INTERVIEW

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Trading And Teaching About The Markets That Never Sleep

Tom Busby

by Jayanthi Gopalakrishnan

Tom Busby's long career in the markets started as a broker then money manager with some of the world's largest wire houses. He then moved into the private sector and started training others about the global markets. He has done guest spots on Bloomberg and Cnbc and is also the author of two best-selling books, Winning The Day Trading Game and The Markets Never Sleep. Busby also hosts a daily online live trading room where traders from all over the globe join him as he covers the daily action in markets such as the emini, the Dow Jones and Dax index futures, as well as his personal stock picks. He is also the host of "The Market Buzz," a radio show on the Houston, TX-based BizRadio Network.

Busby holds a bachelor's degree in business administration from the University of Georgia and a juris doctorate degree from Oklahoma City University School of Law. He was a distinguished graduate of the United States Air Force Budget Officer School and served seven years in the US Air Force before becoming a professional securities broker and trader.

Technical Analysis of Stocks & Commodities Editor Jayanthi Gopalakrishnan (JG) and Staff Writer Bruce Faber (BF) interviewed Tom Busby via telephone and email on March 31, 2008.
 
 

TO get things started, can you give us a summary of how you got started trading?

I got started in the markets when I was still in the Air Force. One of the guys in my squadron was trading pork bellies. It seemed exciting and so I decided to open a stock account, not knowing the difference between pork bellies and stocks. With that account I bought a couple of stocks. Both of them have gone into the history books as not good buys.

JG: What were they?

One was Pan Am and the other Eastern Airlines. Eventually, I transferred those stocks into the brokerage office of Merrill Lynch in Oklahoma City. I was fortunate. I had a great broker named Henry, who taught me a lot about the markets and also taught me about the option market. Well, I fell in love with the option market, because I made a bunch of money real quick. By that time I was going to law school and Merrill offered me a job. We worked out a deal where I could go to law school at night and be a broker during the day. I started doing it, fell in love with it, and I am still doing it to this day.

Once the S&P came along in 1982, I knew the S&P market was for me because there I had a market that I could trade both up and down. That was a luxury in those days, because most everybody would trade to the long side. I was an expert in everything associated with trading back then. I was trading stocks, futures, and options, and doing real well until the crash of 1987. That wiped me out.

JG: That happened to a lot of people.

It took me a while to get my confidence back and get together enough money to start over again. After four or five years, I started trading again. Then in 1996 a friend of mine from my Merrill Lynch days came to me because he had gone to a school for trading and he was unhappy because they just took his money and would not give him any support. After some prodding, he convinced me to start the school I currently run today. He said that it would make me a better trader if I taught other people. I agreed with that, and now, the more people I get to meet, the more people I get to teach, and the better I get.

JG: You have had some interesting experiences going from boom to bust to boom. What were some of the lessons you learned?

I learned that sitting in front of a computer all day did not make you money. It was better to take breaks and try to have a balanced approach anytime I looked at the market. I also learned that there were certain critical times during the trading day that would increase your odds of success. I learned it was okay to take losses. The losses are where the better lessons come from.

Looking at the world as a global market added consistency to my trading. Prior to 1987 I only focused on the day market, and I believe that most people trading in the US still think like that. Jumping forward to 2001, I learned about the Dax market on the Eurex. That market is very important to the overall analysis of the trend. After the US markets closed for the trading day, I went searching for a market to make money in, and the Dax was the one I found. I use it every day.

BF: You mentioned that the crash of 1987 wiped you out to some degree.

Nope. It wiped me out to all degree. There wasn't any degree left.

  ...Continued in the June 2008 issue of Technical Analysis of STOCKS & COMMODITIES

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Excerpted from an article originally published in the June 2008 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2008, Technical Analysis, Inc.

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