The following article was in Canada’s National Newspaper “The Globe and Mail” on December 20, 2008 under the Me and My Money section. I included the link but after a certain amount of time you have to pay for the article so I reprinted it below.
Online trader takes Zen approach to markets
Special to The Globe and Mail
December 20, 2008
JEFF PIERCE
AGE: 33
OCCUPATION: Swing trader living in Vancouver
PORTFOLIO: Cash and short-term trades
Print Edition – Section Front
HOW HE GOT STARTED
Jeff Pierce saved up $10,000 in his early 20s and “dove into the equity markets in 1998 as they were making new highs.” He discovered how easy it was to make money trading stocks and decided he “didn’t want to work for somebody his entire life.”
When the tech bubble burst, he discovered how easy it was to lose money. Still, his account got through the bust with a balance bigger than it started. In 2003, he decided to go full time as a trader and “pursue this lifetime journey of mastering the markets.”
INVESTMENT APPROACH
Mr. Pierce describes himself as “a swing trader of momentum stocks with a holding period of anywhere from a day to a month, based on technical analysis and market timing.” He also uses short selling and options in his strategies.
One strategy is to look for what he calls “lemmings.” These are found among stocks that decline to their 200-day moving averages, where they often “fall off a cliff.” He looks for a few days of rising prices before selling short the stock, preferably on lower volume. These stocks “offer extremely good risk/reward ratios during bearish markets,” he believes.
INVESTMENT RESULTS
Mr. Pierce’s brokerage account is electronically linked to social-investing website Covestor.com and displayed under the name Zentrader. Over the past three months, his account shows a gain of nearly 10 per cent, compared with a decline of about 30 per cent in the S&P 500. Gains in his account were higher for most of October and November, but have tapered off recently as a result of some losses.
INVESTMENT PSYCHOLOGY
Trading the ups and downs in stock markets can lead to emotional ups and downs, but Mr. Pierce works on maintaining an even keel. “I believe that to have longevity in this field, one must find ways to calm the mind and trade from a detached point of view.”
A way he tries to do this is by writing Zentrader.ca, a trading blog subtitled “Mastering the market with quiet fortitude and inner calm.” The blog is a form of therapy – a way to detach from trading and “relax my mind,” Mr. Pierce says.
WORST MOVE
His worst move was to buy shares in Waste Management and Rite Aid years ago when they were trading at multiyear lows. “Before I switched to momentum investing, I thought if a stock was trading at a 52-week low, it was a bargain,” he observes.
BEST MOVE
Trading in and out of Timminco Ltd. last year as it went from $2 to $35 a share.
ADVICE
“Develop a system, test it, trust it, and trade within the rules of your system without letting your emotions get in the way. … One more thing is to always know what your stop is before you place a trade; know how much you are willing to lose.”
