Traders Story – YTE Sept/Oct 2014 Edition

TRADER’S STORY

Get to know your fellow traders. YTE speaks to trader Neville Harris

How and when did you first become interested in the markets?

I first became interested in the markets in the early 1960’s. A fellow student at the time owned shares in Mt Isa Mines which was going through intense industrial disputation. We shared stories of up and down price gyrations with great interest. It’s nice to look back now on a passion that has spanned over 50 years.

And then what happened?

I commenced work as an engineer. In those days I would obtain the closing prices from the evening newspaper and hand draw the price movement onto foolscap graph paper. I did this for approximately 10-12 stocks for about 12 months.

Being located in a small country town, access to a full service broker was by long distance phone call from a red PMG telephone box two streets away. At the time, this barrier limited my ability to place trades although I continued to chart stocks for an interest.

The only investing during these early years was in the Company Staff Superannuation scheme, where a compulsory 5% of salary was deducted. This 5% contribution was matched by the employer.

(Note: It was a time when junior officers did not have a telephone on their desk. Also, calculations were done by logarithms, slide rule, and occasional access to a manual or electric Facit calculating machine).In the early 1970’s, Poseidon Nickel discovered a large deposit and the price of nickel skyrocketed. Other companies in the area went up in sympathy. Being in a capital city, I started buying these miners and followed the “bubble”. Fortunately I sold before the crash. This was a complete fluke, and on reflection concluded that this was not the way to risk my “life savings”.

I also had some more passive investments at the time. I found a “fee for service” advisor who recommended a number of managed funds in local and international shares, property, and fixed interest.

How were you able to learn and educate yourself about the markets?

Newspapers were the main source of information with a little help from the public library. In the 1960’s I bought Edwards and Magee’s Technical Analysis of Stock Trends 5^th Edition. At the time it was extremely expensive and cost $16.50. I see today that Edwards and Magee sells for $165.00 per copy.

As my market knowledge improved, I came to the realization that fund managers were not in my best interest so I became a trader in my own right.

Did you make mistakes when first starting out?

Absolutely. I made many mistakes in the early stages of learning. Although I still make what I call ‘trading errors’ today, fortunately the frequency has reduced greatly.

Would you define yourself as a discretionary or mechanical trader, or a combination of both?

In recent years I have become more of a mechanical trader. This is as a direct result of executing Share Wealth Systems, SPA3 trading system.

Can you give us a brief overview of your trading style?

My entire focus has been trading shares on the ASX and NASDAQ and I use the SPA3 Trading System to guide my decision making. SPA3 is a technical analysis rules based trading system that has been exhaustively researched by Share Wealth Systems. I have been a customer of Share Wealth Systems since 1998 and I’m strong supporter of Gary Stone and his team.

Is there any one trade (win or loss) that had a profound effect on your development as a trader? If so, what did you learn from the trade?

The trade which has had the most profound effect and taught me the biggest lesson is one where the SPA3 system told me to SELL but I didn’t – resulting in a 75% loss. I have learnt my lesson and now exit when SPA3 tells me to.

I have also traded options in the past and not closing a weekly option position when it was prudent was greedy and costly.

Can you tell us about your best and worst trades? Lessons learnt?

I mentioned the worst trades above. The best trade was a beauty. I executed a SPA3 trade on the NASDAQ that returned 150% profit in just 15 days. This large a return in a single trade is rare but it’s why I use SPA3 because it finds stocks that I otherwise would not.

Would you classify yourself as a short term or long term trader? What advice would you offer to people getting started as traders on the relative merits or otherwise of each?

I was an options trader for many years and I would classify this as short term. My equity trading is more medium term.

I would encourage new people starting out to find a trading system, formulate a trading plan, and follow your rules.

What markets do you trade and which markets do you prefer? Do you have a favourite and why?

I currently trade the ASX and NASDAQ although I am about to abandon the ASX because there is the offer of a much broader scope of opportunity in the NASDAQ market. I’m also mindful that my NASDAQ returns have been much better performing than my ASX returns

What makes your trading style different from others? What sets you apart from other traders?

I’m not sure. I am a systems trader so I simply follow the rules of my system. I also decided to buy a system from a reputable vendor rather than building my own. I think these are the two main choices for system traders.

Do you have a favourite rule?

All the rules are important but none more important than managing the risk of the trade once it is open. So now days I focus on following the rules and when the system says sell, I sell.

Ed Sakota says, “Everybody gets what they want from the markets.” What do you get from the markets?”

Apart from trading being a passion and hobby, the markets have so far provided me with a retirement income which I am grateful. I can only hope that my passion helps me in retirement for many years to come.

Has trading affected your lifestyle?

Generally yes it has. Not so much my ASX trading which is executed during the day but I tend to rise early in the morning to see the close of the NASDAQ.

What books, seminars and courses have you read and attended and which would you recommend?

Over the years I have purchased books from Weinstein, Pring, Van Tharp, Douglas, Guppy, Bedford, O’Neil, Nicholson, Tate, Harper, Cohen, Bernstein, Thomset, Dent, Benklifa and Natenberg. I am also an avid reader of trading and finance articles which I generally find from Googling.

I have attended many training courses over the years put on by Gary Stone and Share Wealth Systems. I have also attended courses by Louise Bedford and various broker type seminars.

What does the future hold for you?

Hopefully, many more years of learning, applying the knowledge I have gained to benefit from trading the markets.

If I stick to my rules I am a big believer that my pension will continue to grow and allow me to live a comfortable life.