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Mastering Trading: Tips from a Third-Generation Floor Trader

By Floyd Saunders, Founder at Really Simple Investing

Are you interested in trading but don't know where to start? Look no further than this episode of Really Simple Investing. Host Floyd Saunders interviews Dan Sugar, a third-generation Chicago floor trader turned trading coach. Dan shares his background in trading, from his grandfather trading butter and egg futures to his transition to screen-based trading in 1996.

Dan Sugar, third generation trader on the Really Simple Investing Podcast

Dan Sugar shares his background in trading, starting with his grandfather who traded butter and egg futures in the early 1900s. He later became a broker's assistant and started his trading career in the 30-year treasury bond futures pit. Dan saw the shift from floor-based trading to screen-based trading in 1996 and transitioned to electronic trading. He later became a mentor and coach, teaching trading workshops for a company before starting his own trading school.

If you're interested in learning more about trading, I recommend reading Dan's book and taking his classes. But remember, start small and learn trend following and trading techniques gradually.

The Fed drives the market - Dan Sugar

Mastering Trading With These Tips

You can actually start mastering trading with some of the tips from Dan Sugar. One of the biggest takeaways from their conversation is the importance of understanding different trading strategies, such as swing trading, day trading, and trend trading. Dan recommends swing trading as a good starting point for new traders and emphasizes the importance of managing risk and emotion through technical analysis, such as trend lines.

Trend following and trend trading has been around for, a hundred years or so, and a lot of hedge funds use at institutions. And you want to trade with the trend as much as possible and discern and define the macro higher timeframe trend and then find spots to join it. You don't want to trade against the trend,

Dan Sugar on trend trading

According to dan, you can apply trend lines and trend trading to intraday trading, swing trading, position trading and investing. It's a strategy you can use for all four lengths or all four styles of trading.

A swing trade you're in for two or three days to maybe two or three months. A day trade, you're in and out throughout the day, and then you, you're flat or neutral by three or four o'clock.

You can apply trend lines and trend following to all different styles and all asset classes, stocks, futures, Forex. Intraday trading, you're trading throughout the day a couple trades, medium amount of trades, but at three or four o'clock or one o'clock Eastern, if you made money, you stop and you have no exposure overnight.

Swing trading, you do have some exposure overnight. You take a position for, again, two or three days up to two or three weeks, or six or eight weeks. You can listen to the podcast here:

It all depends on your lifestyle, your goals, your tolerance for risk. I think swing trading's a great sweet spot. Day trading's very difficult. You're up against the algorithms and computers and program trading some sharks in New York and Chicago and specialists and market makers. But I think swing trading's a nice little sweet spot between investing and day trading where it's less time invasive. You're not tethered to the screen. The rewards can be significant.

For those who have experienced the recent market crash and got out, Dan suggests looking for stocks that are going against the trend and still going up. He also advises paying attention to the Federal Reserve's policies and how they affect the stock market. Dan emphasizes the importance of paying attention to the Federal Reserve's policies and how they affect the stock market. He advises new investors to understand that two-thirds to three-quarters of the stock market is driven by the Fed's policies.

When the Fed is in a dovish easing lower interest rate policy, it's a good time to find pullbacks and replacements to get long stock. On the other hand, when the Fed is raising rates, it's not a good time for the market.

Dan advises investors to have a long-term perspective for a certain portion of their investments and to invest a smaller amount in short-term trading. He also emphasizes the importance of managing risk.

Dan Sugar on watching the VX

Dan advises traders to be aware of economic indicators such as CPI, inflation, and unemployment, as they can increase volatility on a short-term basis. However, Dan primarily focuses on technical analysis, using price, volume, trend lines, and chart patterns to make trading decisions.

Dan also shares his recommendations for dividing investment funds between long-term investing and short-term trading. He suggests having a separate account for short-term trading and focusing on a few stocks or contracts to specialize in. He also highlights the benefits of micro contracts, which have less margin and risk, making them a good option for retail investors and smaller traders.

"Specialize if you're trading forex, look at one or two or three currency pairs. You're trading futures, maybe one index plus gold or oil or T-bonds. Pick one or two or contracts to watch and follow.” Dan Sugar

Stocks, trade 10 or under,. Some people start with five. Options, same thing. You don't want to be all over the place. So focus and specialize." – Dan Sugar

Overall, the interview provides valuable insights into different trading strategies and emphasizes the importance of education and specialization in trading. Whether you're a seasoned trader or just starting out, this episode has something for everyone. So, tune in and start your trading journey today!

You can get his book at his website:

Trends, Trend Following and Trendlines by Dan Sugar


Really Simple Investing podcast, Dan Sugar, Chicago floor trader, trading coach, author, e-book, Trends, Trend Following, Trendlines, background, trading, floor-based trading, screen-based trading, teaching career, trend trading, swing trading, day trading, differences, advice, new investors, market crash, Federal Reserve, policies, stock market, pullbacks, replacements, technical analysis, trend lines, manage risk, emotion, fundamental data, long-term perspective, short-term trading, Interactive Brokers, Trade Station, ThinkorSwim, brokerage firms, covered call options, generating extra income, managing risk, commodities trading, corn, soybeans, micro contracts, retail investors, smaller traders, volatility index, gauge, volatility, S&P, fear index, economic indicators, CPI, inflation, unemployment, technical analysis, price, volume, chart patterns, KISS method, trend following.


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