James Mound is a veteran futures and options trader. He is president and owner of JMTG brokerage, which offers the services of a small custom tailored brokerage outfit with all the benefits of one of the largest providers of introducing brokerage firms in the business

This is the final installment of my interview with longtime futures and options trader James Mound.

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

James: Visual. If I can see it on a chart it works for me. I do not frequently implement lagging indicators such as stochastics, moving average, etc. On the flip side I focus on trend lines, Fib retracements, congestion patterns, head and shoulders, etc.

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

James: That a computer alone will make you money. The human element is critical in the process. Good trading takes years, great traders take lifetimes - if you are lucky. Another misconception is the proper capital allocation needed. This business takes a large capital commitment and financial patience.

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

James: Sometimes you need to just jump in the pool instead of getting the toes wet. But if you are going to jump in just make sure that your risk parameters are set and you stick to them. Find the balance between committing to an approach and knowing when to be nimble to change what you are doing for more profitable results.

Find a mentor, or two. Read my book, 7 Secrets Every Commodity Trader Needs to Know, and read 10 other books. But at one point you need to stop reading and start doing. This is a game of risk and if you can't handle the heat, get out the kitchen.

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

James: I scan all the options chains 3-4 times a day. I do this visually and do not use a computer program to generate trade ideas. I review monthly and weekly charts once a week on the weekends to keep a macro perspective and review daily and shorter term charts regularly throughout the day. I analyze volatility everyday. When I find a skewed market I design a trade to capture the skew and then I call the client that I think will hate the trade the most and let him/her try to convince me I am wrong. If I hang up the phone having proved my case and succeeded in a good debate then I act. If there are holes in my trade I reevaluate. Before I ever execute a trade I predetermine my entry and exit rules.

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?

James: I review technicals and fundamentals but ultimately the decision comes from a detailed analysis of the risk, reward and probability of my trade design.

Optionetics: Thanks, James, 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
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