Collinsville High School, Collinsville IL 62025
University of Illinois at Champaign/Urbana Bachelor’s Degree in Chemistry and Mathematics
Research Chemist at Monsanto World Headquarters 1997 – 2000 Head Chemist Monsanto/Carondelet Production Plant; 2000 – 2005
I started and founded BreakpointTrades.com in 2002, a top tiered website devoted to providing the best technical analysis, market analysis, trade ideas, mechanical systems and models on the web.
I began my interest in the Stock Market when I was a junior in High School, I had my mom open an account for me at the local AG Edwards office and I bought my first stock, BUSH was the symbol, I think it was a furniture company, I bought it at $8 and sold for $12. I had no idea what I was doing, but it worked out, but it was more luck than anything.
I’ve always had a fascination with money and how to acquire it. I suppose this perhaps stems from how I grew up, we had very little money growing up, we were just over the poverty line, we didn’t get food stamps but we weren’t that far off. My parents divorced in 1981 and my mom raised me and my 2 brothers on her own with no child support from our father, on a job that didn’t pay well. We never had enough and I think this gave me a determination to never have this problem when I grew up and had my own kids.
When I went to college I loosely followed the market for the first couple of years. Once I had settled in, I started to develop an intense interest in the market again and by my junior year in college I was watching it constantly. At the time, I didn’t know a thing about reading charts or technical analysis, the internet was very new, this was in 1995.
Like most new traders I did the wrong things, I found a couple of Stock Gurus on the ‘young internet’ and followed them. One of the guys I followed was a Canadian Stock Promoter, who promoted gold stocks. Many of you probably know that the Canadian Stock Market was the wild west in those days and some of these promoters were notorious for pump and dump with penny stocks.
At the time I was a poor college kid, I worked a limited part time job, I had a serious girlfriend who took up a lot of my time, and I was in a hard major (Chemistry and Math). Like many college kids, I got my first credit cards in college. I took a cash advance and instead of buying stereo equipment and other cool toys like other kids I knew, I opened up a brokerage account and placed the money there.
I bought my first stock, some Canadian gold stock, at 50 cents, and 2 weeks later it had jumped to $5. I was ecstatic! I called everyone I knew, friends/family, told them about my new found wealth etc. My uncle at the time, who was the Treasurer of McDonnell Douglas (now Boeing), told me that I should sell it, place the money in the bank, and take my then girl friend to a very nice dinner, of course I didn’t take his advice.
I didn’t sell the stock even though I was sitting on a 10-fold gain that would have enabled me to pay off my credit card cash advance as well has have some extra cash to help with my college expenses. Instead I got greedy and like most people, thought it would go higher. Any of you who have traded for a while knows how this story ends.
The stock came all the way back down, and I ended up selling it around 30 cents, for a loss. At the time the tech bubble was in its infancy in the mid 90’s, had a simply just placed my money in MSFT or INTL or CSCO or the many tech stocks at the time, I would have had a nice and easy gain! I did this repeatedly with several stocks.
I graduated in 1997, and like many college kids, I had student loads and I had credit card debt and was broke. After graduation I soon got a job as a Chemist at Monsanto’s World headquarters in St Louis in one of their research labs. Monsanto had the best of everything, including fast computers and high speed internet. I had my own desk and computer and in between running experiments in the lab, I would get on my computer and read up on stocks.
This is when I first started learning about technical analysis, how to read charts and how I could decipher mass human emotion just from looking at the charts, drawing trendlines, patterns, indicators. This concept really intrigued me, that I could look at a chart and then make a good educated guess at what the stock was likely to do in the future, as well as to identify key support/resistance areas (ideal areas to buy or sell). It was sort of like magic in a way, it was also much more interesting to me than fundamental analysis where you pour over pages of earnings and analyst reports.
Additionally technical analysis was a natural fit for my profession. As a research chemist, I ran experiments in a laboratory setting, gathered data, plotted that data and looked for correlations and trends and made conclusions based on that data. Technical analysis is very similar to this process with experimentation and testing hypothesis to validate ideas, a market technician looks for repeating trends, patterns, and statistics in order to analyze the market or a particular stock. In fact many market technicians are former engineers, programmers, scientists and math majors.
My typical work day at Monsanto would begin around 8 am and last until 5, however I found myself staying until 9 – 10 pm at night so that I could sit at my desk and continue to study the market, charting and technical analysis. All my free time was spent studying charts to learn my new passion.
I left Monsanto in 2000 and went to work for one of their production plants, non-research. I became the Head Chemist at the production plant, my job primarily was Quality Control for the products that were produced at the plant, but I continued to learn more about technical analysis whenever I could, even catching flack from my boss for doing this during the day.
After a few years, it became clear to me that I was wasting my time being a Chemist. I was an okay Chemist, but I knew that I would never be a great Chemist, I spent all my time thinking about the stock market and technical analysis, NOT chemistry or ways that I could sdvance myself in that field.
After coming to terms with this I founded Breakpoint Trades in late 2002, a website devoted to providing the best technical analysis, market analysis, trade ideas, mechanical systems on the web. We’ve made some good calls over the years, such as calling the housing bubble in 2005, and the 2008 crash, and the gold bull market from 2001 – 2011.
However with my background in science, I found that I had a knack for developing mechanical systems or models. Over the years I’ve seen tens of thousands of charts and repeatable patterns on indicators, and learned how to apply these to building trading models.
Over the past 5 years I have focused the majority of my attention to developing sophisticated trading systems and models. There’s a ton of mechanical systems that you can find on the market, however the problem with many of them is that many people ‘curve fit’ their systems – basically they take a few indicators such as moving averages, RSI, etc and back test them. The problem with this approach is that these ‘curve fitted’ systems will always eventually fail.
I don’t build my systems in this, I take observations and patterns that have taken me years to identify and add them to my systems. Many of these rules are very easy to see and understand visually.
I’ve found that most people fail at trading because of emotion and discipline. For example, a person buys a stock that they like for whatever reason, and typically they don’t have an exit plan, they don’t set a stop for when it goes against them, or have any plans to take profits along the way. Let’s say that the person buys stock ABC at $10 without placing a protective stop, and the stock falls to $9, that’s a 10% loss. The person says to themselves, well the analyst reports are good, it will come back so I’m going to hold. Next the stock falls to $8.50, then $8, they say well, I’ll give it a little more room.
It becomes a cycle of, I’ll give it a little more room, and one day they are down say 50% and it’s a big loss. The ‘I’ll give it a little more room’ is a vicious cycle, it’s always best to set a stop when you FIRST enter a position, and then stick to it. Otherwise it becomes an emotional game of giving it more room, and now you can’t make an objective non-emotional decision.
I’ve also seen the same thing on the flip slide, a person buys a stock, it goes up nicely for them, and the higher it goes up, the more bullish they become, when in reality they should consider taking some profits or trailing their stops. (remember my example above when I bought the gold stock in college that went up 10-fold and I didn’t sell only for it to come all the way back down).
Mechanical systems / models, can be a good fit for the average trader because they instill disciple that the common person doesn’t typically exhibit when trading. They have defined entries and exits based on statistics and logic, use protective stops, etc. and they are unemotional.
Remember we are not built like Spock from Star Trek, we are emotional creatures, some of us of course fall prey to this more than others, some learn to deal with it with tools and discipline, many do not. Emotion and lack of discipline are the number one reasons why the average trader fails. This is where I’ve found mechanical systems based on technical analysis to be extremely helpful.
We offer a variety of systems that suit different trading styles from day traders to 401k management systems. I look forward to sharing what I’ve learned with you over the years, and please feel free to use the contact form if you’d like to ask me any questions.