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Exclusive Interview: Pro Trader Adam Guren
With five years experience as a professional trader, Guren has a wealth of great information for pros and novices alike. Our conversation includes Guren’s start as a trader, techniques for trading, and advice on what leads to success in the markets.
I started at First NY in the training program which is basically a clerkship where I learned how to trade various strategies. I was placed on the international desk and went through a 14 month program before I started trading on my own.
When I first came out of the training program I was trading Europe and the US. Then I decided I wanted to focus more on Asia because “China” was the buzzword back in ‘04-’05 and that’s where the growth was. From there, China took off and peaked in ‘07. Since I focused on China during its bubble phase, I was able to make a lot of money. Since the global markets have been heading down, I’ve been trading a global book. Although I still trade China, I have broadened out and trade financials in Europe, the US, and Asia.
Adam: Exactly. The best volatility and volume comes on the open and close of every market. So that’s when I do a majority of my trading. I get more bang for my buck at the opening and close.
How do you trade each successive market?
Adam: My trading style changes every year or so. The markets change. So I adapt to where I think there is money to be made. For example, I started my career trading European ADRs such as Nokia and BP. I had a basket of 50 names I followed. I got really good at trading those names just by keeping up with what’s going on. Once I got good at trading 50 names, I didn’t have to do too much prep because I was pretty much up to speed as far as research goes. So I took this style and applied it to Asia ADRs with BHP, Toyota, Sony, China Mobile.
So how do you know when to enter or exit a stock?
Adam: Good question. Getting into a stock is my strength. Getting out is not my strong suit. I use stops to manage risk, but sometimes I exit too soon and don’t let my profits run. I guess I just try to take profits when they are there. Especially in these volatile times. My old boss told me, “You don’t go broke taking profits.”
Let’s say I’m long something and in the money. If I think it’s right to sell, I’ll just sell it. But that breaks a basic rule because most pro traders will tell you “Don’t sell unless you think you should be shorting it.” I don’t trade that way. If I think I’m right, then I say, “I’m going to take this [trade] off now, take my profits, and move on to the next trade.”
Another rule is to leave a scrap on. I’m pretty good at this. For example, if I have 10,000 shares of something and I want to get out, I may sell 9,000 and leave the scrap on just to see where it goes. Over the long run, that really pays off if you do it enough.
What about risk-reward?
Adam: Every trade I get into I have a very good understanding of the risk-reward. One of the keys to success is measuring risk-reward. And one of the best ways to do that, as elementary as it sounds, is to buy low and sell high. So you want to buy when things are beat up and sell when things are overdone on the upside. I’d say I do a good job of measuring risk. It’s probably one of the main reasons why I am successful at trading.
Do you prefer to trade long or short?
Adam: Actually, I prefer to trade long because I’m a natural optimist, so it’s painful for me to watch the market go down. But I can make money either way. In fact, I made more money in 2008 than 2007. But I still find it more difficult to trade a down market because the moves are more volatile. Maybe that’s simply because we just went through the most volatile time in history and we happened to be going down. I don’t know. But down markets are known for having strong volatility on the way down and outrageous short squeezes back up. So you have to be very careful when you’re trading and make sure to have tight stops while taking profits when you have them.
So, with all the volatility, are you flat [all cash] at the end of the day? Or will you hold stuff longer term?
Adam: I’m almost never flat at the end of the day because I really don’t have an end of day. I am holding stocks across many markets so they can be affected when others are open. But 90% of my positions are held under a week
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