Interview with a Trader: Inside the Mind of John Caynor

John Caynor InterviewJohn Caynor, known to most of us as @johnscharts, (first and foremost) is a father of two wonderful children, both of which he is very proud. His son, Shane, is dealing with multiple health issues including Cancer, kidney failure and Alport Syndrome. His bravery fighting these diseases has made him John’s hero. John’s daughter, Jennifer, is a beautiful young lady who is driven, happily married and enjoying the early stages of a successful career. John and Jennifer are very close, and the older he gets, the more he feels that he learns from her.

When it comes to the market, John has been trading for 10 years, during which he has tried different strategies to find the one that was the best fit for him. Utilizing the power of technical analysis, he enjoys searching for new key trades that offer up a good return on investment. His process of scanning and analyzing allows him to review more stocks in a shorter amount of time. He posts his charts on his website, his Twitter account and his Facebook page as a means of challenging himself and in the hope that others who are interested may learn something new, or see an opportunity. He’s a simple man, who attempts to simplify his process whenever possible.

John took some time to answer a few questions.

The Interview

What first influenced your interest in finance and the stock market?

“I was burnt out in my career, and wanted to find something that could generate revenue while giving me more flexibility in my life to focus on family. I went to a seminar that showed me multiple ways of making money in the market. During this seminar, they did a live day trade and generated $500 in profit. I was immediately interested.”

What methods/strategies have you pursued that have failed for you in the past as a trader?

“I have failed multiple times. At first, I just traded because I like the adrenaline of being in the market. I was trading without a process or plan, without stops, and I was holding on to stocks or options too long ‘hoping’ they would turn around. I lost a lot of money. I set unrealistic goals of the money I could make in the market focusing on the wrong priorities. I tried trading everyday, which included forcing trades in hopes of making money. I tried trading with only fundamentals, but didn’t enjoy the research and then tried trading long term, but didn’t like to wait for the six months or more for the results. Over the next few years, I tried several different trading styles until I realized the important thing was finding one that fits my personality. It was then that I realized that short term trades using technical analysis interested me. I like seeing the results of my choices in shorter time frames.”

Who are some influences/role models for you that are relevant to trading and why?

“The first book I bought was “How to Make Money in Stocks” by William O’Neil. This was the beginning of my path to a process. As I researched similar books, I found Thomas Bulkowski also focused on pattern trading. One day, as I was searching the internet, I saw an old interview with Dan Zanger who is a world record holding swing trader. All three of these guys focused on pattern trading, which interested me. I knew if I was ever going to be successful, I had to be interested and enjoy the process. It was then that I finally I read a book about Jesse Livermore which expressed the importance of pivots and sitting tight to buy right. I also enjoy following Steve Burns and Scott Redler on Twitter. They are both class acts who help educate and support other traders. Their quality stream have influenced me on my thought process towards trading.”

When/what was your “ah-ha” moment? What was the breakthrough?

“When I found a trading style that worked for me, I began to enjoy the research, the challenge and the results. I enjoy short term trades, finding new trades and seeing the results sooner than later, also realizing the value of seat time, and reviewing thousands of charts. I spot things much quicker today due to knowing my style and having seat time.”

How would you best describe your trading style?

“I am a swing trader, using only technical analysis. I trade both bullish and bearish patterns using stocks or options.”

What key rules do you apply to your own trading?

“Try to never lose more than 2% on a single trade, stick to my plan and knowing that patience of waiting on a trade is worth the wait.”

Are you involved in any other trading communities? What benefits do you see from them that you can share with readers?

“No, except for Twitter. I will chat with followers, as I truly enjoy other views of a chart or process.”

What do you look for in setups that you trade? (Favorite setups)

“I like flags, pennants and bases near highs.”

What do you feel sets the great traders apart from the rest?

“Simple process, discipline and risk management. You could be choosing the best trades, but without discipline and risk management you could still be losing money.”

What can you tell readers about your risk management approach?

“I try to never invest more than 1% trading capital on a single trade and to not lose more than 2% on a stock trade.”

What trading moments make you the most proud?

“I was working on an option model focused on earning trades a few years ago. The objective was to find stocks that I thought would move big on earnings then place an option strangle trade. If it could move big enough on one side of the trade, it would pay for the loss on the other side of the trade. I would buy the session before the earnings and sell after earnings was announced. The option moved 1300% in less than 24 hours. I would not have believed it if I didn’t see it with my own eyes.”

Very nice! How bout the most upset?

“Times that I bought stocks without a plan or process, and lost money very quickly.”

What books, websites, or other resources would you recommend to those wanting to broaden their trading knowledge?

“‘How to Make Money in Stocks’ by William O’Neil, Thomas Bulkowski books on pattern trading and Reminiscences of a Stock Operator.”

What advice can you offer readers regarding position sizing?

“Never risk more than 1% of your total capital on a single trade.”

A lot of traders plateau and have trouble evolving beyond that level. What advice can you give to them?

“We all need a mental reset. Take a break from the game. The picture is always clearer when you come back. You will see learning opportunities that you didn’t see before.”

Now that you have developed into a successful trader, what are you doing to better your skill?

“If I see a stock that has a nice move, I may review the chart to see if there were signals before the move. Most patterns are not text book. Occasionally, I will buy another book on trading. I will always learn something new and its nice to have it for future reference. The market is our teacher and we are the students. It will always keep us learning. I post an updated watchlist three times a week that shows traders what and why I am following certain stocks. This continues to challenge me to improve my process of choosing stocks to minimize risk.”

Any habits or methods that you use that others might think is unorthodox?

“I don’t use fundamentals in any of my trades. I focused 100% on charts.”

For those who are just beginning to get their feet wet, what advice would you give or direction would you point them?

“Find the trading style that fits your personality, then paper or virtually trade this style until you are successful. Trade it with discipline to your plan with small amounts of capital until your success continues. When you find this style, it will be much easier to find a trade, because you will be weeding out trades quickly that don’t fit your plan. I remember when I was young and trying to decide on a car to buy. After a few weeks I decided to buy a Trans Am. I narrowed it down to the year and the amount of money I wanted to spend. As a result, it was easier to find the car that fit my plan.”

Any advice for those traders who are already successful?

“Always take time to mentally escape the market keeping health, family and friends as your priorities and always be humble. When your ego goes up, so does the risk.”

What would you like your “legacy” as a trader to be?

“Keeping my charts simple and being respectful to other views and processes. My goal is the post charts to challenge myself and to help others that are interested in my style trading. Then we can all ‘chart our way to success.'”

I want to personally thank John for taking the time to share his thoughts on the above subjects with us.

Follow John on Twitter @johnscharts

John’s website

John Caynor

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