Trading and Investing In The Stock Market Advice: An Interview with Oliver Velez

Oliver Velez

Investing in the stock market..who is Oliver Velez, and what makes him an expert in giving advice for stock trading?

Oliver is an international best selling author, world renowned day trader, an entrepreneur.

His stock trading and investing in the stock market seminars have been attended by 10's of millions of traders all over the world.

His best selling book Tools and Tactics For The Master Day Trader: Techniques for Day, Swing and Position Traders is a classic in my opinion, and is a must read for you.

He offers his Trading and Investing in the Stock Market expertise in a number of other tools such as:

Dow Jones has dubbed Oliver, “The Messiah of Day Trading” and financial programs on CNBC, Bloomberg and Fox News frequently seek out his expertise for trading and investing in the stock market.

Below is a great interview with Oliver Velez in which he describes some of his his secret stock trading tips.

The following written interview below was conducted and taken from the Traders' Library 2010 Legends of Trading Forum in Chicago.

Enjoy Oliver’s investing in the Stock Market thoughts…

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How did you get into trading and investing in the stock market?

My dad was a religious watcher of PBS’s long-time financial show, Wall Street Week with Lou Rukeyser. After about a year of watching, when I was about 13, I simply got hooked and when the market gets its hooks in you, it’s for life.

At the age of 19, soon after I went off to college, I took the savings my mom scrounged up for my spending money and opened a small brokerage account. I lost ever dime I put into it of course, but knew from the moment I placed my first trade from my college dorm room, I found exactly what I was put on this Earth to do.

The markets consumed me and I devoured everything written or spoken about it at the time. I even majored in accounting because I believed at the time that it would make me a better analyzer and surveyor of sound companies.

What have you learned from your stock trading mistakes?

I have learned that mistakes are the stepping-stones to higher heights of market achievements. They serve as hints and clues to what areas of the “SELF” need to be worked on.

Mistakes lead us right to the things that must be eradicated from our existence, not only to make us better stock traders but to make us better people, better human beings.

85% of trading is psychological in nature, which means it’s largely a pursuit of self-mastery more than it’s a pursuit of market mastery. To master investing in the stock market, one must first master the SELF. And to be truthful, how many people can honestly claim true self-mastery?

This is what makes this great activity we call trading so difficult. It requires a rebirth, a total transformation of one’s soul. What are losses other than angelic pointers to what we must work on to become higher beings?

I love losses and the mistakes that lead to them, for once they are discovered, the path to higher levels of success is made very clear. I say bring them on.

Who are your stock trading mentors or role models?

A: Fortunately or unfortunately, depending upon your perspective, I had or have only a few. Who does not hold Paul Tudor Jones, one of the greatest market players of all-time as a stock trading god? Just the mention of his name sends me deeply into mental realms of wealth and brilliance.

We are lucky to have him living and breathing in our lifetime.

Jessie Livermore, the tragic genius who has indirectly ignited the careers of so many of the world’s top stock speculators still looms large in my mind as the father of active trading.

Reminiscences of a Stock Operator the book loosely based on his character, is a must read for every stock trader today and is revisited by me at least once every single year.

What stock trading text most influenced your style?

You could say several books became the core of my trading soul.

They were Reminiscences of a Stock Operator, by Edwin Lefevre; How I Made $2,000,000 In The Stock Market, by Nicholas Darvas and anything written by Mark Douglas, particularly one of his most recent entitled, Trading In The Zone.

Since it is my belief that trading and investing in the stock market is 85% psychological in nature, I tend to lean toward writings that deal with mental and emotional mastery over technical know-how.

The technical aspects of this game we call stock trading are simple in nature. Financial instruments go up and down. Period. What cause them to go up and down are people.

What ignite the actions of people are fear, ambivalence and greed. So, by focusing on the psychological part of the trading equation, you go straight to the cause of all. The books I’ve mentioned largely deal with this aspect of trading.

What’s your number one stock trading rule?

A: Don’t lose money. And if you do, never do it again.

Is there a particular technical indicator you rely on?

Beside my stock trader’s gut or instinct, which is the very best indicator of all, yes. There are a few actually. But before I reveal them, let me make this very clear. I believe most stock traders largely use indicators incorrectly.

Many look to these numerous “squiggly” lines with fancy names to tell them what to do, as if an indicator can really reveal the “truth” of a market. The way I use indicators is as confirming mechanisms.

I, the trader, decide on my actions, and indicators help confirm my conviction. I don’t derive conviction from them. They either agree with the conviction I’ve already formed or they don’t.

When the ones I use don’t, I play the underlying item differently. If they do, I play a bit more aggressively. That’s it. They are not bosses whom I obey. I’m the boss and indicators are employed to work for me and the decisions I make.

With all that being said, I’m a big user of moving averages and feel they are superior to anything else that can be called an indicator. The ones I use most are the 8, 20, 50, 100, and 200 simple moving averages.

For timing purposes, one can employ an oscillator like the Commodity Channel Index or a short-term Relative Strength Index.

For filtering groups of stocks down to a smaller number, I like to use the Directional Index. Better known as the ADX.

What is the most important part of your stock trading routine?

Waking up with the mindset that the markets are about to opened up just for me, nobody else. If I don’t feel that superior feeling, I’ll go play golf. That is the truth.

Nothing is more important than ensuring that your actions in the stock market stem from a powerful mental position.

If I have that mindset firmly in tact, 15 minutes before the stock market opens, I’m looking to isolate what markets have moved globally over night, which stocks seem to already be in play and why and are there any stocks that appear as though they are going to gap significantly above or below yesterday’s entire daily range in reverse.

In other words, if yesterday was a down day and today’s opening action is gapping above the high of yesterday’s daily range, I’m as interested as you can be. That’s a big pre-opening routine for me. Looking for those events big gap-ignited reversals.

If you could meet any other stock trader who would it be and why?

Jessie Livermore. I’d like the opportunity to tell him how much he meant to me. I’d like to thank him for igniting my career and introducing me to what I was born to do. I’d like to try to save his life. He meant so much to entire world of traders.

We tragically lost one of the brightest stock trading stars this world will ever see.

Since that can’t be done, I’d love to have a cup of coffee with Paul Tudor Jones. Can you imagine how much that cup would be worth after a 3-minute long talk? Wow!

...Well folks, how is that for a little trading and investing in the stock market advice!

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