Interview Central: Brent Harris, Part I
August 1, 2008
Brent Harris is the President of Brent Harris Elliott Wave. BHEW is located in Fountain Hills, Arizona. BHEW provides a daily advisory service via the Internet and other electronic delivery systems, and has been operating since 2003. Brent has been actually been running a daily advisory service since 1989. Brent is also a licensed commodities broker.
It was a genuine pleasure to get to talk with such a long-time trader like Brent Harris. This is the first part of that conversation.
Optionetics: How did you first become interested in trading the markets?
Brent: Back in the late ''70s my father, who is a climatologist, began providing market-related weather forecasts for a newsletter called The Reaper. While still a Junior in High School, I interviewed the editor of The Reaper, R.E. McMaster, Jr., for an article in my High School newspaper. His explanation of the prevalence of "cycles" in all facets of life, including war, weather AND the markets, was quite fascinating. Enough so, apparently, that I ended up spending nearly all of my adult life in pursuit of the ultimate forecasting approach. I''m now 45 years old, and I can''t say that I''ve found it, yet. But, the journey has been worth every minute.
Optionetics: Do you ever use options and if so what are your favorite strategies?
Brent: Yes, I still use options, but not as much as I did back in the mid-''80s. At that time, I did not have ample capital to trade futures. So, I basically traded long call, or put options instead of futures. Actually, it ended-up being a great way to start out, as my first "big money" win came from trading long calls in the bond market. Today, I only trade long calls/puts outright, if the technical pattern strongly favors a very large move, within a relatively short period of time.
Otherwise, I prefer to use them as a way to protect a futures position. Also, I''ve found options to be useful in offsetting some of the "rollover" costs on long-term futures positions. For example, if you intend to stay long a particular commodity for a significant period of time, selling out-of-the-money calls will put some premium in the account, without any major risk. Of course, if the market goes up dramatically, you will lose out on some potential gains.
Optionetics: What are the things you like best about the trading business?
Brent: Aside from the obvious attribute of never being "bored," catching a good-trend in its early stages is about as fun as it gets. I spend many hours each day attempting to forecast markets, and even more time calculating the key support and resistance numbers. So, when you get "in-sync" with a move, and are able to not only "ride-it," but add to the position at the critical support/resistance areas, it''s a very rewarding experience.
Optionetics: How do you treat losses and how to go about establishing their risk tolerance before the trade is entered?
Brent: In a good year, most of your profits are going to come from a hand full of trades. The rest of them will either lose, or only result in modest gains. You will be lucky if you can win more than 40% of the time. In baseball, that would amount to a 400 batting average. Thus, it is important to have the mindset that you will reluctantly accept minor losses, because when you do catch a winner... it will hopefully be a sizeable one.
Determining the initial risk on the entry of a new position is probably the easiest aspect of trading, at least for me. Since I generally only enter a position when there''s a significant "cluster" of projections that all point to a specific area, I can usually determine in advance about how much I need to risk. The real hard part comes when you have a decent profit, and then have to decide how manage the position. That could be the subject of an entire seminar.
Optionetics: Thanks, Brent, for sharing your trading approach with our Optionetics reading audience.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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