Raghee Horner Interview Part Two

Jeff Neal, Optionetics.com

It was a real pleasure to speak with Raghee about how she approaches the markets. This is the second part of that interview.

Optionetics: What are some of the key rules that you feel are most important for a trader or an analyst to keep in mind when evaluating any potential trading opportunity?

Raghee: The key for me is in recognizing the market cycle.  For me it makes the difference between looking for a momentum, swing, or what I call a Wave entry.  Knowing the market cycle means you can differentiate between a trending and sideways market.  I know it sounds obvious but I see so few traders make this distinction as part of their overall analysis.

Optionetics: What are your favorite markets that you like to trade and track with your analysis tools?

Raghee: I try not to have a favorite market because my thing is that every market has its time in the sun.  Because I rely on charts, as long as there is adequate volume, I can trade it.  But right now and really as of the last six years my most active trading is in the Forex market but I still trade futures and some stocks.  I”d have to say Forex and futures are my favorite markets, I like the tangible nature of these two markets.  I can see myself trading Forex and futures for the rest of my career.

Optionetics: What is your most memorable trade?

Raghee: Funny now that I think about…maybe it’’s because I trade spot currency so much now but back when I used to only trade currency futures I had two very memorable trades for two every different reasons.  I had rolled out of a Japanese Yen trade; hit my two profit targets and I was out.  It was a classic Dow pattern set up and it played into the Fibonacci levels to perfection.  I had taken two profits, one at the 50% and one at the 61.8%.  Now this was pretty early in my trading career.  I was still developing what I now call the three R’’s:  Recognize, React, Repeat.  I had spent most of years in college studying charting analysis:  patterns, Fibonacci, trendlines…all the “recognition” stuff.  In my early years I was trying to make the leap from simply seeing these things to acting on them when I see them.  I don”t know that I would call what I had as confidence back then, it was really just blind ignorance…it never dawned on me that I could lose.  This Yen trade really was a leap for me because it really showed me that I could rely on the charts.  In fact it’’s a little vague now but I do remember there was a whirlwind of fundamentals around this trade and my charts set up was in the opposite direction of the fundamentals.  That’’s probably when I was really able to block out the noise and really discovered that I trusted the charts…completely.

The other trade was a total “kryptonite” trade as I had come out of a successful cotton trade and hopped into this Pound trade, futures trade.  I thought I was right.  I ignored the charts, I ignored my stops…total ego. Cost me 12k.  Which at the time was really huge loss for me, I was 24 or 25 at the time.  I never did that again.  Now I really don”t have any stake in the direction of the trade.  Short.  Long.  I don”t care.  I don”t have an opinion.  I don”t fortune tell.  I hear traders talk on and on about the direction they think a market is going and I always wonder, “what’’s your stake in that?”  I think someone said it best when they asked “are you bullish because you”re long or are you long because you are bullish?”

Optionetics: With all the different technical as well as fundamental analysis tools out there how does a new trader avoid information overload or “analysis paralysis”?

Raghee: I think there is an interesting bell curve that all traders must go through.  At first, we know nothing.  Just that we want to trade and make money so we set out to learn everything we can. Then we hit threshold, to much information.  We”re confused and typically losing money as a trader.

Finally, and not all traders get here, we begin to whittle away at the excess and form our own trading strategy. We settle on specific tools.  That’’s the journey.  Then the hard part is standing guard at the gates. We have to shut out other things. I can admire other strategies but that doesn”t mean I want to run out and adopt those strategies. I think being a losing trader has less to do with the tools and strategies and more to do with a lack of discipline to stick with something.

Optionetics: How would you characterize your technical approach to the markets?

Raghee: I consider myself a chartist. To me technicians rely on indicators more than a pure chartist would. So for me it’’s all about price and price action of which patterns, trendlines, Fibonacci, and pivots are a result.

Optionetics: Thanks, Raghee, for discussing just how you attack the business of trading the markets for our Optionetics reading audience.

Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent