Dr Adrian Manz is a seriously impressive guy: a successful professional trader for over 15 years (check out his ’war room’ below), he is also a prolific and candid sharer of market insights via his famous Around the Horn Intraday Trading Plan – and, most recently, two completely revised editions of his books Beat the Street and Trade Secrets.
We caught up with Dr Manz to talk to him more about his trading secrets – this week, we focus on Beat the Street. Come back next week for everything you need to know about Trade Secrets!
Hh INTELLIGENCE: Hi Adrian. So what’s Beat the Street‘s ’big idea’?
ADRIAN MANZ: Beat the Street is all about capitalizing on what markets do naturally.
Markets are cyclical, and I have managed to maintain a profitable trading business every month of every year since 1999 by focusing on that cyclicality.
I find my trading candidates by evaluating the current phase of the market cycle, and then finding stocks that are making moves that will be pushed by the broader market.
The patterns in Beat the Street pinpoint stocks that are moving due to accumulation, markup, distribution, and mark down.
Once trading candidates have been selected by the criteria in the book, my trading business really takes care of itself. I have made every effort in Beat the Street to show readers what it is that I really do to make a living in the market.
It is a simple approach that has a proven track record, and I think it provides a great deal of insight into how uncomplicated markets really are.
Hh INTELLIGENCE: What would you say is the greatest problem Beat the Street helps readers solve?
ADRIAN: Most new traders overthink trading. They have difficulty in getting profitable, so they assume that markets are tricky, or hard to understand.
The focus shifts away from how to interpret price and volume, and drifts toward the use of predictive indicators to forecast what will likely happen next.
This is a big problem, since these indicators are all backward-looking, and actually have little, if any, predictive validity.
I know many highly successful floor and upstairs traders. I do not know any who make their living by plotting oscillators or averages on stock charts.
Universally, the successful traders I know focus on price, time, and volume. The patterns in Beat the Street are all derived from price behavior. The book focuses, or refocuses, trader attention on what actually works, and why it works.
That’s the first step in getting profitable and actually being able to trade for a living.
Hh INTELLIGENCE: What is the biggest mistake that your book helps readers avoid ?
ADRIAN: Overtrading.
The difference between Beat the Street and most trading books is like the difference between hunters and trappers.
Beat the Street teaches traders how to get in front of opportunities by letting them come to you. I am not looking chase stocks through a forest of uncertainty. Too many things can go wrong. Trying to trade by finding opportunities “on the fly” is not a game most people will be able to succeed at.
Most traders who fail use a “hunting” or “stalking” metaphor to describe what they are trying to do in the market. I teach traders to avoid this mistake by carefully planning every trade in harmony with what is happening in the market, sector, and stock.
If a trade triggers an entry, that’s great. If there are no triggers on any given day, that’s great too.
Beat the Street is about working like a trapper, and letting the opportunity for profit come to you. This takes overtrading off the table, and ultimately keeps a trader in business.
Hh INTELLIGENCE: What got you excited about the topics of Beat the Street?
ADRIAN: I started trading in graduate school. My wife Julie and I performed every statistical and analytical manipulation known to behavioral science and mathematics on stock price behavior.
What we found was that most of what the mathematical models were able to unveil anything beyond what the simple patterns in Beat the Street show us.
Being able to generate big profits by scanning through charts and planning trades for an hour a night represents a huge savings in bot time and money when compared to constantly trying to build or purchase a better mathematical system.
If anything is exciting about my trading style, it is its replicability. People can learn to do what I do. They can replicate my publicly published results every day. They can learn to focus on what is important. And they do not need an advanced degree in mathematics or statistics to do it.
Hh INTELLIGENCE: Why is now a good time for the book?
ADRIAN: The nature of the marketplace has changed significantly over the past 15 years. The markets themselves, however, are essentially the same creatures they were 200 years ago. Beat the Street focuses the reader on how to interpret today’s price behavior, and extrapolate what it will likely lead to tomorrow.
The book is heavy on what works and has always worked, and light on topics such as order entry, order routing, and the latest oscillators and indicators. This makes it an evergreen manuscript, and one whose shelf life is endless.
The first publication in the United States was in 2003. The book is in its 3rd edition and tenth printing here. With so many copies sold, it is almost impossible to find a used version anywhere. I think that says a lot for it.
Hh INTELLIGENCE: What would you recommend as 3 other books, sites or authors in this area (other than your own!) and why?
ADRIAN: The Disciplined Trader is a great book. It focuses the reader on the fact that the real battle in the markets occurs between your ears. Getting and maintains self discipline is of huge importance, and Mark Douglas does a great job of driving the point home.
The Layman’s Guide To Trading Stocks is another good one. My friend Dave Landry wrote it, and it also focuses on the tendency of traders to try and overcomplicate things. Dave’s approach to swing trading is simple and concise. The book has legions of followers, primarily because it also shifts the focus away from the technical, in favor of the logical.
Finally, Reminiscences Of A Stock Operator. Talk to anyone who is successful in this business, and it is a favorite. Published in 1923, it is as good today as ever. My favorite quote is:
“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. ”
That pretty much sums up the point I have been trying to make, and does it far more concisely.
Hh INTELLIGENCE: What do you think is the ‘next big thing’ to happen in your sector?
ADRIAN: There is a lot of consolidation right now. It seems that things are heading in a direction that will allow better global market access, and I think that as more traders around the world get involved in the business, ease of access to foreign markets may present an exponential increase in the amount of opportunity we can get in front of.
Hh INTELLIGENCE: What are you working on now?
ADRIAN: I am focusing on automating much of my trading. I have managed to take much of the button pushing off my plate, and have assigned the chore to my trading software.
My ultimate goal with this would be to plan the trades today, and let the software platform execute and manage everything, according to the rules in Beat the Street, tomorrow.
Every minute I can save by automating what I do intraday is another minute I can spend with my wife and son. That luxury and freedom is exactly what makes this a business worth being in.
Hh INTELLIGENCE: Lastly … What are your top 5 non-fiction books?
ADRIAN:
Influence by Robert B. Cialdini
Thirteen Days: A Memoir of the Cuban Missile Crisis by Robert F. Kennedy
The General Theory Of Employment, Interest, And Money by J. M. Keynes
Market Wizards by Jack Schwager
When Supertraders Meet Kryptonite by Art Collins
Hh INTELLIGENCE: And what are your top 5 novels?
ADRIAN:
The Great Gatsby by F. Scott Fitzgerald
The Parsifal Mosaic by Robert Ludlum
Leave It To Psmith by P. G. Wodehouse
The Code Of The Woosters by P. G. Wodehouse
The Key To Rebecca by Ken Follettt
Many thanks to Adrian Manz for taking the time to chat with Harriman Intelligence. Beat the Street is available in paperback and eBook now!
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