A-Train Finance

I had the great opportunity to have a short interview with Dax Desai over at High Return Investing.

A: Hey Dax, I appreciate you taking your time to talk with me today.

D: No problem. I’ve been a regular reader of your blog
and its great to talk to you.

A: It’s great to talk to you as well. On January 1st, I started my trading challenge. I’m trying to turn $8k into $16k in three months. I’m looking for any help I can get! Now, as I am a frequent reader of your blog I know that you have quite a bit of experience trading. How long have you been at it?

D: I have been reading the Wall Street Journal since Jr. High at which time I didn’t understand 80% of what I was reading. Over time the pieces came together and I understood more and more. That’s how we learn after all right… piece by piece. Then in my freshman year of college I took up trading stocks (1993). Since then I’ve discovered I had a nack for shorter term trades. At some point I did the analysis and realized 90% of my gains were short-term and almost the same of my losses were long-term. From then on I’ve been a short-term trader. Short-term being intraday all the way up to a 60 days. I guess I can’t predict the future much beyond that. That puts me somewhere between a swing-trader and daytrader I suppose.

A: That’s great that you were able to see that. What inspired you to get started with it?

D: When I started there was an older gentleman in one of my classes that used to trade all the time. He seemed like a genius. In hindsight he seemed like a genius because he only shared his winning trades… those trades where “I bought it at $10 at noon and sold it in an hour for 20% profit.” I thought if this guy could do it (he had worse grades than me), than surely I should have the courage to apply what I read everyday.

A: A lot of traders start out with a lot more money available than I , so what kinds of things do you think I should look out for since I’m starting with just 8k?

D: $8,000 is a good amount. Any amount you have you need to keep deer to you. My rules have evolved to: 1. Protect your capital, 2. Trade for small gains and small losses, 3. Always avoid large losses. By doing this you should average out to the plus side because every now and again you’ll hit a great trade where you have a big gain. So the formula for me is: Many small gains, many small losses (you can’t avoid it sometimes), 0 big losses, and some big gains = You will be growing your capital base. When you ignore it and say “oh I’ll let it recover…” you’ll find you will be riding your losers. That’s not the way to go (at least not for me)

A: Considering the challenge is going to last three months, how much of my capital would you recommend risking for each trade?

D: Normally I’d say don’t be 100% vested. Keep 20% for special opportunities. $6,400-7000 should be good.

A: Are there any other tips you would be willing to offer?

D: Research, Research, Chart, Chart - Don’t fall victim to chasing stocks because you heard something on T.V. or MacWorld is here. You’ll end up entering at the wrong time and exiting at an even worse time. There are tons of stocks, don’t feel pressured to buy.

A: That’s a great point, thanks for the advice.

D: No problem. I hope the next time we speak you’ll be running some serious money. If you don’t think big, you never will be. I think you are off to a great start. Identifying what you want and reaching out for knowledge is the best thing you can do as a starter. Don’t feel rushed, but at the same time you have to act at some point or you’ll be standing on the sidelines your whole life.

A: Well, I appreciate it. Thanks for your time, I look forward to speaking with you again.

D: Sure thing, take care.