INTERVIEW
I do discretionary trading, but I also look for specific signals within a pattern.
Adapting To The Natural Market
Swingin’ With The Trade
With Toni Hansen
Toni Hansen is one of the most respected technical analysts and traders in the industry with a reputation for accuracy in both bull and bear markets. She began her trading career as an equity swing trader and has since expanded into many other sectors of the market. Her style of trading and market analysis makes it attractive to investors and traders of stocks, futures, options, exchange traded funds (Etfs), and even the forex market.
This adaptability allows her to be active even in the slowest periods in the overall market as well as successful during both bull and bearish market moves.
Stocks & Commodities Editor Jayanthi Gopalakrishnan and Staff Writer Bruce R. Faber spoke to Hansen via telephone on December 3, 2009.
Toni, how did you get interested in trading?
I went to school to become an archaeologist. That is what I had always been interested in. So I worked for an archaeologist in Iowa for almost five years, which was basically my way through college. Then the last couple of years during that period, an associate of mine started trading online. He was really into it, and I was getting bored working at the lab all day. I wanted to become a field archaeologist because I enjoyed discovering new things. Instead, I was stuck entering data and cataloguing things all day, and that wasn’t challenging at all.
So in the evening I started scanning stocks and getting my feet wet in the markets. I didn’t know anything about market analysis or trading, because it wasn’t anything I had ever studied in school. I ended up focusing on swing trading because I only had a couple of hours a day that I could devote to studying the markets. So that was where my introduction to the markets came from.
How long have you been involved with the markets?
It’s been almost 13 years now.
Going back to the days of swing trading, because you could only spend a few hours a day at it, what kind of analysis did you do? What type of securities did you trade?
I heard people talk about things like buying three- to five-bar pullbacks on a daily time frame into a 20-period simple moving average. When the previous day’s highs broke after hitting that support level, I would buy the stock. At the time I was focused on the Standard & Poor’s 100 and the Nasdaq 100 and waited for these setups to occur. What I found, of course, was that over time this did not prove to be a viable system.
I started keeping a journal focusing on these indexes and where I thought each of the securities within them was going to go the next day, whether it was that three- to five-bar pullback, or something else. I was guessing. Was it going to go up? Was it going down?
Within the securities that did work the way I had predicted, I started to discover that many of them had a lot of similar traits. This became even clearer when I began incorporating intraday time frames in my scanning. I began to focus on securities that had these traits when taking new positions.
Why did you begin using intraday charts in addition to the daily charts?
I found that the smaller time frame offered a better picture of what was going on within the entire daily price range than was apparent on the daily chart alone. If you are looking at a three- to five-bar pullback on a daily chart, for example, you are not seeing the momentum movement intraday. You are not seeing if there was a strong rally into the close that day. Maybe it is going to gap up and bypass what you might have as a traditional entry. Or if there was a rally in the morning and it adjusted in the afternoon, then it gave me a head start on the larger daily setup. I could use a smaller, intraday trigger that would allow me to get in at a better price than I would have on the daily trigger, but without greatly increasing my risk. This also meant that I could use tighter stops as well.