Raymond Burchett hails from Chicago, Illinois and has been trading the S&P 500 since 1983. After getting the trading bug from his two younger brothers, who were both successful traders in their own right as well as working on the Chicago Mercantile Exchange, Ray started his career trading futures contracts on the S&P.
Ray is now revolutionizing trader development to help traders extend their decision making further and further ahead of price movement by teaching traders, and senior executives, to develop their intuition to beat the institutions, high frequency trading software and the algorithmic or fair price traders.
Ray heads up Intuitive Development where he teaches traders to build their trading intuition through live sessions, training material and trading tools.
Reminiscences of a Stock Operator, by Edwin Lefevre
Infinity AT™ Trading Platform
Biggest retail trader mistakes
- Focusing on functional decisions and not putting the foundation in place first
- Demo/simulation trade more than what you can normally risk
- Trading just to trade
Cam Hawkins: I mentioned some of your highlights already and that’s only a small part of your story. Now, this is your chance to share more about you personally and give the listeners more detail about your trading. What you’re trading, how you’re trading it and kind of results you see. Over to you Ray.
Raymond Burchett: I began trading in 198, in August, the S&P and did that full time in the S&P 500 pit until June of 1983. I’m sorry, June of 2004. Along the way ’97 I co-founded Local Knowledge and through that process I linked high performance to intuitive function and so after about over 20 years of trading and trader development this linkage to high performance to intuitive function my curiosity just got set on fire about how important that understanding was and what it can do for trading performance and kind of put it in perspective I had my best years in trading and the market helped too but in the 97,98,99 and 2000, certainly, just more opportunity in the markets but it was through those breakthroughs that I’m sure I’ll have the opportunity to talk about. So as far as trading goes right now. I have an account but I am not that active. I’m active in supporting my trading clients and doing a 5 day advance training workshop, once a month I do a chart book every night and I do a daily briefing for them in the morning. And certainly, keep in touch with the markets that way we do a Sunday evening review. So I’m still very much on top of things but my energy right now is in taking this linkage of intuitive development and high performance out into business professionals in corporate America and also I’ve been solicited by one of the branches of government here. I actually have a pretty significant pilot starting with them this week as a matter of fact. So bottom line. I stumbled about something pretty exciting which certainly helped with my own trading and excited about sharing with about as many people as I can.
Cam Hawkins: Thanks Ray I just started trading the S&P 500 at the start of this year. So I’d be interested to hear what you have to say on the show today that could possibly help my trading and those listeners out here. For those listening for the first time we’re about to enter a round I like to call “The Fundamentals”. This is where I’ll be asking Ray to tell us stories that will help you understand what makes him a successful trader. So go back in time now Ray and tell us what first attracted you to trading and talk us through that very first trade you took.
Raymond Burchett: Alright, actually 2 younger brothers that were trading at the mercantile exchange one in the euro dollar pit. They both started in Euro dollars and then my middle brother, I’m the oldest of 3, had moved in to the S&P and I was working at Arthur Anderson as a CPA. I believe down in New Zealand and Australia and Europe and refer to it as Chartered accountants. So that’s what I was doing and they had been pressing me to make the change and come over and I put so much in to my education in passing the exam was actually working in my masters in tax and finally I gave in and started out in just trying to find my way in the S&P pit and to be honest I almost quit after 18 months and never worked so hard I had been at the exchange before 7 in the morning and stay until after 4 in the evening. I was doing tax and accounting work and also on the weekends, to pay the bills, and after 18 months I was just absolutely beat. Wasn’t making, wasn’t loosing but it’s just I never worked so hard for so little and I was going to give it up. I didn’t want to go back to public accounting, I couldn’t stand a political environment, and because I had my CPA I knew I could get my teaching certificates. So I was going to go teach accounting and coach football at high school and my dad talked me out of it and said “You know, you’ve never failed at anything that you put your mind to. You’re just looking at it at the wrong way. Take the step back and you’ll get it.”. And it was frustrating because both of my younger brothers who gone into the business where absolutely killing it. And I was just struggling like crazy trying to find my way. And I realized that I was focusing on the wrong things. I was worried about the price going up or down instead of the beliefs and behaviors that were behind my decision making and once I was able to shift my focus to beliefs and behaviors then I turned a corner very quickly. But It was stepping back and understanding that I was really looking at all the wrong things and this is why I believe so many traders struggle. Why so few only succeed. So what got me on track is understanding that “Hey, it’s not about price going up or down. It’s about everything that you are doing to develop awareness, to make the decisions, about price going up or down.”.
Cam Hawkins: Thanks for the story Ray. Great story by the way. Now let’s go back to a dark time in that trading career of yours. A point you hit rock bottom, a trade that kept you awake for a week and account you blew on matter of days or even minutes. We want to hear that story.
Raymond Burchett: Well, I can honestly say, the closest I got to rock bottom was after that 18 months when I really decided that I was going to leave and go teach accounting and coach football but you know a couple of years after I think, I don’t know, maybe… Just trying to get the time frame right. I’m going to say somewhere around 92, 93 maybe 94 I’d been doing very well stacking the cheese if you will and one of my rules was if I had 2 loosing days in a row I had to step away and you know even if I hadn’t hit my weekly loss limit but if I hit 2 loosing days in a row that was just telling me either I’m really out of sync or the market is really out of sync. So I had 2 losing days in a row. I didn’t follow my rule. I went in for 3rd day and lost. My daily loss limits, my weekly loss limits are firewalls that I really respect. But I was just so mad at myself that I didn’t follow my 2 day rule and so I had to punish myself and we live on a colder sack and I’ve got about 200 feet across the back of my yard and we’ve been in the house probably 4, 5 years and I’d always wanted to lay a raised bed garden into the swail at the west end of the property and I knew it was going to be a challenge because there’s a lot of services that run through there so all of these post holes have to be dug by hand and I think there is 42 of them and so my punishment was digging those post holes by hand. That may not sound like a big deal but only about the first 6 to 8 inches were top soil then it was just pure clay and I don’t know if anyone has ever dug post holes before in the clay. But it is quiet a feat and I’m a pretty good sized guy 6’2 and back then I was probably only about 200 up to about 210 now but I was fit strong , strong upper body, strong legs, core, and you know had no problem doing physical things. I mean I actually enjoy laboring but you know my hands by the time I got done and this is over a course of a probably 3 to 4 days just going out there and beat myself up and I literally would flood the holes each night to try soften them up and I had a little pump that I put in there to get the water out but would only get me about another 3 or 4 inches and then it was just banging it away at this thing. So I mean besides my arms being sore. There’s blisters all over the inside of my hands I’m wearing gloves but it didn’t help but I just kept going. My wife thought I was crazy but that was an experience that you know I just kept running in to the brick wall and every time I look out there at that raised bed garden it just reminds me of the price to be paid when we’re stupid.
Cam Hawkins: There’s some good points in there Ray. I like the fact that you focused on, I think this is a good point for the listeners out there. You focused on the losses. You gave yourself a limit of losses per week and you know consecutive losses. And you know when you didn’t use that rule that you put in place for yourself. You actually took action and so loosing was a part of your trading and it was I think apart of the trading that a lot of people out there don’t really, can’t really get their head around. Loosing trades having that as a regular thing that you do do. You will lose trades and that having rules and systems around those loosing trades so than you can win more trades than loose.
Great story Ray and we’ll move on to the next question. This time we’re going to flip it around a hundred and eighty degrees. Can you talk us through a specific time when everything fell into place? Your big “ah-ha” moment! That point in time you started to become a successful trader. What you did differently, who did you learned from, that sort of story. Over to you Ray.
Raymond Burchett: Well, again I learn it through basically my own hard work. Both my brothers had been successful. They said look. This may sound cruel but the only way you’d succeed in this business is if you figure it out for yourself and that was a long and argues road for me. When I knew that I really turn the corner I think that it was a series of events. The first I was consistently making 10 ticks a day which is 250 dollars a day. Then consistently 500 or 20 ticks a day which was $500 a day and then consistently I went from 500 to 1500 and then consistently being able to make 1500 dollars a day and have some 2500 plus a day and couple of hundred tick 2500 dollars a day and so when I was able to start doing that I knew that I’d really turned the corner. But you know my best month ever trading was august of 97 and I’m not going to talk about specific numbers but I will say this… going into the last day of the month I was up a lot. I mean, I had really really good month going and one of the things that I was challenging myself was just to stay focus on opportunity and do what’s there and just keep working it and not worrying about what you’re up and down your job is to just stay focus and when it’s aligned, make sure your trading it. And so that last day of the month I basically increased my earnings for that whole month by another 50%; my best trading day ever. My tipping point in becoming successful is my focus was just on the specific behaviors each day and I knew regardless of profit or loss as long as I could stay true to those behaviors each day, overtime I was going to be fine. It was getting to the point of having a different set of values to measure success by. And those values allowed me to create positive momentum each day and really kept me off that emotional roller coaster so I had a lot of energy and that energy allowed me to be patient and the more patient I was the more consistent/successful I became.
Cam Hawkins: Could you give us an example of 1 or 2 of those specific things?
Raymond Burchett: Well, it is far as behaviors go or beliefs drive our behaviors. So, I guess the one of the big breakthroughs for me was you know I have no control over what the markets going to do all I have control over is being prepared and then waiting when the market aligns with what I believe would be a high probability trade. So that became my focus and the other thing too was understanding that look I will do everything that I can to put myself into a trade but the reality is that markets are unpredictable. So when I’m in there trading and it goes against me. There is no point complaining about it just get out because that’s going to happen often. Trades or should I say a losses are an ordinary/necessary part of doing business as a trader. Just stop taking it personal and so my focus was preparation and having the expectation of myself that I was going to wait for that alignment that I knew anything else. I’d be working against myself. And even when I’m aligned and doing the right things. There’s still going to be losses because of the markets are unpredictable and it’s just the nature of the business. So, instead of having an irrational expectation that every trades going to be a winner or somehow there is a perfect trading system out there that puts us into a place where we’ll never have a losing trades those things don’t exist. The only thing that we can do is create an environment or routine or process and actually build a foundation and structure to support the process that’s going to get us to the place of high awareness on a consistent basis and also support behaviors that are going to take advantage of high awareness.
Cam Hawkins: Thanks Ray. I really like, and I think the listeners need take this on board as well. I really like the fact that it is really about sitting on the sidelines until those high probability, opportunities exist and then the other point you made around the fact that leave those trades that have gone against you and don’t match what you expect on market to do. So those are 2 good learning strat that you guys out there listening. Here’s the last question in this round. What has been your proudest moment since you became a successful trader, Ray?
Raymond Burchett: Probably the feedback that I get from my costumers. Just helping them turn the corner just that validation to me is priceless and that I’m able to communicate in a way to them that they relate to in a way that lets them take their accumulated effort in becoming a trader. And getting it organized in a way that’s let them move forward and an effective way and they see that it’s just a little bit of reorganizing and a little bit of shifting perspective can go a long way into creating the balance and trust that we need to become successful traders.
Cam Hawkins: Thanks Ray and look sharing your knowledge and seeing the success of other people that you are teaching and training is truly something to be proud of. Now, we want to move on to another part of the show this is the part I’d like to call “The Technicals” around 12 quick questions to help the listeners understand what a taste to become a successful trader. Are you ready Ray?
Raymond Burchett: Absolutely.
Cam Hawkins: So, Ray how long did it take you to go from trading newbie to consistently profitable trader?
Raymond Burchett: A little over 2 years.
Cam Hawkins: What’s your mental approach to trading? And what special techniques do you use to keep your emotions in check?
Raymond Burchett: Well my mental approach is that I want to stay focused on what I can control. So it’s having great awareness for what those things are and it’s not just a cjeck the box it’s something that has to be reaffirmed every day. And we have to take every opportunity to go to a deeper place of understanding for these things and trading is very dynamic environment and if where not constantly having those examinations where not going to be able evolve with it.
Cam Hawkins: Do you have a success you can share? One that resonates with you personally.
Raymond Burchett: I guess we’re at our best when we perform intuitively. Intuitive function is the unconscious application of learned and developed skill, knowledge and experience. We drive our cars intuitively, athletes compete intuitively, and musicians perform intuitively. Any genuine professional is unconsciously applying their creativity and imagination integrating their skill, knowledge and experience to keep their decision-making ahead at the rate of change. That’s what we have to do as traders. Keep our decision-making ahead of price movement. When really the only way we can do that is through the unconscious application of learned and developed skill, knowledge and experience.
Cam Hawkins: What’s your recommended mastered trading book?
Raymond Burchett: The one that resonated with me was Reminiscences of a Stock Operator. I believe Edward or Edwin Lefevre is the author.
Cam Hawkins: What are your views on trading robots?
Raymond Burchett: They’re there. I just looked at what I need to do to be successful and I’ve done analysis of competing against institution, the fundamental folks, competing against the algo and high freak guys which I think are the robots that you’re talking about and then just basically being an intuitive trader where we’re open to everything that’s going on and as an intuitive trader the way we define markets states that changing the way we’ve crafted our strategies not changing, the way we are going to execute is not changing. But what is changing in real time is our awareness for when to enter and exit and it’s not that definition, strategy, execution won’t change overtime. But in the moment you only think that’s really able to evolve with the market’s real time is our awareness for when to enter and exit and I believe that we as humans where we understand how to organize ourselves and how to set ourselves up to compete against all those other elements, the robots if you will. We can enjoy situations where we consistently have a significant advantage over them.
Cam Hawkins: What trading related Internet resource do you always use?
Well, there’s a combination of things and in the late 90’s I created a methodology for calculating proprietary value levels. And it’s one of the things I share with my clients. It’s something that they’ve learned how to do so they don’t become dependent upon me for software or anything else. They learned these methodology. They can apply it to any market and so it’s very very powerful and so that really gives me great comfort as to potential entry and exit. Potential for move, if you will. And I created this in the mid 90’s because we are having a lot of apprehension as we kept making new highs at the S&P. And I know folks use Fibonacci extensions and things like that but in my mind if everybody is using something then it’s an opportunity to figure out something else that might be a little bit better and so that’s what I did with my proprietary level value calculations.
Cam Hawkins: What’s your preferred trading strategy?
Raymond Burchett: Well, it’s basically a directional trade in other words. I want to participate in the market when it’s not going to be advantageous to the high freak guys when the algo guys, fair value guys aren’t going to be overly excited because it’s difficult for them to define the risk and these directional trades, the fundamental of the institution guys are already hedge down so they don’t have a chance to participate so when these directional opportunities set up and we can get a really clean trade for an extended at least ten handles at a minimum with very low risk and you know we’ve had a bunch of them in March and we had 3 in February. I tell my costumers if you can discipline yourself to just wait for this directional opportunities and prove to yourself the ability to do that over the course of a year you can have a hell of a career as a trader because now you can just leverage up when those opportunities present themselves. But those, over the years, and this is again something my clients learn, directional opportunities really are high high probability and the secret is just waiting for them to present themselves. I think we had 7 or 8 march already. When we only had 2 or 3 in February. So it’s feast or famine but there’s enough of them over the course of the year where I believe you can make a pretty darn good living.
Cam Hawkins: Ok, if you could leave our listeners with one piece of advice. What would it be?
Raymond Burchett: Understand that it’s our foundational decision making that develops the awareness we need to make the right functional decisions about price movement. And to put that perspective, when we’re driving a car our foundational decisions are based on the rules of the road. Our functional decisions are about navigation or how fast are we going to travel given road conditions, traffic, weather and so those two are constantly coming together to make the best decisions. I mean imagine driving down the interstate, at least that’s what we call our super highway in the United States. And you’re making decisions about speed navigation with no foundation for the rules of the road. You’re going to be a wreck in about a second and unfortunately, a lot of other people are going to be in that mess and that what I just described as what happens to overwhelming majority of traders because they just focused on making decisions about functional decisions about price movement and they never put that foundation in place; the rules of the road if you will. That’s why I struggle for 18 months and that’s why I have been so effective working with traders because I open up their eyes to a huge missing piece and unfortunately simulated trading just encourages us to focus on the functional and totally turn a blind item to foundational. It’s not intentional it’s just the nature of the beast.
Cam Hawkins: That leads us nicely to the next question Ray. What is the biggest mistake most retail traders make?
Raymond Burchett: Well, there’s 3 of them and I just laid out the first one. You know the other 2 are trading more than 1 lot in sim. When we start out in trading it’s all about making good decision. Validating our ability to make good decisions and we don’t have to trade more than 1 lot to do that and the whole idea of the sim is to validate that ability then when we go to trade live it’s going to be what we are used to. Trading that 1 lot. And what happens is folks, because there is no risk of financial loss, they’ll trade more than 1 lot. They go to trade live and they can’t afford to trade more than 1 lot and they’re struggling. The first thing they start blaming their failure on is because they can’t afford to trade more than 1 lot. So again it’s all about validating good decision making. We only need to trade one lot to do that. And then the second bad habit is trading just to trade. Again in sim I’m not going to lose anything I might as well click the mouse and figure it out and see what happens. Bottom line there’s a golden rule that I really embedded in myself and in my clients that we really want to trade when we are certain on state, confident to strategy, and committed to wait for market alignment. That means we know what we want to do, why we want to do and how we’re going to do it. And all our energies available to develop awareness for when to enter and exit the market. And those are the only conditions we want to participate under and if we just sit down and start clicking away we put in a really bad muscle memory, if you will. It takes a hell of lot of work to erase. The same thing trading more than one lot. Bad muscle memory takes the hell lot of work to erase and when you understand the foundational decision making that I have been speaking to, you’ve got the perspective that’s really going to help provide the self-control to just trade one lot and to wait for market alignment cannot create this bad muscle memory.
Cam Hawkins: Ok, if you’re not a Metatrader fan Ray. What’s your preferred trading platform and why?
Raymond Burchett: Well, I use the AT platform from Infinity and I really really love the DOM. I think it’s the best DOM in the business. DOM is the digital order management or the trade ladder. One of the things I teach my clients is how to read the DOM, the fine tune market, entry and exit and really like that.
Cam Hawkins: Question 11. What does your typical trading day look like?
Raymond Burchett: It actually starts the night before. I spend about an hour before I leave my office down town putting together the chart book for the S&P and when I get home about an hour and a half later after I put the draft together I go back and look through it and then I finalize it and send it out to my costumers. I also do a play of the day for Infinity for an educational piece. And then it’s really important because it helps me digest everything that I saw during the day. Keeps me in my process, if you will. Keeps me drawing straight lines. Validates that I’m following my rules, if you will. And then really clears my head pushes anxiety down gives me focus for the next day. And then the next morning I do a daily briefing from 7 to, we go from 7:45 at the latest usually where done by 7:30 but it’s really just walking through that chart book the previous days set ups what we’re looking for the current day we talk about the economic calendar, geopolitical things, all sorts of other forces on market. One of the fun conversations we’re having right now is just really how inept all of this quantitative easing is and why? And we’re seeing just how, what’s the word I want to use, ineffective it is with the tenure now trading in step again with the S&P 500. At the end of the daily briefing, pretty much spun up and ready to go the day if I’m going to throw my hat in. But this is where I get my clients to. So they have that great clarity going in every trading session. A positive reinforcement. It gives them opportunity to ask questions, just keep drawing straight line to what the why and the how? So we know we are doing everything we can to keep ourselves in the best position to compete.
Cam Hawkins: Finally, what broker do you use?
Raymond Burchett: Infinity futures.
Cam Hawkins: OK, now we’re into the part of the when myself and my members the MTM Mastermind put your knowledge and experience to the test. So Ray, are you ready to take the challenge?
Raymond Burchett: Absolutely.
Cam Hawkins: Perfect! For those not in the know, my MTM Mastermind community are working towards creating a profitable trading system or robot. If you’re not MTM Mastermind yet just jump on metatradermentors.com and join while it’s free.
So Ray today your task is pretty simple. The MTM Mastermind have decided we want to focus on the instrument you trade and the S&P 500. We’d like to hear your thoughts on the top 3 things we should focus on.
Raymond Burchett: Number one you need to know how frame the market so you have a consistent reference points for decision making. Again, my process is my proprietary value levels for doing that.
Number two you need to understand who you are competing against – the institutions, the high freak’s the algo’s. What their strengths are, what their weaknesses are and then how retail traders can position themselves against them and you guys wants to put together your own robot and certainly there is a way to do that. I don’t want to say you can’t benefit from mechanized trading but I think the human touch is going to keep us much more aware of the opportunities that we want to execute under.
And then third, is that you’ve got to have tools geared to identifying the energy in the market because that’s the validation of price. So, you can develop the ability to forecast price movement. So the combination of understanding the strategy that gives you an advantage over the folks you’ll be competing against, having the market framed with the value levels. And then really having conviction for the tools that you’re using to forecast, is going to put you in a very good place.
Cam Hawkins: Thanks Ray. Before we wrap up what’s the best way for the traders to get hold of you?
Raymond Burchett: My website is intuitiveperformance.com. And sometime in April I’ll send a link to Cam letting him know of access to a session – one of my basic training – which we’ll be a 3 hour live training. 8:30 central time Chicago to about 11:30 and in that session for folks who are just putting their toes into the waters, if you will. It’s a great way to really become aware the depth of the trading challenge and what’s necessary to meet it and for those of you who have been at it for a while it’s a great way for you to really develop understanding for current state; in other words it’s the four of first session that we develop a baseline, if you will. And then we have that starting point we need to really get on with better supporting development performance.
Cam Hawkins: Thank you Ray for sharing with us today!