thomas-lightThomas Light is a highly regarded technical analyst who has built a wealth of expertise in Price Behaviour Analysis. He fell in love with short term trading after his first job in an asset management company. Back testing every weekend as a young professional, Thomas then honed his skills with the help of his mentors and his experience on the trading floor with real life traders. Bringing him a step closer to lessen the gap between theory and real life.
Thomas trades both Stocks and Currencies for his company at Faraday’s.

In this episode, Thomas shares:

  • Why the number of open positions you have is not important
  • The one time of day he avoids trading
  • Why good routines are key to success
  • The right balance between Technical analysis and Fundamentals
  • His winning strategy for Swing Trading

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Key Insights

  • Don’t focus on the number of open positions but rather focus on your rules and your exposure
  • More screen time, back testing are the foundations of a trader
  • There are 3 essentials to succeed as a retail trader. 1.) Find a trading style that suits you. 2.) Find a strategy within that trading style that has a natural edge in the market. 3.) Developing a routine in which will enable you to apply those strategies consistently.
  • Having discipline is important. Creating routines and following it
  • Be Persistent. Trading thru tough times and the drawdowns is how you’re going to progress as a trader
  • Use less indicators and focus on price. Most indicators are lagging. Price tells you a lot at the moment
  • For fundamentals on stocks, focus on bank’s policy statements and earnings releases. It will help you get a general idea of what is happening in the market
  • 70% technicals, 30% fundamentals is a good balance
  • Focus on the process
  • Your trading journal is the best book you could read about trading

Thomas’ Trading

  • He uses the daily charts and confirms the direction on the weekly charts when trading stocks
  • He uses the hourly chart to trade and correlates it with the daily chart to confirm when trading currencies
  • He trades both stocks and currencies namely FTSE 100 on stocks, major currency pairs and G7 crosses. Always looking for the most volatile pairs
  • Usually trades during market openings and avoids trading during lunch hours. Prepares data and analysis before the market opens. At the end of the trading day, he makes some detailed analysis of the day to prepare for the next trading day
  • His main strategy is short term swing trading. A great strategy for piggy back riding on the “big players” in the market.

Thomas’ Strategy

thomas-strategy

  • Use the daily and weekly charts as our higher timeframes
  • Start by looking at a stock that has a bullish reaction to a trading update or earnings update. A bullish reaction is defined by its Average True Range (ATR). If a stock has an average true range greater than 150% of its move on a day of earnings, then it certainly catches our attention
  • Check the integrity of the move making sure that the market is not over extended and is not fighting against a massive higher timeframe downtrend.
  • Make sure that when it’s breaking out, its breaking out from a solid base
  • Buy that stock on the next period of mean reversion. It could be the next pullback or consolidation. If it’s a pullback, the entry trigger is a close above the previous sessions high
  • If it’s a consolidation, the entry would be an inside day
  • Stops are placed one and half times the ATR of the stock. Just make sure you are using stop placements relative to the stocks volatility
  • Trade management, once the trade hits one times risk, move the stop to breakeven. That’s entry plus trading cost (spread)
  • Takes profits are twice his risk

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 IN 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 OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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Forex, futures and options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. Our website, product contents, and materials are neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our website or in any materials. The past performance of any trading system or methodology is not necessarily indicative of future results. Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets.

Don't trade with money you can't afford to lose. Nothing in our course or any materials or website(s) shall be deemed a solicitation or an offer to Buy/sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.