Interview with Paul Wise

Could you tell us a little about yourself?

After completion of my Bachelor of Commerce in 1993 I started my career as a registered representative of the Sydney Futures Exchange. Between 1993 and 2000 I was a partner and senior market analyst in various broking companies that I owned or worked with. I left broking in December 2000 to pursue my passion for trading and devote all my time to publishing the knowledge that I had accumulated over my commercial life.

My personal goal has always been to use the leverage of options markets to create income that is not subject to the normal constraints of a conventional occupation. This leverage translates into freeing up time to pursue non-work related activities, which result in a more balanced life, a happy family, and a happy me.

How did you get started trading?

In my first employment as a dealer I was encouraged to take trades on my own account. I tried to only give advice on a trade that I was prepared to take myself. I soon started to see patterns of volatility and price which influenced the outcome of a trade. I began building spreadsheets to evaluate historical market data and test my ideas. It was the start of my trading career!

How long have you been trading now?

Since 1993.

What do you like best about trading?

I like the intellectual challenge of trading. I like the fact that I can trade what I see, not what I think. What I see are technical triggers not influenced by the flow of macroeconomic or fundamental stock specific news. It is an activity that few master with a high degree of success. It is this counter intuitive nature of financial markets that beats most new traders. I find it intriguing…

What markets do you trade?

I trade Australian and North American stock, futures, index and FX markets.

What style of trading do you use?

I exploit the mean reversion of volatility and price using a rules-based non-emotive approach. I trade in time frames of five days up to two months. My trading methodology can be replicated by any trader who is committed to learn. My style of trading works at an index, sector, industry or stock level in bull or bear markets, and it can be applied in highly volatile and non-volatile environments.

What have been the biggest influences on your development as a trader?

John Bollinger.

What is the one biggest lesson that you have learnt since starting trading?

You have to manage your risk through position sizing and by placing hard stops on your trades.

How did you get interested in coaching other traders?

When I first started working as a broker/dealer I observed that my most successful clients were the most knowledgeable clients. I developed my own stable and long term clientele, through teaching my clients everything I knew, and they appreciated it.

Do you focus on coaching of one particular area of trading, e.g. risk management / psychology or finding trades?

My focus is on trading as a complete process. I teach my clients all steps from trade discovery, trade entry and trade management through to trade exit, and I also include psychological coaching. You cannot teach just on element in isolation of all others, or you are not teaching someone to “trade”. I don’t like to use the term “trading system” here, since I think it has been abused by too many educators who teach you a couple of “strategies” and call that a “system”. A trading system is a complete process which includes an understanding of money management and the dispassionate application of your trading process.

What sort of results do your clients get after coaching with you?

I have coached several hundred clients and I have no way of tracking their success. The short answer is that I do not know. What I do know is that no client has ever asked their money back or voiced their disappointment. Some of my graduates send me their contract notes so I can use them as trade examples and testimonials. About 15% of my graduates are actively participating in a group meeting every week to discuss potential trades. Some of them have been happy and loyal clients for more than 8 years, still referring new business my way today.

What is the most satisfying part of coaching traders?

Listening to the success stories.

What is the biggest but most easily fixed mistake that you see traders make?

The biggest mistake traders make is that they trade what they think and not what they see. What they think is influenced by a high volume of often irrelevant information which is delivered daily by the media and which triggers emotional responses. Instead traders need to make their trading decisions without emotion and to stick to the rules of their system.

Do you recommend journals or other record keeping as an important part of trading?

Yes, I keep an ongoing written record of performance and trading ideas that can be used for future reference, and I encourage my clients to do the same.

What are the most common issues that you see in your clients that prevent them from becoming better traders?

• Being unable to take personal responsibility for their trading decisions.
•  Lacking the discipline to implement a planned approach to their trading.
• Being unable to develop the emotional detachment required to successfully trade.
• Not accepting that trading is a long-term enterprise and that successful trading comes from cumulative experience over a number of years.

What advice would you give traders who are just starting out?

• Avoid large event style trading seminars. They are about selling products not teaching you how to trade.
• Find a coach that you trust. Check the internet for negative comments or warnings before you sign up.
• Try and determine if the training you are about to pay for is of a general market nature or whether it is a specific trading course. Most courses are general market education masquerading as trading courses.

What 3 books do you recommend traders read?

Any work by John Bollinger.

Any other advice or wisdom from your experience in trading that you could share?

Build experience using your trading system by backtesting it to death. Stress-test it in bear and bull market environments. Test it in highly volatile and non volatile environments. Don’t use real money until you have convinced yourself that your system is “bullet proof”!