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September 1996
The STOCKS & COMMODITIES interview this month is with Innergame Partners money manager Howard Abell. Abell, who has worn numerous hats over his 25 years of experience, including floor trader, floor manager and author, just to name a few, brings the real-world experience of trading that I know our readers are interested in. In the interview, Abell refers to the importance of trading psychology and the individual trader's chances for success and points out that how we view the markets is critical to our success as traders. After all, the market we want to trade has no particular form in itself, and so we as market participants form an image of it, created by our own perspective and built upon our own experiences -- some good, some bad. Abell suggests, and I know you'll agree, that it's the approach you use and the degree to which you follow it that is the critical component.As I write this, the stock market has been tumbling, changing roles among investors and traders. Now, the buy-and-hold investor is pondering the notion that perhaps that there is another direction to the stock market besides up, while the high-tech crowd has already taken its lumps. Even so, on the sidelines has been another group, a collection of individuals sensing, if not completely convinced, that at some point a long-overdue collapse will finally unfold. The current market's fall has brought to them a feeling of correctness and a feeling that avoiding risk is the optimum position in the current climate. What's interesting is that the switch among the collective consciousness of each extreme set of participants is brought about by the same entity: the movement of the market. So what you have are groups of people who have taken market movement, internalized very different experiences and concluded diverse perceptions.
Here's my point. The successful trader has a method that enables the market to simply exist and for the trader to simply trade according to his or her method. The markets' current decline was long foretold, and long-time S&C readers should have seen the evidence. As presented in numerous articles, the research shows that rising interest rates is not a good environment for the stock market. If you simply follow a reasonable proxy for interest rates, consider the Dow Jones Utility Index (DJUI) and follow the work on their interrelationship, work such as past articles by John Murphy, Tim Hayes and other intermarket analysts, then you will know that if the Djui is falling, it's likely the stock market won't be too far behind. The recent stock market decline should not have caught you by surprise.
Have you visited our Web site yet? Just in case you haven't checked it out, our Internet address is https://www.traders.com. We're adding new material and upgrading it as fast as we can; for example, if you're using the Traders' Tips column for custom formulas, you'll find them at our site and you won't have to type them in. And that can only help you.
