After the realization that the life of an artist wasn’t really going pay the bills, John Hoagland did a 180 and took a job as a runner working on the trading floor of the Chicago Mercantile Exchange (CME). There he made his way up the ranks moving to phone clerk and then deck holder.
It was during 1989 when he started trading at the Chicago Board of Trade where his father also worked. Then in 1990, he went back to CME to work as the head of a propriety trading firm trading the S&P’s.
In 2011 he decided to step out of the pit and started trading independently.
It was a big leap from the pit to the charts and in today’s episode you’ll learn exactly what changes John needed to make in order to make that shift and remain profitable.
John is a senior performance coach at TopstepTrader and TopstepFX where they give traders the chance to prove themselves and provide a “step” up for those who want an easy way to fund their performance.
Profit Trading Futures & Forex Without Opening a Brokerage
John’s trading partner and 10 year S&P 500 CME veteran, Kevin Adamick talks me through TopStepTrader.
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John’s Strategy Revealed
Mind Over Markets by James Dalton
- [14:57] There’s always something good you can take out of your performance even if it’s not necessarily a good result, there’s something that you did there good and you wanna try and point those out. Maximize those and minimize your weaknesses.
- [15:21] You have to monitor yourself, your feelings, your emotions, your mental state, even your physical state to make sure when you do very well, are you in your peak state? If you do not do well, there’s something that you’re not doing well.
- [17:41] If you want it, you will do it. If it’s important to you, you will do it.
- [22:53] In the pit when all the information, when all the orders where coming in, you could see what the banks were doing. You could tell when your immediate competitors in the pit were over long or over short.
- [24:38] On the floor it’s very physical, we had to scream, howl, jump around and wave. It was in an effort physically to do anything. On screen, it’s “point and clicks”.
- [25:53] It’s very easy to become emotional or upset and just step away from a trading strategy.
- [26:59] There’s I think the idea that you’re calling yourself a trader means that you have to trade and we all know that there are going to be times when maybe we are better off not trading.
- [32:11] I’m looking for places where the market has not been accepted or is likely to be rejected. I have to be really patient in looking for those opportunities.
- [32:58] I think it’s much easier to manage your response to your emotions if you’re a little longer timeframe and you’re a little bit less active on the mouse.
- [43:22] Market is always changing and of the biggest changes, of course, is the advent of electronic trading.
- [46:06] If the market is consistently moving higher on higher volume with increasing open interest, that’s a very healthy auction and it’s more likely to continue in that direction until volume starts to fall off and/or open interest.
- [48:30] You can be a good trader. It’s more on what’s going on your mind than your market knowledge.
- [48:36] You have to really believe that you deserved to make the kind of money that you can make doing this otherwise you will never pay yourself that.
- [49:48] You have to read, you have to continually learn how the human mind works.
- [50:01] Nobody likes to take a loss so we’re going to avoid them. We’ll hold on to a loss until it becomes so painful we have to get out of it.
- [51:03] Be right bigger than your wrong and be right half a time and you’re going to be okay.
- [52:47] If you think you’re bigger than the market, the market is going to smack you down, that is the humility.
- [52:53] You have to be grateful for the opportunity, you have to be grateful for everything that you’ve earned, and you have to be grateful for everything you earn even before you get it.
- [53:32] Without humility you can’t see, you can’t hear. All you hear is yourself and that’s not gonna work in this environment.
- [55:55] It is so important to consider yourself as a risk manager and not necessarily a trader.
- [57:32] You really want to try and be patient and be a risk manager. Think risk first in everything that you do and be patient, it’s going to take time.
- [58:50] One of the best ways to speed your learning curve is to consistently be in touch with yourself mentally, physically, and emotionally.
- [63:28] Learn to think risk first. You wanna learn how to take a loss and learn to be comfortable being uncomfortable.
- [64:53] You’re making money, you’re sustainable and when you’re sustainable, you’re buying time. And when you’re buying time, you’re gaining confidence. And when you’re gaining confidence, hopefully, you’re remaining humble and continuing to educate yourself on how markets work and even more importantly, how you work.
- [75:42] I’m not here to take losses, I’m here to make money. If you don’t learn how to take a loss you’re going to be moving your stop, you’re going to be increasing your risk and trades just because you don’t want to take the loss.
- [75:56] I’ll jump on my hands, I’ll bang on the table, I’ll hold my breath, I’ll stand on my head, I’ll do whatever it takes to move this market back away from a loss to me.
- [77:31] Look for cheap trades, look for opportunities where the market has not spent a lot of time and trade close to those.
- [80:31] Have fun and enjoy not your passion for trading, enjoy your passion for markets.
- [80:50] It’s a lot more fun when you’re profitable. Do the things you need to do to for a consistency in framework over the market, the consistency in how you address that framework in that environment and have fun.
- [81:58] If you’re only using one side of your brain you’re missing half the picture.
- [82:30] You have to be flexible, you have to be accepting information that may be contrary to what you originally thought.
- [83:37] That’s what people do to their trading and to their accounts and to even each trade. They over-managed their trade, they put too much weight on each trade. This next trade you take isn’t gonna be your last.
- He’s using a little bit longer timeframes than most of the day traders
- He’s always looking for bigger asymmetric opportunities
- He likes to find areas where the price has been or is likely to be rejected quickly
- He trades Crude Oil, E-mini S&P, Gold, and Euro
- His trades usually take an average of 30 minutes to five hours
- He tends to focus most of his analysis on the day session (regular US trading hour) information only
- He looks at the Market Profile based on the 30-minute chart
- He also looks at the volume and VWAP but doesn’t use many indicators
- He has a 2:1 Reward-to-Risk ratio
- He only has not more than 2 – 3 trades in any given day per product
- 90% of his market analysis is based on technical analysis
John’s Strategy of the Week
- He starts up by looking at what happens and understanding who the participants are in the overnight (outside the regular US trading hours).
- If the overnight traders (generally the weaker money) have taken e.g. Crude Oil consistently higher throughout the overnight, he assumes that they are holding long positions.
- When the regular US trading opens, they’re gonna be looking for new buying new business to perpetuate their longs in their favor.
- If that new business does not arrive (drives the market to the other direction) a bunch of short timeframes weak money traders will start bailing out.
Profit Trading Futures & Forex Without Opening a Brokerage
John’s trading partner and 10 year S&P 500 CME veteran, Kevin Adamick talks me through TopStepTrader