006: Tim Walker – Using Technical Analysis and the Methods of Gann to Takeout Big Moves

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Traders, what is up? Thanks for joining me on the sixth episode of Chat With Traders, the podcast for those that understand there are many lessons we can absorb from the successes and failures of profitable traders amongst us. Now the interview you're about to hear today is actually the very first interview I ever recorded, and just quietly I think it probably shows. But that's not important.

Today's guest is an immensely successful trader and a wizard on the topic of WD Game. His name is Tim Walker and his answers you do not want to miss. I was really excited to land this interview with Tim. He's a trader who I have a lot of respect for and have had the opportunity to speak with in the past. So I know what he's about and the logical perspective he places on trading.

This interview goes right into many topics ranging from the importance of looking at the bigger picture to understanding why the majority are fooled by fundamentals and news releases, which is really interesting. We also talk about how the methods of WD gain have influenced his trading and in particular the 50% rule. This is one rule that I encourage you to check out for yourself. Even though it was discovered by Gan who was around in the early 1900s, it still holds weight in today's market.

So for complete show notes and a recap of today's episode, head on over to chatwithraders.com. It's all there. And as always, if you like what you hear, please leave a rating and review in iTunes. I will be incredibly grateful.

Here is today's guest for a lesson in technical analysis, Tim Walker. Hey Tim, thanks so much for coming on the show. I'm stoked to have you here. My pleasure to be here. Thanks, Aaron. Awesome. Now we've been chatting for the last couple of minutes or so and uh I'm really excited about the different topics we're going to touch on. So

We're going to dive deep into your journey. Uh we're going to discuss some of your trading strategies and methods, as well as some of your best advice for entry-level traders who are just dipping their toes in the market. So Um before we get to that, we'd like to start off the show with one of your favourite quotes. Uh one that's helped you to push on through challenges and uh that type of thing. So take it away.

Well, I I had to think hard about this one because I usually find a new favorite quote every week, but after giving it some thought. I decided the one I liked the best was uh one from uh one of W D. Gann's books. where he said, You heard it said that ninety nine out of every one hundred people who go into trading lose money and he says, Well that means that one out of every hundred must make a fortune. And uh and so therefore you can be that one.

And uh and I I thought that was just brilliant because I like to be positive and that always just brings me back to the positive side of things'cause, you know, trading is a challenging profession. And uh and there'll always be something unexpected happening. But if you remember that then uh then every reversal then becomes a stepping stone to another success. Yeah, it's right. No, that's excellent. Brilliant quote there.

Um all right Tim, so let's get right into it. Day one, take us there. Tell us a little bit about how you got into trading. Well, it was quite funny really because uh as has happened to me more than once in my life, it appeared to be by accident. And uh I met s I met someone at a dinner. who uh in the course of social conversation was telling me about her work.

And she worked with a company called Safety in the Market, which I'd never heard of, and they taught the methods of a chap called W D Gann, who I'd also never heard of, about something called the stock market, which I sort of knew that it existed, but that was about the extent of my knowledge. And uh so I did some research after that and uh and bought a course and got started and when I opened the book

The first page that I read of it, I just fell in love and I thought, this is what I'm gonna do next for my career. And You know, it it's funny, I'm sure I'm sure many people who listen to this have had the same experience, but I just I just knew that it was the the right thing for me.

didn't mean that it was always going to be easy, but I I just had that that knowledge. In fact I've met a lot of traders in the course of the last several years who, when they were looking for a change in their life, came across trading and it just seems to be one of those things that attracts people and That was certainly my experience. And so I I I got into my book. I think I studied for about six months before I started trading.

And uh and then I had the early months of trading with the usual ups and downs. rather more downs and ups, I think, at first for memory than everyone experiences. And um uh and then, you know, gradually I I just got better at it and got on top of it and uh Uh after about a year I had the opportunity to move on from the job I was in at the time and and uh and I pretty much decided to make trading my career after that and that that was in two thousand and six.

And so for the nearly eight years since then that's what I've done. Yeah, no, excellent. So before that were you what were you doing beforehand? Were you involved Well, I used to work with a company that trained people in communication skills. So I used to both attend classes myself and also was involved in the in the preparation and administration and so on of of many of those and in training people.

And uh I'd been doing that for quite some time and I got a tremendous amount out of that. It helped me a lot. Mm. And uh um, you know, I just happened to be at that time where I felt, Well, I'm ready for the next thing, whatever the next thing might be and Time for a change of scenery. Yeah. Yeah, no, awesome. Awesome. Okay, so...

Do you happen to uh remember your first trade by any chance? I remember my first trade very well. In fact my my first my first two trades are quite memorable. The funny thing was my my first trade um which later appeared in a trading course as an example of doing exactly the opposite of what I did, was a trade in uh in BHP, and I took a short trade in it. uh which fulfilled all the rules in the beginner's book um and promptly lost money.

And I remember at the time, while of course I would have liked it to make money, I wasn't too disappointed by it because I felt, Oh, well, it's my first trade, you don't expect to be the world's best trader there. And so I didn't really think very much of it until a couple of years later when, as I say, I saw that very trade, or that period of the market anyway, um appear in a trading course uh with an example of a signal to to buy. I I was short, I sold it.

And uh uh and what that trade taught me was that uh there was a lot more to trading than what's in the beginner's book. Hmm. Yeah, absolutely. And uh and I I realised from there that there was there was more that I had to do. Yeah, no, that's brilliant. That's brilliant. Okay. So what was some of your early setbacks? Like what were you really failing at and sort of struggling with to get your head around? When you were first sort of dipping your toes in the markets?

I can answer that pretty clearly because it b it became apparent to me probably about two or three months into it. that what I had absolutely no idea of was the bigger context of what the market was doing at the time. So I'd learned how to look at a very small segment on a on a short term daily timeframe. And I hadn't I didn't really even know whether we were in a bull market or a bear market.

And so when I look back over my earlier trades, I found that there were an equal number of long trades and short trades. Whereas of course in a bull market you should be taking mostly long trades and in a beer market you should be taking mostly short trades and I was just all over the place. I lacked that that bigger view. Okay. So you're just looking at sort of the too small of a picture, you weren't sort of

zooming out and looking at, you know, a couple of years back and sort of you know, as you said, the big picture of things. So How d I mean, how did you overcome these sort of setbacks? Did you obviously you just sort of learnt uh you do need to zoom out and look at the bigger picture and see what really is going on? Well I realised I needed more knowledge, so after I'd taken about half a dozen early trades.

I just took a break for about a month and just focused on doing more study and learning a bit more, and that's where I started to fill in those missing bits. And as it happened, it was a period where the market was doing nothing. It was just going up up and down in a sideways manner. And I was better not trading at the time because there's hard periods to make money in. And uh and during that period I I got a much better view of what the market was doing overall.

And so I was able to get a much clearer perspective by not trading. Um, because sometimes when you're in the middle of the market it's there's a lot more confusion there or you're worried about what's happening in the trade. And by taking that step back I was able to clear my head and then I I came back with uh, you know, much greater skill. Yeah, I mean,'cause when you're in the market of course you're a bit biased and you obviously want it to

Traveled away that you're trading. And it's it's very easy to ignore what the market is trying to tell you if you have a forman. Yeah, no, exactly. So um What was um now that we've sort of got your your bad trade out of the way and um you know, some of your earlier ones

What's one trade that you'll never forget? I mean, it almost feels as though you sort of wrote the trade before it even happened. Well uh th the actual the probably the My favorite trade, it's not the best trade I've ever done by a long shot, but my favorite one to remember was actually the first one I took after that period when I came back to the market. And I found a setup on uh A stock which

isn't around anymore called Coles Meyer. And uh it was it was a fairly simple setup. It was just a double bottom trade. But it fitted the new things that I'd been studying during the previous month. And um when I came back and took that trade, it it was a good trade and I traded it well, but I just happened to be lucky enough that while I was in the trade, a takeover rumour came out.

And when the takeover rumour came out, I think in one morning the price jumped from something like ten dollars fifty to thirteen dollars a share. And so I made a terrific great profit on the trade, uh, which, you know, was luck as much as anything, but but it was just great because I'd I'd taken a good trade. It was a strong setup. And I was trading it well and because of that, you know, the good luck it's funny how good luck comes when you're doing the right things.

And what what that why that's my favorite trade is that that one changed my thinking. Because then I realised, yes, I can be successful at this. I was confused after the early trades because I was still learning, but that one just showed me that if I studied my rules and applied them properly, then I could be successful at it. And I think it was the change in thinking that was more important than the actual outcome of the trade.

Yeah, so you just sort of proved it to yourself that, you know, you can do this. But so much of it is about belief. I've had many times where Uh, you know, I might be looking at the markets and think what a wonderful period of trading it is and then someone comes up to me and says, Oh, gee, it's been so hard to find a good trading setup in the last three months and

after I've picked myself up off the floor, I then open a chart and show them about half a dozen really good trades and say, what do you think about these ones? And because their thinking has been negative, they only see the lack of opportunity. And when mine is positive, I see the good opportunity. So I think how you feel within yourself is about ninety five percent of it really. Yeah, yeah. I mean emotions are certainly a massive part in trading, aren't they? Huge. Yeah, definitely. Very huge.

Just before we carry on, I'd just like to take it back a step. You um mentioned so you went back and you sort of did a lot more training and built your knowledge up a bit. What sort of things were you doing to build your knowledge up? What were you you know, were you reading books, were you taking courses?

Uh what sort of things we do? I I I'm a voracious reader, so I I love reading and I love books and I just read everything whether it's on the market or anything else that I can get my hands on. And so yes, I did a lot of reading. Um I was uh I was in a uh a study programme, safety in the market study program, uh which was called the Platinum programme, which was just simply a structured course over a period of twelve months.

And and what I did was to basically have one topic every week that I focused on. And I used to just go over that material again and again as many days as I could during that week. until I really got a handle on it and then move on to the next. So I was trying in a systematic manner as I could to just build up my knowledge base. Hm. So when you say a topic, you're sort of meaning as though like a certain um pattern or a certain uh one rule, you're really trying to drum it in.

Yeah, it could be various things. It could be one topic like um analyzing price ranges in a market, or it might be one like volume and volume analysis, or like just different different areas um so that I could Well there's two things. One is to focus on one thing at a time, and the other was also to get repetition in it. Um and the the impetus for that actually came from a book

um quite a popular book. It's called The Tipping Point by Malcolm Gladwell. And they're analysing all sorts of things, but one of the examples in it was a children's T V program. Which they tested by showing the same episode to the kids five days in a week, Monday to Friday. Instead of showing five different episodes, they showed the same episodes five times. And because it was an educational program.

Uh and I think it was I think it was called Blues Clues. So the idea was that the show had various clues and the kids were supposed to guess the answers a as it went on. And of course by the fifth episode they knew all the answers in advance. And it just occurred to me, oh gee, this is a really good way to study. that we generally don't understand the topic the first time we read through it. You actually have to read two, three, four times before it makes sense.

So I made a rule of trying to do three to five times every week on the same material. And I would find by about the third or the fourth time it was really starting to make sense to me. Plus I was starting to draw connections between that topic and maybe the one I'd studied the last week or something like that. So I saw the interrelation of different things. Okay. Yeah, no, that's that's a really good point you make there, Tim. That's uh that's excellent. So

Um, when you were starting out and you were picking up, you know, on your trading and that sort of thing, were you uh doing paper trading or anything like that, uh, to start with. I d I did initially. I did a little bit of paper trading for about a month. Um, but the vast majority of my trading has been practised in the actual market.

And I think this is a thing that varies from person to person. I mean, it's always wise to do a little bit on paper first so that you at least know what you're doing. But once I knew what I was doing, Um, I just wanted to get in there and and try it out.'Cause the the big problem with paper trading is that it leaves out probably the most important element as we were discussing before, which is the emotional state.

And and you know, it's it's very easy to take the fifth loss in a row in a paper trade'cause you just go, Well, there you go. Um, but when it's for real, it's it's quite a different thing. And then you find yourself second guessing and thinking, Oh well will I take the next trade? or Well perhaps I'll close this one out early and just take this little bit of profit I have and so on.

And it gets much harder to to stick with the discipline. Yeah, no, I couldn't agree with you more on that point. Um yeah, I mean it cuts the motion out of it altogether, which yeah, as you said, is a huge point in it. So Um, let's talk a little bit about um your trading methods and your strategies. Obviously we you know, don't have a huge amount of time to go into great detail, but just sort of In a summary

Mm-hmm. How do you sort of approach the markets? Okay. Well, my my basic starting point really is WD Gann's work. Um and so that's the sort of perspective that I come from, which for a start is technically based. Um and my my focus is really on looking for uh strong turning points in the market to start a series of trades. So that might be something like a double or a triple bottom, for example. uh or or say a yearly top or a bottom if it comes on price and time relationships.

Um without sort of trying to go in and defining those. But basically to try and look for an important turning point in the market that is a reasonable degree of certainty that it's that the market's going to change from that point. And not necessarily to trade it right away, but as soon as it's confirmed to start trading and then to try and

hold a trade for as long as possible in the next move. Now for my style, because I trade on a daily chart, my time frame from a trade tends to be about a week to two weeks mostly. Um uh occasionally if there's a longer move. Um, I might have one where, you know, if so I trade off a swing chart. Um, if a swing chart keeps moving in the same direction without interrupting for a period of time, um, then I'll have one that lasts a bit longer.

Um, but I try to then uh also alternate between holding on for a move as well as locking in profit um as I go because one of the things I found is that whatever you think is going to happen in the market, um, it nine times out of ten it does something different. And so it's always better to uh you know the old saying a bird in the hand is worth two in the bush. Well a a dollar in the account is is generally worth two dollars on paper. And so

So it's always good to like keep locking in profits as they go. Yeah, so you often just sort of trail your stops up as the market sort of progresses. Um that's I try to split my position in two where I can and take take profits on half the position. um at a high probability point that the market should get to and then the other half I'll try and hold on for a longer move.'Cause I've had so many times when what I thought was going to be a longer move lasted three days.

Um and then I've had other times when what I thought would be a short move went on for three months. So I find splitting in two like that just gives me the opportunity to have something either way and also gets me out of the w way of trying to be right. You know, I gave up quite a long time ago trying to be right in the market and just focused on trying to keep up with what the market was doing. Just trade what's in front of you, yeah.

Yeah, absolutely. So, um just to elaborate on that a little bit, as the market's going up in your and your position, you see I you mentioned that you're um sort of closing out half your position and moving your stops up to protect a little bit. Do you ever um find yourself in a situation where you're adding to your position as the market goes up?

Yes. Yes. Now there's there's there's a couple of ways of doing it. My my way of doing it is Because I'm closing positions out and taking profits as I go, then when I get a new trade signal

Then I I take an additional trade there. So I'm sort of building it as I go. There are other ways that I've studied of doing it and I've tested some of those, but that's the way that sort of fits my style and personality best because I'm like I might take, say, two contracts, take profits on one, so I've got one left.

Then another signal comes in, I take another two contracts, which means I've got a total of three and so on, and then I can I can just build it up that way. Right, okay. No, that's excellent. So

You know, this is very um sort of technical based, your trading methods. Do you take into account uh fundamentals and sort of news releases and that sort of thing? Do they affect your um idea on with one exception, no. Um the the exception I'll give you the exception first, which is with news releases. Um, if I notice them I tend to do the opposite of what they indicate. Uh, because having studied it for some time

Um it's not that I think fundamentals and news are not important. They are important but there's two limitations on them. One is unless you work for a large bank or institution that has the research staff able to do the research into the fundamentals, um the average member of the public cannot get his head around. what those figures are. I I had I was teaching a seminar once where we had a lady in the group who was an accountant.

And we were talking about this and she put up a hand and she said, I'm an accountant and I've prepared company annual reports and balance sheets and so on and she said, I know what lies you can tell using figures and still be doing, you know, what's within the letter of the law. So so even if you're skilled enough, which I'm not, to read those things, uh you're highly unlikely to get the accurate information. Plus it's always out of date by the time it reaches the market.

Um but the other factor is that Fundamentals are not the only thing that drives the price of a stock or a commodity, because there are two other factors. One is people's emotions in general. And um and the other is just the overall up and down cycles of the market. And classic example of this is the GFC we had in two thousand and eight. Now, many stocks in that period fell fifty, seventy five, even ninety percent in value. Some went out of business altogether.

Um and you can't say that all those companies fell that much in value. It was just that as time went on and prices were falling, people started to panic. And then they just wanted to sell everything and that drove prices down further. Um and because all the market was falling, it was it was a cyclic period where the market was going down. In two thousand nine it turned around and the market started going up again, and by and large it's been going up ever since.

And markets move like this, they go up and down in cycles, and fundamentals won't tell you what the cycles are going to do. Uh you know, it's a it's it's a bit like trying to use today's weather to forecast tomorrow's. You've got to look at other factors, um, which might be the storm that's b beneath the horizon that you can't see.

And so um so for all those reasons, uh I I don't try to study fundamentals, I try to study the price chart because all of those factors combined will appear in the price chart. Um and so I am still taking account of fundamentals in a way. The other reason I try to avoid is that, far be it for me to suggest that people try to manipulate markets, but it is a fact that. Good positive news announcements for companies very frequently come out at the high point of their price move.

And all I can suggest there is that some news releases are being given to the public. uh to induce them to buy uh and often those releases come from people within the industry who presumably are wanting to sell because they think the price is as high as as it's going to go. And that's why sometimes if I hear a news release I'll be I'll be looking to do the opposite. Classic example of that, I was on a holiday back in twenty twelve in September.

And when I landed back in Australia, I landed in Perth and as I was catching a taxi from the airport to where I was staying. I heard an announcement over the news that the uh Federal Minister for Resources had uh just announced that the mining boom was over. Uh and then they proceeded to go on and say that the price of um

iron had fallen from three hundred and twenty to a hundred and sixty dollars a ton or something and they gave a couple of other prices that were like that. Now one of the things I know from my technical analysis is that when a price falls in half, that's often a good point where it's going to start to move up again.

Uh and then I did rather wonder why he was making this announcement at this point in time. I would have thought if the price had fallen from three hundred and twenty to one hundred sixty, it would not have taken that long to work out that the boom was over.

I would have thought you might have been thinking that at about two hundred and eighty. Um so as soon as I heard that I thought, oh, it must be about the time to buy mining stocks. And sure enough, that was about the time where many of them have have bottomed and and risen from that point. So so often I if I hear news, I don't go chasing news. Sometimes people send it to me, but frequently I look for the for the market to do the opposite of what the news would tend to indicate that it will do.

Okay. So if you've got a uh you've you know, identified a potential trade, um do you check any news reports that have come out recently or do you just Go with your instincts, you don't let that affect you. I just I just go with what the chart's telling me. Um I've had so many times when I would look at a setup on my chart.

and it would tell me I should be buying and there'd be some negative news and so I was scared to buy and then didn't and then the price did exactly what the chart was going to tell me that I thought, well, I'm just going to forget the news. And see the thing is You can't be right all the time in the markets. Nobody's that smart. And and trading is not about being bright. Trading is about seeing a setup that works seven, eight, nine times out of ten.

Taking the trade that's indicated by that setup. Managing the trade effectively, that's very important, managing the risk and then managing the exit point from the trade to get the best possible result out of it, and then also knowing when not to take a trade. And probably my greatest weakness was that that last matter of knowing when not to is always wanting to take trades. But but really there are some times when you're better off just sitting there for a month

um not not doing anything. Mm-hmm.

Yeah, right. Now that makes a lot of sense, Tim. Um, so you've talked about you mentioned um the sort of the half the price, the fifty percent level. Do you want to just elaborate on that a little bit? Well, uh the rule as I originally got it was from uh some of Gann's books, where he basically said that when a price falls in half, Um either let's say you've got a stock that tops at thirty five dollars, if the price hits seventeen fifty, uh, it's generally a good place to buy.

then he also said that you can measure the price range between a high and a low. So if it had a low of twenty. and a high of forty and the price fell to thirty, then that's often a good buying point. Now I don't buy on those points alone, but they're the sort of setups that I look. In fact Gann said in one of his books that you can make a fortune in the market just on that 50% rule if you understand how to use it.

Now, after several years I'm still learning new things about it. So it's it's a little m it's not necessarily more complicated than what I've just said. It's just about learning to recognize it when it happens and then having the right signals. to act on that s sign when it comes. You know, okay, it's fallen to fifty percent, uh now what do I do? What sort of

turn do I look for in order to give me a signal that I'll trade it at that point. Yeah, so you're looking for a little bit of extra confirmation before you just sort of jump in at that point. Absolutely. I would never do it just on that one thing, but if for example there was a double bottom also at that level

or it was on one of the timing rules that I have, or there were volume indications behind it, or whatever. If I had say three or four of those, then I might have enough there and then maybe my swing chart would give me a signal. after that, uh at which point I would take a trade. Okay, sure. So there's sort there's sort of two steps in it really. One is one is analyzing a market that's in a position for a trade, and then the next thing is waiting for the actual signal.

And there are times when I see a market in a position for a trade, but it gives no signal, so so I don't trade it. Sometimes, for example, the risk is just too great. The entry point just makes it impossible to take. So I just have to let it go and then wait for another time. Yeah, sure. No, that makes sense. No, good one. So um

Uh what else we got here? Um so those are some of your sort of your favorite patterns to trade is the fifty percent levels and then especially when they fall at like a uh double bottom or triple bottom price point. Yep. Mm-hmm. Those are the ones you like to get on. That's my absolute favorite. Yeah. Okay. Because they're it's they're extremely high probability trades. Mm-hmm. And and they do two things. One is they work most of the time and

The and the other is they either have a really good move when they do, or if they fail, they present a trade in the other direction. So there they're sort of points where the market's at a decision point where it has to go one way or the other. And I like those because you end up with about a ninety percent chance of making some money, even if you're wrong at the beginning, if you know how to trade them. Yeah, exactly. Okay. So

Just on a side note there, why is it that you do see these double and triple bottom patterns? Do you you know, are you able to answer that one? Yeah, yeah, you can you can do it quite logically actually. If you're talking, say, about a double bottom, let's say we're looking at a stock. Um now every stock will be traded by by large concerns who know a lot about the industry.

You know, in a a mining stock we'll have people trading it who've worked in the mining industry all their lives, they deal in those minerals, they know the industry back to front. So if we see a company like say BHP and four times it gets uh finds support at twenty dollars a share, or even one time it finds support at twenty dollars a share, and then it comes back at that price again.

then there's a good chance that the people who bought it last time at twenty dollars, obviously they bought it because they considered it was good value. Obviously if it had a good move up from there, then a lot of them bought it. So there's a good chance they'll do so again.

Um and it's interesting actually we've got a few markets right right now sitting at at points like that. The um the US dollar index, which I don't I'm not a currency trader, but Uh I was looking at the chart just the other day and uh the the index of the US dollar, the futures index, uh has come back to the level of seventy nine about, I don't know, six or more times over the last two years. And uh and if anyone cares to check it, it's actually on a 50% level. Um

And from the twenty eleven low to the twenty thirteen high, you can measure it, it's sl sitting slap right bank on there. Every time it comes back to that price, somebody has been buying it. So obviously somebody who knows a lot knows that it's good value at that price. And sure enough it hit there on about Thursday last week and just rocketed up for two days. Now, conversely, if you have a price like that and the price falls through

That means that those people who were buying it several times before now no longer are willing to buy it at that level. And that's why you can you have a pretty good chance of success if you go short. on the break of those support levels because it means that the people who were buying aren't anymore. So for some reason they perceive there's been a fundamental change in the value of that market. Now, um similarly you'll get the thing at a double top.

where okay a market's come up it may it's made a top. Okay, why is it made a top? Let's say it's a price it's never traded at before. Let's say a stock trades at fifty dollars a share. It's never traded that high before, but it makes a top at that price. Then it falls to$40 a share and it comes back to$50 again. Now, two things will have happened there. One is People who, again, insiders in that industry, will have been selling it at fifty dollars the first time.

Now they must have a reason for selling it at fifty dollars. If they thought it was going to go to sixty, they'd hold it for longer. So they must consider on all the evidence in front of them. that fifty dollars is as much money as they're gonna get for those shares.'Cause when they're trading in millions of shares as those big funds do.

Um, y you know, they want to hold on for as long as possible'cause getting out five dollars too early is the waste of a hell of a lot of profit when you've got positions that big. So, you know, they know their stuff, those people. And I don't know the stuff, but I can see what they're doing by looking at the chart. So I see they've been selling at that price, then the price comes up there again, and I watch to see what it does. Is there selling taking place when it gets there a second time?

Now, if there is and it starts to go down, again I've got a good chance of getting a trade because it you know, it was worth as much as it's going to be worth the first time, they obviously consider it was worth that much the second time. Now there's another factor that comes in at tops is that okay, while some people were selling at the first top, some poor, unfortunate people were also buying at the first top. And so there's all these people in there who bought this share at

fifty dollars a share. Now it's fallen to forty and they're sitting there going, Oh I've lost so much money. Please just get back to fifty again so I can get out at break even. So it gets back to fifty and they say thank you, God, or whatever deity they worship. And um uh and then they they take their money and run. And so so you got all those people for both those reasons selling when it gets back to the old price.

And that that's as good a reason as any that I found why why markets will turn at at previous price levels, whether they're tops or bottoms. Okay, cool. No, thanks for elaborating on that. That's that's excellent. Are you ready to get serious about trading? Then join Tasty Trade, Investopedia's best platform for options trading in 2026. Stocks, options, futures, and more. Tasty Trade has everything you trade all in one platform. Get low commissions, including zero commission on stocks.

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Let's just um dive into a little bit about where you often see entry level traders uh slipping up. Like what sort of mistakes do you see really common amongst um traders who are just starting out in the markets? The biggest problem I have encountered with people starting to learn is that they don't realise the value of being able to do what we call form reading. which is to take the patterns on a chart and draw information out of them.

And for a technical trader, every day you have five pieces of information. You have the open and the close of the day, you have the high and the low of the day, and you have the number of shares or futures contracts or whatever traded in in that day, which is the volume. So open, high, low, close and volume.

And the combination of those things either on one individual bar or on a group of bars taken together, maybe two, three, five, a dozen, whatever, they form patterns and they are packed with information. So for example, you might have one day where a stock makes a ten dollar range from high to low and the and a half a million shares are traded. And then the next day it makes a five dollar range, it goes higher.

Um, but the range is only five dollars instead of ten. So it's got half the range, but it's got the same volume. Now that's telling you something, because whereas there were lots of buyers compared to sellers on the first day. Because the range was ten dollars. If that range is halved but the volume is the same the next day, then it means a lot more sellers have come into the market. These things of course an entry-level trader doesn't know, but unfortunately not many books talk about it.

And so they don't pick up on these things. They don't know the difference between a market that's trending or actually moving somewhere and a market that's just chopping sideways. So they'll take trades in markets which they're better off not even touching. uh and instead of waiting for the ones that are making strong moves. You know, markets spend

Well, I've never actually done the dates to tell, but but I reckon markets probably spend about half their time moving somewhere and the other half preparing to move. Some say it's eighty preparing and twenty percent actually moving, but it just depends from market to market. But every market will have periods where it sits getting ready for the next move. And the moves can sometimes be very short. They might last three weeks after it's spent two months preparing.

And you've got to be ready for those and they're the times when you can make money quickly. I mean, there are strategies, say option strategies, which I don't trade, but there are strategies for making money in sideways markets. But by and large, it's much easier. to make money in a market where the price is going somewhere. And it's very hard to make a market and m make money in a market that's choppy. And and most entry level traders are not even aware of that distinction and I think that's

In my experience, that's what causes the most trouble for beginners. Mm-hmm. So not identifying a you know, a s a certain um trend that's playing out. They're just trying to jump into a sideways market and You know, trade for short movement. You know, let's say they've learned a signal. It could be anything. It might be moving average crossovers, which is a popular one. Not one I use, but

many people will recognize it. Now, so they'll they'll just enter a trade on that without actually looking at what the market's doing. Now, if a market's had a good rise, let's say you've had a strong bull run happening, and then you get a crossover of moving averages and it starts going down, that could be a good a good signal to enter.

But if you've got a market that's going sideways, those moving averages are going to cross over back and forth and back and forth half a dozen times. And if you take trades every time, um you'll just get your money eaten for breakfast. And and and so people don't don't see that distinction. And the these are visual things. You know, we we see much more in a picture. I mean, there's the old saying, a picture tells a thousand words.

And it's very true. If you can see a picture, there's so much more in it than say just looking at numbers. And I have to see a picture of things and I I look at charts and and I I'm still learning. I I get more things all the time, more information. Every month I learn something different. I don't think you ever run out of things to learn when it comes to trading. But uh but I can I can pretty much tell largely what's going on in a chart just by looking at it.

even before I I I get in and start applying more tools to it. And and you know, if the market's not going anywhere, I'm certainly not interested in doing any further work on it. Yeah, you just gotta sit tight and just wait for a a good signal to come about.

Yeah, absolutely. Okay, cool. So Just moving on a little bit, you know, I've I've heard people say quite often that you gotta treat trading like a business. So I mean I think a lot of people probably trade, they take a trade, it either wins or loses, they'd accept it, um, move on, take another trade.

Is uh is there something missing there? Are they supposed is it a good idea to be Physically recording each one of your trades, putting notes with it about why it was good, why it was bad, what you did wrong, what you did right. Um and just documenting all your trades. Is that something that you do or used to when you're starting out? I think it's something that everybody has to do for as long as they keep trading. Because um Your trades give you f that's your way of feedback.

Um, you know, if you let's say you want to become a professional tennis player, okay, you go and get a coach. And when you get your coach, you go to a training session, you hit the ball and your coach gives you feedback. He says you're holding the racket the wrong way or your elbow's bent or whatever it is and gives you correction and gives you the feedback

from the things that you can't see yourself. Now in trading your coach is the market. And the market gives you feedback, but the feedback the market gives you is it gives you money or it takes your money. And it's completely impartial. Some people think the market's against them, but it it's not. The market the market's like nature. Nature is completely impartial. If you're in the way of a cyclone, you get blown over.

If you stand on and on the beach and watch the tsunami coming in, you'll get you'll get washed away. You know, if you don't know it's coming in, you still get washed away. If you're a bad person or a nice person, you still get washed away. And the markets are like that. You know, it's no good saying that I've spent five years of my life doing this, I deserve a good trade. If you break the rules, the market will take your money.

And and but it's actually giving you feedback all the time. It's basically telling you you're trading the wrong way. And the only way you can see that feedback is to go back and look at what you did. And I vividly remember doing this one time some years ago now, where I I I got out a chart, I printed out a chart covering, oh, I forget how many months it was, maybe about three or four months worth of the market.

And with a pin, I drew on in arrows buy, sell, buy, sell, buy, sell. And I stood and looked at the chart. And I had to go and have a chat with the guy in the bathroom mirror and say, tell me Tim, why did you take that short trade in that screaming uptrend? And then why did you close this trade out when the market was keeping going up and gave you absolutely no sell signal?

And things like that. And I it was only when I did that that I saw what I was doing. Now I was actually making money at that time, but what I was doing was making money, giving it back, making money, giving it back, making money, giving it back. And when I actually looked at it, I thought I'm not following my rules. If I was following my rules, I would have had a couple of trades that lost money, but I would have held on to all the ones that did.

And I just thought I'm shooting myself in the foot. Now I could only see that by going back and reviewing what I'd done. And and uh I I I write a a newsletter every week and and I was writing about some of this to my subscribers recently and one sent me an email afterwards and said and said, I'm just blown away. He said, I went through my trades for the last year And I found that Almost I think he said almost all of my prof no, he said all of my profits came from about

three very simple setups and on about three markets. He said, All my losses came from trading other markets and trading different signals. And so by doing that review, in in one swipe of his pen, he has just sent his profitability through the roof by simply cutting out a whole lot of trades. He doesn't actually need to learn a single new thing about the markets. All he has to do is stop taking all the trades that either aren't in those few markets or or aren't that particular signal.

And that's the sort of thing that you find out. And that's just one example, but I've got several. I could tell you more of mine and I could tell you more of other people's. But it sort of gives gives the flavor of it. You only get that feedback by looking back because we have amazing ability as humans.

to deceive ourselves about what's going on and we just don't see the cause and effect of our actions. So we think, okay, I'm not making money in the market at the moment. It's because the markets are really hard to trade. It's because the Fed's manipulating interest rates in the United States. It's because oil production is

low, high, whatever. It's because there's war scares in the Ukraine. It's not because of anything, it's because of what I'm doing or not doing. And I can only find that out by going back and having a look at my past trades.

Yeah, no. Excellent point there. So yeah, really important to document everything and then at least you've got it there and you can always sort of go back and review it and um yeah, go from there and correct yourself. So one thing that you you touched on there which I just wanted to um sort of ask another question on and that was um Instead of trying to trade all markets, um s really just specialising on, you know, a certain amount um and not you know diving into other markets outside of

your set few that you actually follow. Is that is that something you still stick to these days? Is just Narrowing down on a couple. Um Yes. I s I stick to I've stuck to it more as the years have gone by and I've got more experience. And I can give you a couple of reasons for it. Um, for example, I don't trade currencies. I think I've tried tried trading currencies once or twice very early in my career.

and currencies just don't work for me. And I think it was the famous trader Jesse Livermore who said stocks are like people. They have personalities. And it sort of makes sense in a way if you think about it, because the sort of people who trade Gold stocks are the sort of people who work in the mining industry by and large, because most trading is done by professionals in the industries. Um, the sort of people who trade wheat are going to be farmers.

Uh, the people who trade coffee are going to be coffee manufacturers, coffee growers, whatever people involved in the industry. And just as different people's personalities lead them into different occupations, So the the the activities of those traders is going to produce different patterns on the chart. And and everybody will find that they relate to certain ones.

So I remember when I was learning one of my friends had worked in the steel industry for years. And so he traded steel stocks. I think it was Blue Scope Steel he was trading. And and he made a pack of money. Um Just by that, because because he was experienced in that industry, uh, therefore he was already

You know, it it was uh it was one that worked for him, he he enjoyed it, and so he traded it well. And uh and I just found I you can you can often tell it fairly fairly quickly because you look at a chart and it's just hard to make any sense of it. And I've always been like that with with currency charts. I sort of look at them and think, uh, yeah, it looks messy. Um And it's funny because um a a very good friend of mine who who trades and teaches traders about trading currencies.

um was talking about we were talking about markets one day and he and I trade soybeans, for example, is one of the markets I trade. And he said, I could never get into soybeans'cause can't make any sense out of the chart. And I laughed and said, That's really funny because that's how I feel about currencies. And so, you know, both of us felt the same thing about the others' markets and yet we could both make money in the ones that that we traded.

And so I think the more you stick with a few markets, the more you start to nut out. what the characteristics of that market is. You know, you might get one market that tends to make spike tops where it runs straight up into a top and then falls straight out of them again. Whereas you'll get another one that will go up to a high price and then it will sit there for a week before it starts. heading down and so on. And you don't see those at first when you when you look at the chart.

uh you've got to you've sort of gotta look at the chart for a while before they become apparent to you. It's a bit like I don't know if you remember them, I don't know if they have them anymore, but I remember about twenty years ago they used to make these books. of uh three three D pictures and they were computer generated three D pictures. And you look at them and it just looked like a whole lot of dots on a page.

And if you stared at it long enough and in the right way, you sort of your eyes would go funny and then you'd be able to see a a three D picture. Yeah, no, I remember those ones, yeah. Yeah. And m price charts are a little bit like that. You've got to stare at them long enough before you actually start to see what's really there. And if you keep flitting from chart to chart to chart, you never stare long enough at the one chart.

Whereas you keep you know, trading a market's always a good way'cause when you trade it you take a hell of a lot more notice of what's going on. And if you stick with the same one for a period of time, you you start to get it and you you look at something and you think I've seen that before. I reckon this market's gonna do so and so and then sure enough, a few times it does, and then gradually you start to get a feeling for what's going on next. So

uh you know, you get a lot more confidence. Whereas if you split yourself over several markets, they'll do different things. So you start doing the thing that works in market A.

But you start doing that with market B and it would have made money for you in market A, but it loses money in market B. So you confuse yourself. So so yeah, I generally won't trade more than about two or three markets that I'll I'll be trading at one time and I I don't even like being in more than two trades concurrently because I just find it's too hard to keep my attention on. Okay. Yep. No, that makes sense. You just gotta sort of familiarize yourself with your set view and then um

you know, certain patterns and um things just start popping out at you that you know Yeah, and they might change from time to time. You know, for example, I traded cotton during uh during the big bull market and the big bear market in two thousand and ten and two thousand eleven.

But I haven't traded cotton since because, you know, it had its it had its big run and uh you know it'll be several years before it has another one. And so sometimes I'll have a market like that where I'll trade it for a period of time, but in that time I've really got to concentrate on it. um and and not spend too much time looking at other ones. Yeah, now that's awesome, Tim.

All right, well um before we let you run away, we'll um dive into the closing bill, which is just uh the name that we give um the sort of set round of questions. Uh we ask it to all the guests. So um What was the best piece of advice you ever received?

Well, uh this is a good one actually. It relates to some of the things we've been talking about. A mentor of mine many years ago, probably twenty or more years ago, said said this to me. He said, There in there's no room for amateurs in the game of life. And what he meant is that whatever you're doing, you've got to treat it As something you've got to have a professional attitude towards it. He said if you're amateur in anything, it doesn't matter whether it's your health and fitness.

Whether it's your marriage and family, friendships, trading, business, whatever, be a professional. Because the professionals are the ones who win and the amateurs never win. And it doesn't matter what it is. And I I think that's the best thing anybody's ever said to me. Yeah, that's awesome. I like that. I can definitely see the logic in that one. Um

Okay, so now another important point, um, routine. So what does a typical day in the life of Tim look like? Where I live currently in uh in Bangkok in Thailand, um

At the time I get up in the morning, which is generally around six o'clock'cause I'm an early riser, is just when the the markets have finished trading for the day in the US and just before the markets in Australia open. And since they're the two markets that I follow Um first thing I'll do is switch my computer on and then over breakfast I'll I'll check what all the markets have done overnight. Um and then I I will have the Australian market on during the day, but I'll I might check it.

couple of times during the day. If I'm in a trade just to make sure that nothing untoward is happening that's not expected. Um, and then I really don't do anything market related really from for much of the daytime. At the moment I'm learning to speak Thai, so I I go out and have some Thai lessons in the morning.

And uh then I'll come back, I'll have lunch, I'll relax for a while, play the piano, do some reading and so on, and then I'll uh I'll I'll do a bit of market study in the afternoon after the Aussie markets have shut. And uh the the US day session opens about uh eight thirty PM. my time. And uh so, you know, I'll have all my orders in before that. I'll usually have a look at what's happened in the US on the open um and then I go to bed. So, you know, my actual trading time per day

on average is probably about ten minutes. Hm. Okay. You know, some sometimes on a weekend I'll pull a market apart and spend some more time on it. But really if I know what's going on Um, I I don't have to keep reinventing the wheel and doing hours of work every day. I'm not an intraday trader.

Um, I can't see the point in giving up my full time job which I had before, to have another full time job sitting in front of a computer that seems like just e exchanging one set of chains for another one. So my aim in trading is just to free up my time so I can do other fun things that I like doing, like going away on holidays for a week as I did last week. Yep, excellent term that love it. Okay, so one trading resource you couldn't live without. What would that be?

Well, I s I suppose a a good piece of charting software really is what every trader needs needs nowadays because Uh, it's just it's such an advantage. over ha over the old days when people had to keep records by hand. I mean keeping records by hand is good for training. But but with with software you just you have access to the data, you can check what's going on, um, and you can apply tools to identify set ups easily. You know, obviously every trader needs education.

But exactly what education they need will will vary from person to person'cause everyone's got to find the style that's right for them. And um but I I I I think you're making it very hard for yourself for somebody who doesn't have a good piece of charting software. Yeah, absolutely. Okay. Now one book you believe every entry level trader must read. Um, I had to think about this one a little because my favorite book.

for beginner traders is is Gann's first book, which was called The Truth of the Stock Tape. But it's not necessarily one that I'd recommend to every entry level trader. Um if for anyone interested in learning Gann's style, I would recommend it to. I think to an entry level trader, probably something like a good biography of the famous trader. Now probably the most famous trader that people come across is Jesse Livermore.

Um and there's two good books on him. There's there's one sort of semi fictional one that was written that's called Reminiscences of a Stock Operator, but there's actually a very good biography called Jesse Livermore, World's Greatest Stock Trader. Um, which was written by a guy called Richard Smithon in about 2000. And it's just an excellent book because it just talks about.

a man who saw the highs and the lows during his lifetime, who who made millions and lost them, and who never tired of the challenge. uh of trading the markets from day to day and really was a consummate professional in many ways. You know, he had his weaknesses. But there's just so much to be learned about one, what's possible with trading. I mean, Livermore made a hundred million dollars during the great crash of nineteen twenty nine.

which is in about an eight week period. And a hundred million's a tidy sum of money today, but it was a hell of a lot more in nineteen twenty nine. And uh so it just shows you what's possible for somebody who can think big. Um and uh you know, plus he's a trolly good read reading about his life. And uh uh I think that's a great place for people to start, you know, get get an idea of the uh

uh the Hollywood fantasy of it all before you get into the hard study. Yeah, cool. No, I'd I'd definitely like to read that one myself actually. I'll have to check it out. Um, knowing everything you do now, what would you have done differently come day one again? Something that you know, would have cut your learning time maybe not in half, but drastically reduced it. What would what would something that you could give away be? uh two things I would uh

uh study the bigger picture of the market. So I'd I'd s I'd learn to look at weekly and monthly charts and look at what the major moves that were happening were, rather than just focusing on a daily chart, which is what I actually did. Um, and so, you know, I'd learn to determine what the major moves were and then to narrow down and look to trade them. Uh and the other thing I would do is study volume a lot more. Okay. Excellent.

We'll um let you go. It's been awesome having you on the show. Um the listeners of the pleasure, Aaron. Thank you very much. Brilliant. I'm sure the listeners will take away huge amounts of uh value from this and um definitely some good actionable points there too which they can pick up on and, you know, put into place right away. So um

Yeah. Alright Tim, now before you run away, um where can our listeners find out more about you? And more importantly, um you recently published a book. Um so where can we find out more about that? Well, I have a website. Um it's www.timwalker as in my name, t i m w a l-k.net dot AU And I talk about my book on there.

Um and uh it also mentions a newsletter that I write. The book actually has recently been published in the United States by the Institute of Sacred Science and uh it's for sale on their website. Oh, awesome. All right. Good one. So anyone who wants to find out more can just head there and the link will be in the show notes as well. So all right, Tim, thanks a lot for your time and we'll speak to you later. Fantastic. Thanks very much, Aaron.

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