Dave Floyd has been trading since 1995 but was exposed to trading right out of college. He was a sales trader at a British bank, matching up orders for institutional clients. When he started trading it wasn’t all smooth sailing. He learned that he not only needed the right psychological mindset—but also the right trading methodology. In this episode of How to Trade It, learn how he became a successful trader with over 25 years of experience and become the founder of Aspen Trading Group.According to @aspentrading10, the key to success = mindset + methodology. Learn more in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #Mindset Click To Tweet
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You’ll want to hear this episode if you are interested in...
- [1:15] How long has Dave been trading?
- [2:10] It’s about methodology and mindset
- [8:19] Dave’s current trading methodology
- [15:27] Do you need a second revenue stream?
- [17:56] How Dave trades using quantitative data
- [21:39] How trade management factors in
- [23:54] Performance metrics you can trust
- [26:22] Connect with Aspen Trading Group
It’s about methodology and mindset
Dave started trading without a process in place. He always found himself hesitating to make the trade because he wanted everything to be perfectly aligned—which just doesn’t happen. So he prioritized mastering the psychology of trading. But he soon learned that he needed a repeatable process in place. Dave stumbled across his chosen methodology by mimicking people with more experience. Why? He knew that most new traders don’t have the ability or knowledge to know what a trading approach should be.
Dave didn’t make any money the first year. It was a humbling experience for someone five years out of college. His friends from college were getting promotions and making money. It really challenged whether or not he was making the right decision. But he believes if you follow what you love, you’ll eventually figure it out. He had the blind faith that it would work out. A year later, things started to click.
Dave’s current trading methodology
Dave has changed his approach 2–3 times over the years. Right now, he identifies as a swing-trader (trades lasting several days to a few weeks max). His trades are rooted in support and resistance levels. He tries to identify where there’s been a large confluence of trades taking place and looks for volume that acts as inflection points. He also relies on instinct and experience. He always stays aware of what other markets are doing because it impacts his trades.
Dave keeps an eye on four or five currency pairs and trades one at any given time. He also trades the S&P futures and ten-year notes. That’s his universe. He doesn’t recommend expanding beyond a core market that you know really well. It can give you the edge on the trade. Dave does 4–8 trades a month. He will take the occasional day trade in the S&P 500 or 10-year notes but he isn’t actively seeking them out. He’s always looking for short-term opportunities to present themselves.What is @aspentrading10 current trading methodology? He shares some of his strategies in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #Mindset Click To Tweet
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How Dave trades using quantitative data
Dave focuses on charts and quantitative data. He uses a service that does data analysis and comes up with patterns and probability scenarios. He recently received some data that said “When the breadth on the S&P 500 is 9 to 1 after a down day, forward returns over the next week are x.”
It’s happened 20 times in the last 10 years and 18 of the 20 showed positive returns in the week after. He’s assuming that the historical patterns will repeat and it will be a check box in his “Do I enter the trade” column. Dave is a large believer in aligning himself with the trend of the timeframe he’s trading.
Dave is interested in buying prices that are pulling back to support or selling rallies into resistance in a downtrend. He will buy breakouts if they hit a key level. He looks at support and resistance across multiple timeframes which have a higher weighting.
How trade management factors in
Dave notes that you can be a gifted trader with a great win-loss ratio but if you’re not implementing the proper position-sizing, you end up degrading the performance. If you’re not yet a successful trader, it makes your performance that much worse. What does Dave mean by position-sizing? You have to go into each trade with a set amount of maximum risk.
Dave doesn't prefer to base this on a percentage of his total account. Instead, he limits his risk to between 1–2% of his portfolio. You’ll always keep your max loss at a certain percentage, which is key. If your portfolio is down 10% all of a sudden you need 11% to hit break-even. If you’re new and risking 5%, 3–4 losing trades has you down 20%. It’s hard to recover monetarily and mentally.
How does Dave differentiate Aspen Trading? Listen to learn more about his group and how they serve their clients.Learn how @aspentrading10 factors in trade management to be a successful trader in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #Mindset Click To Tweet
Resources & People Mentioned
- Free Tools and Resources from Aspen Trading
Connect with Dave Floyd
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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.