Toni Hansen is a graduate of the University of Iowa where she focused her studies on North American archaeology. After several years of working for the Iowa Office of the State Archaeologist she became interested in the equities market. Applying the field and laboratory skills learned as an archaeologist, she began studying the markets in depth in a search for repeatable behavior and patterns.
Toni is one of the most respected technical analysts in the industry with a high reputation for accuracy in both bull and bear markets. Her focus in the room is on intraday index scalp trades (lasting 5-30 minutes on average), stock continuation patterns and reversal patterns (held an average of 30 minutes - 2 hours), swing trades (1-5 day holds) and position trades (2-12 week holds).
Toni Hansen a seasoned professional trader that utilizes some very effective technical tools to consistently extract profits from the markets. This is Part 1 of our two-part conversation.
Optionetics: How did you first become interested in investing and trading the markets?
Toni: I actually never had an interest in the markets at all until the end of my college career. I went to school to become an archaeologist and actually worked in that field for about 5 years before I started trading full time. My significant other, however, has had a passion for the markets since he was a kid. It was through him that I became introduced to it. To me, it is not a big step from archaeology. I am still unearthing human behavior and history very gradually over time. Instead of a field somewhere though, I deal with charts.
Optionetics: Do you ever use options and if so what are your favorite strategies?
Toni: I actually have not yet used options myself. It is one part of my market education that I am still pursuing. I had never had any experience with options at all until I was studying for my series 3. They had always seemed like a rather daunting method of trading until I spent a bit more time getting to understand them better. For years I have had traders who follow my swing trades suggest that I trade the options on them as well because my strategies apply very readily to that medium. It is only recently that I have begun exploring that potential.
Optionetics: What are the things you like best about being a trader?
Toni: Ironically, one of the things that led me into this field and out of my old was that I was tired of sitting at a desk all day throughout the winters, entering data. Now I get to sit here all winter AND summer! It doesn’t seem like quite the sacrifice though when I am working for myself. There is a lot more freedom involved. I also love challenges and to me the market was just one more mystery to work on solving.
Optionetics: How do you treat losses and how do you go about establishing your risk tolerance before the trade is entered?
Toni: I keep my risk in check by making sure that before I enter any trade I have a time-tested exit strategy. I never risk more than 1% of my account on any one trade and usually only 1/4-1/2%. I also have plans in place to help protect me in case of an emergency, such as my Internet going down, my stock gapping past me stop, etc. The more situations you can imagine and prepare for ahead of time, the less likely you are to be overwhelmed when the unexpected occurs. I know very few people who hold overnight that have not had a stock gap adversely. Having a good exit strategy in place ahead of time helps to keep losses in check. Additionally, I take steps to avoid situations in which such action is more common. For instance, I will not hold a swing trade into earnings, no matter what.
Optionetics: Do you prefer long-term strategies or short-term strategies?
Toni: I do everything from day trade to invest. With regard to day trading, it is primarily in the EMini futures. I then mainly swing trade and position trade equities. Once you have a good understanding of the technical aspects of the market, you can apply them to any time frame. The main difference is that the fundamentals come into play more with longer-term strategies, whereas they are basically not important at all when it comes to day trading and even swing trading.
Optionetics: What are some of the key rules that you feel are most important for a trader to keep in mind when evaluating any potential trading opportunity?
Toni: My main rule is to have a solid technical reason behind every move I make in the market. I must be able to explain rationally to someone else why I made a certain decision and know that over time it will be correct more often than not.
Optionetics: What are your favorite markets to trade and track with your analysis tools?
Toni: I think that one of the most important thing I did to advance my knowledge of the markets was putting up charts of the indices, even when all I traded was equities, and watching them every day. This helped me understand how the market moves from one pattern and trend type into another. With equities most people look for specific patterns, but do not really have a strong understanding as to how and why those patterns develop and what leads certain patterns to fail. Following the patterns in the market as a whole from day in and day out has given me the tools to deal with most market circumstances, even when dealing with them means sitting out and waiting for them to change into a lower risk environment.
Optionetics: Thanks, Toni, for sharing your overall approach to the market as well as how you evaluate trades. Look for Part 2 of this interview to be posted next week.
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