Dr. Barry Burns – Top Dog Trading Interview

What’s your name? Dr. Barry Burns What is you website address? http://www.TopDogTrading.com Can you give us a little bit of background about how you got involved in Trading and what led you to become such an expert? I was a businessman and owned several small companies over the years. When I decided to make a career change I did a lot of research to find the perfect career for me. It had to be something with enormous income potential. But I also wanted time and travel freedom – to be able to work when I wanted, where I wanted and only when I wanted. Finally, I was pretty burned out on always catering to customers needs. I wanted true independence. When my due diligence was complete, there was only one choice left standing: Trading! My dad was a stock trader for 70 years before he passed away. So I had grown up with it in the household and my dad had taught me some things when I was a kid, but at the time I was more interested in karate and girls. When I realized that trading was the perfect career for me, I started looking into it again and things had changes dramatically since I was a kid living at home. Electronic Trading was just coming on the scene and it was a very exciting time. The average person was more empowered to compete with the big boys. I joined a local trading club and read every book I could get my hands on (over 100 eventually). And when I was ready to make the commitment to become a full-time trader, I called my dad and asked him to mentor me again. He agreed and I moved back in with him for a short time to become his student. After that I put a lot of screen time in, and later found 3 more mentors who were willing to work with me. One of them was a floor trader in Chicago. How long did it take to you to become really become proficient at Trading? I went through years of being successful for a while and then losing again. In fact I found that just as there are cycles in the markets, there were cycles in my own behaviour and my trading method. Learning that cycle helped me be aware of when I was in a down cycle and to stop trading. People focus on trying to control the markets, but that’s impossible. What they really need to do is learn to control themselves. The owner of our trading club said in his experience it takes people at least 4 years to become a professional trader. I’d say that’s about right, although it varies dramatically from person to person. What markets do you trade? Is there any reason for choosing them? I swing trade and day trade. I had started trading stocks simply because that’s what my father did. Now I also trade futures, currencies and options. For years I was afraid of the leverage of these other instruments, but now that I’m better at managing my risk, the leverage allows me to make so much more money. Primarily I swing trade stocks and ETFs and day trade futures and forex. Would you view yourself as a fundamental or a technical trader? If both what percent to give to each? I’m close to 100% technical trader. That’s all I look at. If I hear some good news regarding the fundamentals of a company, I may look at the company, but when I do, I’m looking at the company’s chart. Are you more a systematic trader or discretionary trader? My trading rules are extremely objective. Anyone trading my rules precisely would be trading the same way. However it’s just a fact that people who master any skill or profession incorporate a lot of their experience into their subconscious. It’s natural and unavoidable. It’s like the master saying to the kid “I’ve forgotten more than you’ll ever know.” What the master has “forgotten” is not in his/her conscious mind, but that information is still at work in the subconscious influencing what they do. Are there any specific strategies that you trade? Can you provide any details of them? My strategy is very objective and scientific. I look for 5 market “energies” to align in the same direction and at the same time. The alignment of these energies creates a probability scenario that favors my position. It’s my edge. It’s what puts the odds on my side. Those 5 energies are: 1. Trend (direction) 2. Momentum (trend strength) 3. Cycle (timing highs and lows for entries/exits) 4. Support Resistance (blockage to energy) 5. Fractals (looking at the bigger picture or scale) If you are in a take-profit situation and your system is telling you to exit rather than hold on, how do you bring yourself to exit even if it’s still running in your favour? Most of the time I exit with hard limit orders. They are placed before those levels are reached. I let the market take me out rather than depending on myself to make a split second decision and risk hesitating. How do you react to the winning and losing streaks? Winning and losing streaks are a natural part of trading. They are part of the “cycles” inherent in the market. The key is to have stop losses in place to minimize your draw down. Just as I place a hard stop loss in every trade I execute, I also have stop losses based on a percentage of my account for every day, every week, every month and every quarter. If my daily stop loss is hit, then I stop trading for the rest of that day. If my weekly stop loss is hit, then I stop trading for the rest of that week. If my monthly stop loss is hit, then I stop trading for the rest of that month. Likewise, I have trailing stops that work the same way. If I’m in a trade and I’ve made a lot of money, I’m not going to allow that trade to turn into a loser. I’m going to put in a trailing stop on that trade to make sure I lock in some profits if the market turns against me. So too, I have trailing stops for every day, week, month and quarter. If I’m up a certain amount in a day, and then I start losing money. I have a daily trailing stop that won’t allow me to give back all my profits for the day. If that daily trailing stop gets hit, then I stop trading for the day. The same principle applies for the week, month and quarter. This is one aspect of money management that is critical and I don’t see many traders utilizing it. What is the most important part of that discipline? What is your golden rule? The most important thing is to keep my losses small. Not all my trades are winners. But if I can keep my losses small, then I can keep trading until the big move comes along and I catch it. To do this, you must be very picky on your trades. The #1 sin for most retail traders is over trading. My opinion is that the market is mostly a random walk. But periodically things line up to give you a high probability trade. It’s not a predictable trade as the market is never predictable. But it is a probable trade. For me, this is when the 5 energies align at the same time as mentioned earlier. The key is to be patient and wait only for those times. Let the retailers (amateurs) over trade. We stand on the sidelines and watch them chop up their trading accounts and wait patiently for the real opportunities. There are plenty of good opportunities. My slogan is to take “fewer, better trades.” What kind of risk do you take on a position? When if ever would you increase this risk? On a chart I only risk a bar to a bar and a half on my trades. So my risk is small. And even when my trades don’t succeed, I’m usually not even losing that much because of the way I manage the trade. My rule is to keep my risk on each trade to no more than 2% of my account. How do you handle your position sizing for each trade? My rule is to risk the same dollar amount on each trade, so I adjust the number of shares/contracts to match that dollar amount. What do you consider are the characteristics of a successful trader? Psychology is the most important thing. I think the Mark Douglas books are excellent and should be required reading by everyone. I would highly recommend his books “Trading in the Zone” and “The Disciplined Trader.” If you had one secret to give about Trading, what would it be? There is no one secret, but I have several slogans I live by. I’ve been around trading for so many years now and heard so many things that I forget where they all come from, but they may be from Mark Douglas. My favorite trading sayings are: 1. Successful trading is simply a business of not making mistakes. 2. The consistency you need is in your mind, not in the market. 3. Be like the Jaguar – crouching perfectly still, waiting for the setup to come to you, then pouncing without hesitation or thought. You only need 1 to feed the family. The first two are about learning to discipline yourself, which is the key. Becoming a master trader is not about mastering the markets, it’s about mastering yourself. The last one is about over trading. Any further comments you would like to add? If any of your readers would like to learn more about my trading methodology, I’ve put together a free 5-day video course which they can have by going to: http://www.TopDogTrading.com/free_course.html I would personally like to thank Dr. Barry Burns for taking the time to reply and provide some insight into his style of trading. James Ramsay Visit www.otrader.com.au for more interviews and a Free 20 trial of our Stock and Option Portfolio management Software

3 thoughts on “Dr. Barry Burns – Top Dog Trading Interview”

  1. The discipline is the hardest to master for me. Having been a hands on builder, it is hard to sit and focus my mind on something as non physical as trading.

  2. I have taken Dr Burns’ Foundation courses 1 and 2. I think that Barry is a genuine person with his student’s interests at heart. He gives great value for money, and takes “after sales service” seriously.

    No, he does not have the elusive trader’s “Holy Grail”, and nor does he claim to (as far as I know). But he offers a solid, coherent package (not a single “system” as such), which is very clear and understandable.

    It may not be the only way to trade. It may not even be the best way to trade. But it is certainly one viable way to trade, and given due diligence, could be made to work by anyone who applies themselves to it properly.

    I like his idea of “fewer, better, trades”, and “let the market come to you”. Those seem to me to be very solid principles which should stand any trader in good stead.

    I am anticipating his forthcoming course on swing trading with much interest.

    MWE.

  3. The best thing about Barry is not his knowledge of trading but his focus on discipline and his approachable teaching style (I’ve taken his first 2 courses). His system is not all that is needed but it is a good beginner’s foundation that provides a workable approach when combined with a few other things (maybe to come in his 3rd course). I chose his course due to his teachng ability – I am a teacher and know that one can know a thing but not necessarily impart the thing successfully.

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