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Interview with Ray Barros

Could you tell us a little about yourself?

I am over 65, married for 40 years. I  have been trading the markets since the early 70s. I graduated from Sydney University, Faculty of Law in 1970. I sold my legal practice around 1980 and became a full-time trader. I currently reside in Hong Kong but commute regularly between Hong Kong and Singapore.

How did you get started trading?

I was looking for something different to being a lawyer.

I placed my stock trade in 1969 (the Posideon Boom, Australian Stock Market) and my first futures trade in March 1977. Both starts had disastrous results. I got ‘serious’ in 1979 when I visited my father-in-law in Hong Kong. I started day-trading the tael market (HK gold market) and struck a purple patch. In 3 weeks, I made enough to buy my wife a fur coat!

Around 1980, I sold the legal practice and became a full-time trader.

How long have you been trading now?

Successfully since 1987.

What do you like best about trading?

The freedom. As a contrarian, I love being to do what few people can do well. In addition, I like the fact that my success depends entirely on me. Finally I love the financial freedom trading has brought me.

What markets do you trade?

Most of the financials – FX, S&P, US Bonds, Gold, Crude Oil. I occasionally venture into Soybeans.

What style of trading do you use?

I am a discretionary rule base trader i.e. I generally follow a set of rules but my rules allow me to ‘break my rules’. This provides my intuition to play a role in my trading.

My time frame is the monthly trend – I use an 18-day Barros Swing to define the trend.

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

  • Pete Steidlmayer
  • Richard Wyckoff

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

That success comes from  the consistent execution of your risk management and trading rules.

About Your Trading Coaching

How did you get interested in coaching other traders?

I was born to be a teacher. One of my core ambitions to leave a legacy. Once I became a successful trader, I knew I could combine the two strengths to fulfill my legacy.

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

No I take a holistic approach – teaching the 3 essential elements to success:

  1. Winning Psychology
  2. Effective Risk Management
  3. Trading Strategy

How do you work together with your clients? E.g. phone / email / screen sharing?

All of the above.

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

That really depends on the client. Some have become highly skilled fund managers, others have failed to make the grade.

I am excited by the research results that Neurology is bringing to trading education. This research promise to deliver better results to a wider audience. I have tested a program based on the research on two control groups, one of 10 and one of 20. At time of writing (March 2010), the results have been phenomenal. We are launching a large scale program in Singapore in May 2010. I am looking forward to seeing if the same results can be obtained for this large group.

What is the most satisfying part of coaching traders?

Without a doubt making a difference. This is exemplified by a trader who when coming to me said: ‘I have been trying to trade for over 10 years without success. You are my last hope’.

Ten years later the same trader said: “In my life, STC was on the best things I have done; for my trading, it was the best thing I have other done”.

(STC was the name of my mentor program at the time)

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

Unrealistic expectations. Unless the newbie faces what is achievable and the effort required to attain that success, he cannot succeed.

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

Yes. I recommend traders keep an equity journal and a psychological journal. The equity journal provides the quantitative data needed to improve; the psyche journal the qualitative data needed to improve.

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

  • The first issue is the time and consistent effort it takes to succeed.
  • The second is to accept what one can reasonably expect from trading
  • The third is to accept that on a trade by trade basis, the market is random. Our edge is found in the large sample size. Which means that consistent execution of the risk management plan is essential
  • The final one is over reliance on ‘the plan’. Clearly a plan must have a positive expectancy but a trading strategy alone will not guarantee success. Without effective risk management, success is impossible.

General Advice

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

  1. Understand the effort and time you will need to expend to become successful.
  2. Always do some form of due diligence on a prospective mentor – the internet is great vehicle for this.
  3. Success is a function of the triumvirate: Psychology x Risk Management x Trading Strategy. Fail in one aspect and success will elude you.

What 3 books do you recommend traders read?

  • Reminiscence of a Stock Operator
  • Daily Trading Coach 101
  • CBOT Manual on Market Profile

Unfortunately there are no good books on Risk Management.