About me
How did I start trading?
I made my first steps in trading in 2003 lured by the boom in the Bulgarian stock market. I was just out of high school and I had no idea what I was doing. Luck was on my side as everything went up, every day. The only thing I disliked about the local market was the lack of transparency and the tiny liquidity, which were the main reasons for wild ranges and huge bid/ask spreads. I wanted to learn more about the art of stock trading and there was no one to teach me. I decided that the best place to learn about it was the United States and I moved to Saint Louis to study Finance. Here I realized how little I actually knew and started to learn something new every day. This process continues.
I was lucky to start the journey on my learning curve with Investors Business Daily in good times for the stock market. For the most part I am satisfied with my progress as trading paid for my tuition and more. In May 2010 I graduated with honors in the MBA and MS of Finance programs of Webster University. I am ready to embrace new challenges.
Short description of my market approach
My equity selection approach is based on PEAD (post earnings announcement drift). I pay attention to stocks that grow their earnings and sales in an impressive pace and have just surprised the Street’s estimates by a wide margin after long period of neglect. The best performing stocks are the ones that manage to surprise the most and most often. The surprises are always earnings related. When it is not about actual earnings, it is about expectations for future earnings.
I define myself as a swing trader. 80% of my trades have a duration of 2 to 30 days. I pay attention to sudden, catalyst driven, high volume, price expansion in stocks with solid earnings and sales growth. Such an event usually signals the starting point of a process of major re-pricing.
For more details on my equity selection approach, refer to the “trading methods” section.
About risk management
It plays essential role in my trading. I utilize 30 min charts to define the risk/reward ratio of potential trading candidates. They provide an opportunity to define a tighter stop loss. Tighter stop loss equals more favorable risk/reward ratio. While it is true that tighter stops are easier to shake out, this is disadvantage only on the surface.
1. Good trades rarely will go too far against you.
2. You don’t have to be right all the time in order to be profitable. Many successful traders are profitable in less than 1/2 of their trades.
3. You don’t put stop losses in randomly selected areas. The stop is put at a spot ,which if reached, indicates a termination of the trend.
I am very selective and this is why I rarely initiate more than 5 trades per week and I never hold more than 5 positions at any time. I have a total amount that I risk per trade (0.5% to 2% of my capital) and a limit I can afford to risk per month(5%). If that limit is reached, I immediately stop trading to reevaluate my work.
The purpose of this web site?
It will serve me as a media, where I will express some of my research, share some entries from my private trading journal and my stand on worthwhile topics for the time being. This blog is also a place, where I will collect other money managers’ thoughts that will help me to grow as an investor and a person.
Everyone has his mentors. If you look at the most successful people in any area of life, you’ll notice that in the beginning years of their career, there was someone who taught them how to start and how to develop in a direct or indirect manner. On the right side of my blog, you will notice links to different blogs. They all belong to people, who have helped me to shape my trading philosophy. I read them on a daily basis.
Books that I recommend
How to trade in stocks by Livermore
Trading in the zone by Mark Douglass
The Hedge Fund edge by Mark Boucher
TA using multiple timeframes by Brian Shannon
The daily trading coach by Dr. Brett Steenbarger
Enhancing trader’s performance by Dr. Brett Steenbarger
The Little book of behavioral investing by James Monthier
The Wallstrip edge by Howard Lindzon
Differentiate or die by Trout
Influence by Cialdini
Do you respond privately?
Am interested in knowing the top 5 books that you have recommended in terms of importance.
Have you listed them in the order of how important you think these books contribute to ones knowledge of
investing?
Steven
The books are not listed in terms of importance. They just represent a solid foundation to step on and might accelerate your learning curve. As everything else, to become successful in trading it takes time, a lot of deliberate practice and the right teachers at every level of mastery. Reading those books won’t make you a profitable trader. They’ll just help you to become more knowledgeable. In order to understand some of them (especially the ones related to psychology) you need to have some experience in the market.
If you are at the beginning stage of your development as a trader, you might wish to start with Howard Lindzon’s book – “The Wallstrip edge”. Read it 2-3 times. You will find something new every time.It reveals a very simple, but powerful method to make money.The most important thing to remember from Lindzon’s book is that you don’t have to be in the market all the time. Fight only battles that you can win. Also start reading the weekly edition of IBD – cover to cover. After you do that for 6 months, you will have the foundation to dive into some more sophisticated elements of the investing game – risk management and position sizing, technical analysis as a tool to understand investors’ psychology and measure sentiment.
If you really want to become profitable investor, you need to devote time and to practice really hard. Before you put your real money on the line, try with a simulation during the first 6 months.If you cannot make money in a simulation, you won’t be able to do it in the real world.
If you have any other questions, feel free to email me at ivaylo.ivanoff at gmail. I will try to answer to my best knowledge.
If you don’t give up, you will never fail!