Don't Stare at the Market

03/25/2014 9:37 am EST


Deron Wagner

Founder and Head Portfolio Manager, Morpheus Trading Group

Staring at the market all day long can make you go crazy, says Deron Wagner, who shares his "Set it and Forget it" trading philosophy instead.

SPEAKER 1:  Most of us are used to doing our planning and trading near to or during market hours.  I’m here with Deron Wagner.  You do your planning and your analysis in a lot of times outside of market hours.

DERON WAGNER:  Yes, that’s correct, Rob.  I’m actually not an intra-day trader.  The stocks and ETFs that I buy generally look to hold for several weeks to actually several months.  As a result, it’s not necessary for my strategy of trading to sit and stare at the market all day.  In fact, I used to do that back in the day trading days and it made me crazy.  As a result, what I tend to do is I do most of my research outside of market hours, one to two hours a night scanning the market.  I have my own stock scanner and then I have some other things I look for.  Then I create a watch list outside of market hours, either that night or early in the morning and I set price alerts.  Then if anything hits my price alert during the day, I actually have automated orders, buy/stops or sell/stops to trigger, if I’m not around to watch the market.  Now, most of the time, I’m around anyway but with my style of trading, I can completely automate it without needing to be necessarily present all the time. 

SPEAKER 1:  How do you deal with the emotions that accompany holding trades for the longer-term?  Do you find that that’s a lot of pressure? 

DERON WAGNER:  Actually, on the contrary, I find that it’s a lot of pressure to hold very short-term.  When holding long-term.  I use what I call “a set it and forget it” approach to stops.  Once I get in a trade, I have a predetermined stop/loss.  I set a physical stop.  Either the trade goes in my favor and I make money or it hits my stop and I’m out but I don’t think about it once I’m in.  As the trades move more in my favor, I raise the stop higher to protect profits but I find it much less stressful than intra-day trading because in intra-day trading I’m constantly watching every tick, every movement.  It’s interesting that you ask that but on the contrary, I find it to be less stressful. 

SPEAKER 1:  Do you find the transition from short-term trading to long-term trading was difficult or did it feel like you were freeing up your time and your emotions?

DERON WAGNER:  At first, I felt like a little bit guilty like I’m not watching the market all day but after I got over that, then I found that it definitely gave me freedom.  It actually really reduced my stress level too which I think is really important.  If a trader’s going to be doing this many years it’s important to make sure you have a system that’s not going to burn you out. 

SPEAKER 1:  If you stop yourself from burnout and reduce your stress level, you’re going to make more money.  Thanks, Deron.

DERON WAGNER:  Thank you, Rob.

SPEAKER 1:  You’re watching the Money Show Video Network. 

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