Change text size

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Michael Paulenoff has been a student of and a participant in the world financial markets for the past 26 years, since his graduation from the Georgetown University School of Foreign Service in 1979. Early in his career he analyzed the fundamental and technical aspects of the financial and commodity futures markets for Smith Barney, Harris Upham, and for Drexel, Burnham, and Lambert. From 1988 to 1993 he was President of MJ Capital Inc., a market analysis and trading firm, which advised clients involved in the financial futures and commodity markets. In 1992-93, he co-authored, The Business-One Irwin Guide to the Futures Markets.

In February 1999, Michael founded MJP Market Strategies, Inc., a financial market advisory firm, and developed www.mjpstrategies.com in October 1999. In addition, from August 2000 through August 2001, he was the chief on-air market consultant and strategist for JAGfn, a live, daily 8-hour financial market webcast and cable TV show produced by Jagnotes, Inc. Mike has been a contributing analyst to Harry Boxer''s The Technical Trader since June 2002, and in February 2003 launched MPTrader.com.

This is the final installment of my interview with Mike Paulenoff.

Optionetics: How would you characterize your technical approach to the markets?

Mike: Pattern- and momentum-driven.  During the past 25 years, I have catalogued and experienced thousands of patterns, which provide the basis of determining if a trade has a high degree of success. On top of the patterns, I overlay various mathematically-based momentum studies, and lastly, I introduce as much market psychology as possible (positive and/or negative) into the particular situation to help me anticipate if a particular outcome is reasonable, and probable.

Optionetics: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Mike:  Major misconception: that trading systems work indefinitely. That is, until they don’t work anymore, and rest assured, at some point each system will stop working, so ALWAYS, ALWAYS continuously tinker with and improve your system and methodology as if it is a living, breathing organism that constantly needs nutrients and nurturing.

Optionetics: What kind of advice would you give a person just beginning to trade the markets?

Mike: The first piece of advice is something that was passed to me when I first started out:  If you want to make a small fortune in the markets, make sure you start out with a large one!  Kidding aside, do your homework. Nothing comes easy. The more work you put into it, the more likely the outcome with be favorable and provide you with a rewarding existence.

Optionetics: Can you describe what your average trading and analysis day entails from preparation to execution?

Mike: My alarm clock goes off at 4 AM ET. I work out for an hour, then I spend an hour skimming the news and looking at the overnight markets, and the latest price patterns, all the while keeping in mind whether or not the macro trends remain intact, are changing, etc. When I get to the office I begin to look at individual names, news in the names, and how that might impact various ETFs that I am concentrating on at that time. By the time the opening bell rings, I have a pretty strong sense about what I expect the indices to do for the first two hours of trading, and I am looking for opportunities in various ETFs both intraday and for a more extended timeframe. 

Optionetics: What kind of decision-making process do you go through before deciding on a particular trade and a particular sector of the market that would be worthy of putting on a position?

Mike:  The most important aspect for me is whether or not the price pattern exhibits the right technical “set-up” that argues in favor of a positive outcome. If I think the set-up is favorable, then I go about defining the risk parameters, and at least two upside targets for the trade.

Optionetics: What type of analysis methodology do you employ to find great trading opportunities?

Mike: For me it is all about patterns, and pattern recognition, coupled with momentum, and underlying market psychology.

Optionetics: Thanks very much, Mike, for sharing your thoughts about the trading business with our Optionetics reading audience.

To read previous installments of this interview, please click here.

Jeff Neal 
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
Visit Jeff’s Forum
Listen to Jeff at www.ProfitStrategiesRadio.com

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Recent Articles by Jeff Neal, Optionetics.com

• July 24, 2008
  Market Insight: Gardner Denver Profiting from Expanding Operating Margins
• July 23, 2008
  Outside the Box: The Benefits of a Systems Trading Approach
• July 22, 2008
  Tech World: Comtech Telecom Showing Stellar Return on Equity
• July 17, 2008
  Market Insight: Wind River Systems Riding Good Earnings Momentum
• July 16, 2008
  Outside the Box: Parts of Eastern Europe Emerging as Big Growth Markets