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For many people, especially those who don't have much experience in the field of investment, investing means above all following instructions.
Even if the source of information used to invest is extremely reliable, if you don't understand the mechanisms behind that information, you still risk wasting your capital.
In this interview with Radio24 journalist Debora Rosciani (Sole24Ore group), Andrea explains what it means to invest consciously and helps you understand why it's so crucial to know exactly what you're doing and analyze the information you receive before using it to invest your money.
Hello everybody! Today we are going to be talking about an extremely important topic: how to invest, how people invest, what's their idea of investing, what's their approach, their strategies, and their methods of investing.
We'll do this with the help of the protagonist of a success story that represents a model, a goal, an objective for many people. However, we really need to say that often, the ambition to replicate other people's successes is not enough, because today we're talking about success in a very special field. A field that arouses a lot of curiosity but to which people often approach with illusions, and so they often end up in disappointment.
If you're watching this webinar, you already know who I'm talking about. Today I have the pleasure of speaking with Andrea Unger, a professional trader who's the only one in the world to have won the World Cup Trading Championships in the Futures category 4 times.
Let me introduce you to him. So Andrea, here we are! Welcome!
Thank you, Debora. Hello everyone! Good morning!
So, why are we talking with Andrea today? First things first, Andrea's not here to give us the recipe or the secret to achieve the same results as him. Today Andrea will explain to us, in a simple but very clear and strong way, that investing is about method and patience. It's a matter of being professional.
Contrary to what many people believe, there are no tools that can make you rich. They believe that taking a one-month course in trading - so to trade the markets - is enough to make ends meet and solve their family's budget issues. But trading is an extremely complex thing. It certainly offers many possibilities and many opportunities, but it's also necessary that you're prepared and have the right mindset. It's essential to have strong psychological and emotional defense mechanisms, as well as a method and a lot patience.
So, Andrea, at this point, the most important question that comes to mind is the following one: how to invest in a conscious way? I suppose that it happens to you, precisely as it happens to me when I am on the radio, that once you've explained all these concepts, and you've spoken about the method of investing, the criteria, and the reasoning behind it, people keep asking the same question, which is, "So now, what do I have to do?" Maybe in your case, the question might be, "Come on, give me the names of the three stocks to invest in!"
When we receive these kinds of questions on the radio, we're always quite perplexed. What strikes us is the naiveness of those who don't grasp the importance of making choices that suit one's own profile. Does this specific rule apply to your field? And what's your answer to those who ask you to give them the names of three stocks?
It happens to me quite often, and sometimes even with people who are very close to me, such as my family members. Even if they know how I work and what I do, and they see me at the computer and see my cloud with all the numbers, they still ask that question...
Look, I've got some names here on my computer. So, for example, I could tell you: CRWD, MRNA, and TEAM. These three acronyms are the ones that I have on my computer's monitor at this specific moment. I don't even know what stocks these acronyms stand for. I don't know what they do, and I don't know what companies they are. I just know that these acronyms were given to me by my software, which uses a specific system, and I checked it right before starting this interview.
By the way, these three stocks could be eligible for buying today and maybe for a period of about a week. And I say "eligible"...
Eligible based on what criterion?
In this case, it's a conservative momentum criterion (now I start using the big words!). And now it's just come to my mind that... These are all US stock, as you may have guessed from their acronyms. Because according to our studies and analyses, we've noticed that US stocks, compared to the stocks of the rest of the world, tend to be more likely to continue to run when they start trending.
So, we can use some proprietary algorithms to look for the stocks that are moving the most because generally, the stocks that move the most will continue to move for a certain time. And be careful, we don't look for the best stocks ever! Because even the best stocks can take breaks. So another thing that our algorithm does is identify which portion of the ranking to analyze. Now, since I don't want to overcomplicate things for those listening to us, we can say that we simply look for stocks in better shape. A bit like a football coach who chooses the fittest players to put together the team because he assumes that they are going to be fit and play well also in the next league or cup match. He knows that the ones who ran too much in the previous match may be too tired, so he leaves them in the bleachers for half the game because he thinks that they could have some difficulties at the beginning of the match.
The same reasoning applies here. But unlike in football, where the same principle can be applied to the whole world, in this case, if we apply this reasoning to the rest of the world, we don't get the expected results. We've tested this criterion on all markets. We've taken the historical data of all possible stocks and tested them, and got very good results only on US stocks, whereas on stocks from other countries such as Europe, for example, which is also an industrialized and powerful country, or Asia in some ways, the trend is quite different.
You can still make money but in a disordered and scarcely effective way. Well, most likely, after seeing the curve of the profits of those stocks, nobody would ever throw their money into that kind of investment. Instead, it works pretty well on US stocks. So those 3 stocks that I've just mentioned are the ones I'll add to my portfolio, but only for a limited time, so if someone's going to watch this interview next month and say: "Ah! I take these 3 stocks because Unger said..." They might make a 300% gain, but they could also have already given everything they could give.
I rotate my portfolio of stocks quite often, weekly or sometimes monthly. Then if the algorithm keeps telling me, "Take this stock again, take that stock again," they can remain in my portfolio, but the initial idea is to keep them only for that period of time that I was telling you. So there's no replicable rule here, also because my way of identifying the characteristics of stocks (with the algorithm that we have built) may be different from that of someone else. Like a football coach who may have different ideas from another coach about what a fit player is. Or maybe, he could choose a player also based on the team they're going to play against because he believes that the characteristics of that player would be more suitable in that situation. Maybe he plays more on the wings, or he's better at crossing. Maybe the players in the other team are all small, so crosses can give you an advantage, and so on. These are all things that perhaps can improve the situation.
So, when I told you the acronyms I had to look for the list on my computer because I don't know those stocks. And the reason for that is that I don't choose them based on some reasoning I make or fundamental analysis of what a specific company is currently doing. Everything is systematic. The computer gives me the acronyms, I send them to my broker, and then the broker tells me the stocks to which they correspond. But actually, I don't care about that. However, of course, I've noticed that in 2020, several pharmaceutical companies ruled the roost.
Yes, of course, and maybe tourism didn't go very well in 2020. And the same goes for airlines, as it's pretty easy to guess...
Yes, and telecommunication companies also went very well. Zoom, for example, has been rising for a long time, and we all knew that online communication would have taken over compared to face-to-face communication.
This is a fundamental analysis we can make only from experience. However, my computer gave me the acronyms of those stocks, so I took them, put them in the machine, and traded them. I didn't have to worry about anything else.
But this shouldn't be misleading! Because someone could come and say, "Hey, give me some names every week, and I'll be happy." No! Well, of course, he'll be happy with that, but in reality, experience also plays a major role in this process.
I've been doing this for over twenty years. And even if I don't look at the acronyms, when I notice something strange in the information given to me by my computer, I keep my eyes peeled. And sometimes I can miss something, which means that the information I give could even be dangerous or harmful because I missed a certain detail that might have made me more careful on other occasions.
The computer can go wrong if we feed it with inaccurate information. It's a machine and works only on what we give to it. So if there was some flaw in my algorithms, they could give some absurd piece of information. On the other hand, I'm not experienced enough, I use that information, and maybe I pay the piper.
Because experience is what makes me say: "What? No, that's impossible! Why are you telling me this?" And maybe I go and check it out and find out that something went wrong. So this is a warning to all the people who, for example, want to blindly buy one of those "Expert Advisors" that are sometimes sold on the internet. They buy the robot system, activate it, and it starts to work... The problem is that if you don't know how that robot works, and if you don't know why it does certain things, and if you don't know exactly how it does them, it can be extremely dangerous. Because you're putting your money in it, you feed it to the little robot and don't even know how it's going to use it. If, instead, it was you who created it, when you see that there's something strange, you can go and check whether it's doing what it's supposed to do or not. But if you don't know how it's coded, and you don't know anything about it, how can you check that? It's absurd to go and buy a "black box" system (as they call it), hoping that it will make the money it promised because generally, it doesn't.
We've also given another important piece of advice. I'm very interested in your observations about the difference in efficiency between the American market and other markets in the world. Perhaps this could be another interesting topic we could talk about in the future.
Now I'd like to ask you another question related to the information that your systems give about market trends. Let's make a current example but avoid those blessed cryptocurrencies everyone's talking about - did your systems understand what was going on in the commodities market? I refer to this crazy upward trend that derives from the current macroeconomic context of recovery and from an economy that is overheating, with the shortage of many commodities due to the fact that sometimes suppliers can't cope with the restart of global demand. Did your systems guess that this was about to happen? And was it an investment opportunity for you?
They hadn't guessed a thing. They had no idea because I don't feed them with this kind of information, such as the things that you've just mentioned, which are dictated by different experiences that are more fundamental than technical. My systems have done very well on some commodities - the energy market in particular - simply because they're used to following the current trends of the markets and open and close positions when it's more appropriate to do so. When Gasoline prices went up, they opened long positions. They bought Gasoline and made money because Gasoline continued to go up. And in recent months, they did the same with Soy, for example, which is another market that has done very well recently because it moved well and behaved according to its statistical behavior, so it behaves as usual.
There's an important thing I'd like to say again, and that's the fact that systems analyze what happens, and based on what happens, they tell me what to do. Well, they do it automatically because the process is automated. And this means that if there's a strong trend going on in a particular market, and historically, that market tends to continue to follow trends when they start, the system identifies that trend and tells me to open my position, and I do it. I'll never be able to buy on the lows or sell on the highs, though. That's something only lucky traders or liars can do, and those who got some information under the table... but those are borderline practices, of course. So, apart from that, I find an edge in that central portion of the trend, and that portion is enough for me because I'm happy with doing it many times, even when trends are not so "super" as the ones you've just mentioned. They are normal movements, but I try to be there.
Before we say goodbye, here's the last service announcement. For all the people who'd like to delve deeper into the concepts we have explored during our conversation, you can order Andrea Unger's book, "The Unger Method," which is available on the Unger Academy website. You'll receive the book at your doorstep. It's free, you only cover the shipping costs: so happy reading, everybody!
Need More Help? Book Your FREE Strategy Session With Our Team Today!
We’ll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.BOOK YOUR FREE STRATEGY SESSION NOW >>
Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.
I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems.
In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.
Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.
Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.