Meir Barak is a professional US day trader and a leading Wall Street expert who regularly appears on TV and in the financial press. Meir founded Tradenet in 2004 and serves as the company's chairman, senior lecturer, chief trader, and professional mentor in the Tradenet Analyst Room. Meir owes his financial success entirely to the US stock market. By sharing his and Tradenet's day trading strategy, he strives to help others achieve the same high quality lifestyle. -Tradnet.com http://www.tradenet.com/about/meir-barakHow did you begin your career as a professional U.S. trader?
It was 2000, the slowdown of the tempestuous hi-tech run-up to Y2K. Funds ran dry, I felt as though I was stuck in one place. I was bored with waking up early every morning, getting to work before traffic started, returning home late after the traffic jams, and catching up with my family pretty much only on weekends. I experienced a mini-crisis one day when my wife asked me to take our little girl to kindergarten, which I happily did. But when we arrived, my daughter turned to me and said, "Daddy, that was my kindergarten two years ago..."
I sought a way to leave the rat race, pay back some debts, and make that one big hit. I also wanted to move into a lower gear and be closer to my family. In short, I wanted to make millions without working too hard. There are very few legal ways to earn large sums quickly. I reviewed the options, and chose an area I'd always loved: stock trading. From short term trading, so I'd heard, you could get rich quick. I did very well. Within five years I was able to leave my day job, repay all my debts, and become very comfortable. I went from a negative balance to a surplus of several million dollars. The stock market made my dream come true. Was it easy? No. It was harder than I imagined! My first problem, which everyone wishing to succeed must face, was: should I give up my salary? Should I take the risk, leave my job, and try a new direction? Only very few are prepared to do that. Most of us are just too scared, and for good reason. I understood that if I were to realize my dream, I'd have to take that risk. Back then, I thought stock trading would be child's play. I opened an account with a broker and innocently believed I'd succeed to buy cheap and sell high. How did that first year end? With a loss, of course. Now, 16 years later, I know I was clueless, lacked experience, and was somewhat arrogant. In actuality, I was ripe prey for the pros. It took me a long time to discover that behind every stock trade are two sides: the pro and the idiot. For the first year, I usually filled the role of the latter. To be a stock trader, you don't need a diploma. Everyone can open an account, trade, and make pointless moves, just like I did. That's also why most traders fail. I knew there were those who succeeded, however, and I believed I could find ways to become part of that group. I sought them. I found them. I joined an online trading room. What an amazing world I'd discovered. The analysts bought and sold, in real time, successfully. Two analysts, Mark and Chris, are well known and have become my friends. They are the people to whom I owe most of my basic training. It seemed my path to success was paved. All I needed to do now was to listen to the analysts and copy their moves. So simple? Well, no... I knew what I had to do. I contacted Chris, the head analyst of the trading room, presented myself as a member, and asked him to be my personal mentor. I was very happy when he agreed, and we settled on a fee. I packed a bag and took the first flight out to his home in Phoenix, Arizona. Within just a few months of my return home, I went from losing to breaking even, and then from breaking even to profit. Some two years after I made my first trade, I succeeded in generating a monthly income that allowed me to leave my job. Within just a few years, I moved from regular employment to the freedom of a home on the sea, playing golf, swimming in my private pool and no more than two to three hours a day of pleasant trading. I had just achieved the American dream.
What was the first important lesson you learned about trading?
It is not simple! You can always learn it, but you can never master it. It is as complicated as any other profession. If it was easy - everyone would be rich.
How did you recover from your first big loss?
By understanding that losing is an important part of trading. In fact - you must lose in order to learn. A child learns to walk only if it falls hundreds of times. Every loss is a good source of knowledge that helps you become a better trader.
For those of us who can't be day traders, how do you keep on top of your portfolio in the short term?
I do swing trading too. In order to manage my longer time frame swing trades, I use my trading platform to setup take profit targets and stop loss orders, so I don't need to watch my charts for more than a few times per week. The whole process could be automated if you don't have the time to trade daily.
For the new investor, when are CFDs a better idea than stocks? Conversely, when should they take the financial plunge and buy the actual stock?
If you are not a US resident, you should always prefer CFDs. From the viewpoint of the trading platform, trade in CFD is executed in exactly the same way as stock trading. In fact, if your broker does not expressly state what you're trading in, I'm prepared to vouch for the fact that you wouldn't even sense the difference. So how does CFD trading alter from stock trading? When you buy stocks, you buy them through the stock exchange from a person interested in selling them at the exact same time you've decided to buy. One of the biggest issues with the stock exchange is the scope of supply and demand. But we don't always find the buyer or seller with the required amount, and we often need to "chase the stock". Chasing stock generally costs us both money and health. But when you buy CFD, you're not buying stock at the exchange; you're buying a contract identical to the stock from your broker. The advantage of this method is that your broker can allow you to buy or sell any quantity without linking it to stock exchange liquidity. This leads to: Faster execution, no shorting restrictions, no slippage, higher margin, lower commission costs.
Can you teach "day trader instincts"? How do you boost your trading confidence?
Trading is in the middle between an exact science and art. I can teach you the science, however, you will have to develop the artistic part of trading by yourself. I can give you the tools, show you the way, and save you sometime, but the rest is up to you.
Do you see Poland as a growth center for U.S. market investing?
In recent years, I was surprised to find out that compared to other European nations, Polish people are more interested in US stock trading than other countries. I believe it is a combination of a slow local stock market and a general spirit of the Polish people for better life and change.
What are the difficulties that a foreign investor might encounter when beginning to trade U.S.?
Until a few years ago, a foreign trader had to trade according to US regulations and with a lot of capital. Since US trading was introduced by local EU regulated brokers like Colmex, in fact, it is much more simple for a foreign trader to trade compared to a US resident. The knowledge of the English language is not an issue at all! However, it may be harder to find local language education.
What was your biggest trading success in 2015?
Traders make more money when stock prices go down, so for me the August 2015 mini-crash down was the best time in 2015. I made over $80,000 that month! January 2016 was equally good.
What do you think is the possibility Fed will hike rates in March? How will that effect the U.S. market?
Unless there will be a big market drop, I believe rates will go higher in March. The Fed has no choice but to keep interest rate going up. Stopping interest rates from rising will be like a declaration that the Fed is concerned.
How should falling oil prices change an investor's strategy on the U.S. market?
First, I don't think that oil prices will continue to move down. I believe that this is the time to buy oil. A lot! Oil prices will go up, however the correlation to the stock prices will no longer be as it has been in the past few months.
What do you see looking ahead in 2016? Will it be a volatile market? What sectors will be strong investments?
I am a trader. I trade every day as it comes, so for me the expectations of 2016 are not very important, but if I need to guess, I believe that until August, the volatility will stay high and cool down for the last 5 months. I believe the strongest sector will be the oil sector.
What trading platform do you use?
Since 2003 I have used 5 different trading platforms, and I can give you a long list of pros and cons for each broker and platform, but I can categorically say Colmex is my favorite. I am a happy Colmex user since 2008 and currently use the "Colmex Pro CFD" platform, which I have found to be the most suitable and reliable platform for my trading style. It is important to know that Colmex is an EU financial institution. Opening and operating an account with an EU regulated broker has a lot of advantages: high margin, no slippage, very few shorting restrictions, the ability to trade stock CFDs with zero spreads and more. It also means that when you deposit funds with Colmex, your funds are EU insured up to 20,000 EUR, and held in segregated bank accounts. You may also be interested to know that when you open a Colmex account, Colmex may fund several services among them courses and my live online trading room, which means that if you have a Colmex account, you can trade live with me every day, ask questions and even mirror my trades.