), volume and perhaps three moving averages. That's it. That's all you need.

I hope this helps.

Comment on A Month of Trading History Revealed

Steve — Thu, 14 Feb 2008 01:56:47 GMT

Oliver
All I can say is WOW. I am so impressed with you and your company.
I could not believe you when I first saw your commercial on CNBC as I was starting my day for trading. Visiting your website I kept saying to myself there got to be a catch what is this guy's angle?

There is no catch, no angle only truth and honesty. For me I have taught myself to trade with little capital and high commissions so it been a slow road to travel now that you have found me it like the saying when the student is ready the teacher will appear.

I look forward to meeting you soon.
Steve
WOW

Comment on 10 Insights For Professional Traders

Carlos — Thu, 14 Feb 2008 00:02:39 GMT

Hello Oliver:

My apologies for another question, but I'm just a little confused. According to your comment for this post, you mention that a trader needs to focus on roughly 8 stocks. With a list scanning 20-30 other stocks.

Now, when you say 8 stocks, are these your core stocks that you are trading on a daily basis to add liquidity to the market and get paid and hopefully making one to two cents a piece? Additionally, the other 20-30 stocks I suppose these are the stocks that we should be familiar in which we will trade using guerilla and micro tactics, can you please confirm.

Comment on When Two is Better than One

James Duguid — Mon, 11 Feb 2008 12:04:49 GMT

Oliver,

You say "price,,price, price" as the only important indicator,in regards to supply and demand. Could you be a little more specific insofar as an example. Are you looking at price vs. level II buying & selling? volume? ma's, a combination of all of those or something entirely different.

Thanks,
Jim

Comment on When Two is Better than One

Oliver Velez — Mon, 11 Feb 2008 09:31:44 GMT

In my world, Priscilla, there are only three indicators that truly matter the most:

1) Price;
2) Price, and
3) Price

While this may sound a bit facetious, I assure you it is not. I only try to make the point that he/she who learns how to interpret the relationship between supply and demand via the price action only really don't need indicators and other squiggly lines. Price is the only thing that matters and it is the only thing that will make a trader money. What's more, too many people forget that all indicators are "derivatives" of price anyway. They are like the sons and grandsons of price, or better yet the employees of price. They are often one and two levels removed from the price and the further one gets away from what matters, the more vague one's decisions will be. Why not cut to the chase and deal with the real thing, versus something "based on the real thing?"

I find that far too many traders have gotten lost in some non-trader's academic, ego trip to create the perfect, no-lose indicator with their name on it. Most indicator creators never traded anyway. Price and a few moving averages (we use the 8ma, 20ma and 200ma) are all you need, my dear. And if you can't get things right with that, moving further away from the price will only make things worse.

I hope this helps.

Comment on When Two is Better than One

Oliver Velez — Mon, 11 Feb 2008 09:20:03 GMT

Welcome, Brad.

Yes, you will be given guidelines on how to formulate your own list of stocks, in addition to the ones we currently use. Most traders not only focus on too many stocks, they are looking at the wrong ones and don't realize that the quality of your plays begins with the group of stocks you've selected as your core universe. This and many other things will be covered.

You'll be amazed at how much more refined your ability will be to spot opportunity in your stocks...and after only 2 days. You'll never be the same. That is a personal promise.

Comment on Wide Range Bars & What They Reveal

Oliver Velez — Mon, 11 Feb 2008 09:14:32 GMT

Michael:

As you undoubtedly know, there are several levels of mastery that must be obtained before one can say that he/she has arrived at a permanent state of achievement in trading. Those much needed levels are:

1) Educational Mastery
2) Technological Mastery
3) Experiential Mastery
4) Psychological Mastery

These four levels of mastery are greatly focused on by us and we do all we can to help our traders work through each one. Most are not even aware of what is needed to become a successful trader. These people will simply forever be lost. Many others who have a vague glimpse of what is needed don't have the proper guides and mentors to help them along the way. I'm so glad and appreciative that you have recognized this in us and call VCM your home.

Stay the course and keep up the good work.

Comment on When Two is Better than One

Oliver Velez — Mon, 11 Feb 2008 08:35:27 GMT

Dear Mel:

Steve Nison's first book, Japanese Candlestick Charting Techniques, had a very profound effect on me back in the early 1990's. While I recognized that the Japanese form of charting did not possess any magic per se and provided no additional information than other forms of charts, it did make the relationship between supply and demand (the perpetual tug of war between buyers and sellers) in the market far more visual and easier to interpret. Steve Nison did an outstanding job at bringing the western world's attention to this ancient form of price recording. And today, I'm proud to say I count Steve as a personal friend.

As for Greg Carpa, a partner of mine for many years, you could not find a better tutor/instructor on the art of reading Japanese Candlesticks today. I truly don't think there is a person alive who has reached the height of his understanding in this area. I remember the day (it was actually one late night on the phone) I introduced the concept of Candlestick charting to him after having devoured Steve Nison's book. It was like nothing we had been reading or doing at the time. Like me, he was blown away by what I initially revealed. But over the ensuing years, Greg and I began to take many of the concepts to much more refined levels. And you will see this in his DVD.

This combination of Steve Nison and Greg Capra is a no lose proposition, in my view. You will not need to go further if it is your desire to understand this art form. Just keep in mind that these bar types (or any bar types for that matter) don't magically make one a better trader. Reading market's action via bars of any kind is quite different from trading it. Reading is like being a spectator at a sporting event. To be a player calls for other things in addition to reading. One may learn how to read a book on Golf, but that won't ever make the person play like Tiger Woods. It's one small piece in a rather grand puzzle. Never forget this.

With that said, you have a winner. I promise.