Stocks & Commodities V. 29:5 (46-52): Interview: Short Swings In Futures With Markus Heitkoetter by J. Gopalakrishnan and B. Faber

Interview: Short Swings In Futures With Markus Heitkoetter by J. Gopalakrishnan and B. Faber

As founder and Ceo of Rockwell Trading, Markus Heitkoetter has shared his trading methods and ideas with more than 300,000 traders in over 196 countries. Heitkoetter started trading stocks 19 years ago, using point & figure charts from numbers published in the morning newspaper. In 1996, he began developing a number of trading systems, and in 2002, he decided to leave his job as a director at Ibm to become a professional trader. Throughout his career, Heitkoetter has traded virtually everything from stocks, options, futures, commodities, and spreads, all the way to forex and interest rates. In addition, he is the author of the bestselling book The Complete Guide To Day Trading and is a regular speaker at Trading Expo and Cme Group–sponsored events. His articles and videos are published on MoneyShow.com, in major publications, and on thousands of websites around the world. Heitkoetter lives with his family in Austin, TX.

Stocks & Commodities Editor Jayanthi Gopalakrishnan and Staff Writer Bruce Faber interviewed Markus Heitkoetter via telephone on March 7, 2011.

Markus, can you tell us about yourself and how you got started in trading?

I am originally from Germany, but I live in Texas right now. I did my first trade when I was in high school. I was 18, which is when I was legally allowed to trade in Germany. At that point I bought one share of VW, which is a share in the German Dax. I bought it for around 50 Deutschmarks. I was so excited. I could only afford one share. Talk about disposable income in money you can afford to lose!

After I bought that share I would, twice a day, go to a pay phone in my school and call my broker. I would ask him things like, “How are we doing? How much money did I make?” This went on until the third day when my broker said, “You know, Markus, how much money would you like to make on this trade?” I said to myself, “If I could make 10 Deutschmarks, that would be awesome.” So I told him, “Ten Deutschmarks. That is the profit I want to make.” He said, “Done. Stop by my office tomorrow morning. I will give you the 10 Deutschmarks, but stop calling me every single day.”

This was my first trade, and it turned out to be a profitable one, which of course encouraged me. But I noted that with the little money I had at that time I could not really be a trader. So I saved some more and then started trading options. I did some straddles and strangles, and I had the quotes from the morning newspapers, and some hand-drawn point & figure charts. This is how I identified stocks in the Dax 30 that were poised for a breakout. That is how I started building my account.

From then I started trading stocks. I tried everything that everyone knows these days. I tried fundamental analysis. I tried the Canslim method. I did all of this until finally in 1995, when computers became more powerful, I went into chart analysis. I was fascinated by it. I bought my first software, which was SuperCharts by Omega Research, now TradeStation. This is where I first started reading about indicators. I have a German book about 600 pages long, The Big Book Of Indicators, with 167 indicators. I think I plotted 163 of them on my screen. I just thought that the more indicators I used, the better. Little did I realize that half of the indicators were screaming “Buy!” and the other half were screaming “Sell!” I was sitting there with analysis paralysis, not knowing what to do.

So what did you do?

Like every trader, I went through the phase of automating trading systems, so I thought, “I am smarter than everybody else.” Having a programming background, I thought I could develop the perfect trading system. I read a lot of books about it. At that time I had not discovered the Internet yet, so all of my quotes came from dial-up. I wasted two years of my life trying to automate a trading system when it finally dawned on me: I needed to simplify my trading. I had to keep it easy so I could know, at any given time, when to enter and when to exit.