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UNITED KINGDOMS

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Mar/Apr 2012
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PROFILE: DAVID RYAN

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On achieving trading success

DaviD Burton on Gann: health, knowleDGe, capital, patience & nerve
TRADER'S STORY
trader's story
Get to know your fellow traders: YTE UK speaks with day trader Richard L. Muehlberg.
R
ichard L. Muehlberg has been
trading for more than 20 years.
Born in the United States,
Richard was raised there, in
Germany and in the United
Kingdom. A childhood interest in writing
led him to a first career in advertising
as an executive/copywriter. A growing
interest in trading later led to a second
career as a day trader. Richard now
trades futures, ETFs, debt, equity, FX,
metals and energy from his base in New
York City.
How and when did you first become interested in the
markets?
My interest began when I realised I could buy physical gold. I bought
a Krugerrand gold coin from a retail coin shop. Holding the coin in my
hand, I thought, I like this.
And then what happened?
After my coin experience, I began swing-trading silver bullion. I was
attracted by an ad for a company specialising in bullion trading (you
bought from them, you sold to them). After losing consistently I realised
I had no idea what I was doing. I stopped trading with that company.
How have you been able to learn and to educate
yourself about the markets?
I am self-taught by trial and error. Fortunately, I suppose, I can be
stubborn. I could not accept that I could not figure out how to be
consistent in trading successfully.
Did you make mistakes when first starting out?
First mistake: I did not know what I did not know. Second mistake: I did
not appreciate the resources around me that could have helped me.
Would you define yourself as a discretionary trader, a
mechanical trader or a combination of both?
A combination. I give priority to mechanical decision-making, but
allow discretion.
Can you give us a brief overview of your trading style?
I am a multi-market day trader, specialising in highly correlated
futures and exchange-traded funds. My style is chart based. My
62 YOURTRADINGEDGE UK MAR/APR 2012
trading screen currently displays sixty charts (from 500-day charts
to 5-minute charts). I use intermarket analysis to alert me to a days
best, cleanest trade(s) and to confirm intraday price moves. I use
eSignal linear regression channel analysis and moving-average
analysis to examine price smoothing (price trends) and to identify buy
and sell levels. I use time-of-day analysis to examine counterparty
mix in a market and to identify intraday buying (selling) waves.
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?
Every trade I make has an effect on me. If a trade is a win, I briefly
reflect on the skill I showed, then place that trade behind me. I know I
have to guard against becoming overconfident. If I succeed in staying
focused, I will be likely to follow up with another win. If a trade is a loss,
I immediately take the time needed to fix the source of my mistake. If I
succeed in fixing where I went wrong, I will be likely to follow up with a
win. I am a day trader. Day trading is a skill that can easily be subject to
lapses. Every trade is important to my development.
Tell us about your best and worst trades.
Many, many years ago, I made a long gold position (trend) trade.
Gold went up day after day. I did well. Then gold reversed. I could not
understand what was happening. I kept waiting for gold to resume
its climb. I fought the market. I went into a prolonged state of mental
paralysis. I held the long side as gold collapsed. I finally took my loss.
That trade was one of the seeds that grew into my adoption of day
trading. I prefer the risk management inherent in day trading. My best
trades are when I wait for a good trade, act fast when my rules say
to act, then flow with price, and exit when my rules say to exit. My
best trades are all trades (win or lose) during which I am disciplined.
Would you classify yourself as a short-term or a
long-term trader? What advice would you offer to
people getting started as traders on the relative
merits or otherwise of each?
I am a short-term trader. I start and end each trading day in cash.
The merits of a trading approach are relative to the trader. How do
you think? Do you prefer to take your time about making decisions
or are you able to think and act quickly? Do you like to learn? Are
you willing to learn rules? Can you follow rules? Can you admit
mistakes? Can you adapt? Compare who you are to the qualities a
trading approach requires. The fact you are a beginner is part of the
issue. Who you are is the larger part of the issue.
What markets do you trade and which markets do
you prefer? Do you have a favourite, and why?
I started trading as a single-market trend (position) trader and
evolved into a multi-market day trader. I made the transition
because I was not suited to single-market trend trading. I kept

getting blindsided. So I kept looking at the directions from which
I was being blindsided. My appreciation of how markets are
connected grew. I began following multiple markets: debt (US 30-
year Treasury bonds and Eurodollars), equity (the NASDAQ 100
Index, S&P 500 Index plus five US equity sectors, and an index
representing German, mainland Chinese and Japanese equities
respectively), FX (euro FX, EUR/USD), metals (gold, copper), and
energy (crude oil West Texas Intermediate). Now I follow all of the
above and shift my money to each days best, cleanest trade(s).
My favourite is the market or sector (long or short) I should be in at
a given moment.
What makes your trading style different from others?
What sets you apart from other traders?
I have counted eighty-four different ways to look at price movement.
My style blends a handful of the eighty-four. Individually no part of
Every outcome is not necessarily the desired outcome. Success
in trading is proof of a desire to succeed but failure is not
necessarily proof of a desire to fail. Day trading in particular is a
complex skill.
my style is unique. So, is my blend unique? Possibly. But I am not
trying to be unique. I am trying to effective. My style is to flow with
brief bursts of price movement driven by a crowd of temporarily
dominant buyers or sellers. I look to join traders who commonly
best their counterparties.
Do you have a favourite trading rule?
No hook, no trade. On a bar chart, a hook is a sharp intraday
reversal off a linear regression mean, buy line, sell line or moving
average. A hook usually marks the start of an intraday run. The
no hook, no trade rule cautions me to wait for a hook before
considering a trade, then to act quickly, taking a position in the
direction of the hook.
Ed Seykota says, Everybody gets what they want
from the markets. What does Richard L. Muehlberg
get from the markets?
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MAR/APR 2012 YOURTRADINGEDGE UK
TRADER'S STORY
I disagree with the absolutism of the saying. Every outcome is not
necessarily the desired outcome. Success in trading is proof of a
desire to succeed but failure is not necessarily proof of a desire to
fail. Day trading in particular is a complex skill. Outcomes depend
on an effective combination of ambition, effort, knowledge, tools,
rules, discipline and ability (change this aspect list according to
your individualised needs as a trader); you get according to your
combinations net effectiveness. If you are failing, examine each
aspect. If you are succeeding, take no aspect for granted. What I
get from day trading is the satisfaction of maintaining a fascinating,
difficult skill.
How has trading affected your lifestyle?
I used to be a night person. I often stayed up late and went to bed
at 3am Eastern Time (I live in New York City). Now I am a morning
person. I look to go to bed at 8pm Eastern Time and get up at 3am
Eastern Time. I get up when Europe is active. As a day trader, I
need liquid markets. My markets in general are more liquid from
3am to 8pm.
What books have you read and which would you
recommend?
Technical Analysis for Dummies by Barbara Rockefeller. She does
a superb job of explaining multiple forms of technical (mechanical)
analysis, including strengths and weaknesses. Reminiscences of
a Stock Operator by Edwin Lefvre. Market Wizards by Jack D.
Schwager. Plus the mini-classic by John J. Murphy, CRB Guide to
Chart Analysis.
What does the future hold for you?
Continuing opportunity.
YTE staff
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