Lessons from the Pros

Education Resource

Profile of an OTA Instructor – Don Dawson

Before you can become an instructor at Online Trading Academy, you have to be a trader. Don Dawson earned his wings in a distant era—the 1980s. A colleague was buying stocks through a broker and Don decided to give it a try. He quickly grew bored with the slow pace of stock price movement (“If a stock moved a dollar a month, that was a big deal,” he recalls) and decided to try the commodities markets. He was hooked.

dondawsonThose were the days of open outcry in which orders were filled in “the pit”; Don would call in an order and could hear the roar of the pit in a phone held to his broker’s other ear as he relayed the order. There was always a delay in getting filled and you might be informed of a fill after market close, where there was nothing you could do if you didn’t like the position. There were no real-time market updates. Don kept his television tuned to Financial News Network which showed prices with a 15-minute lag. He did have one edge, because before his broker went home at night, he would turn his green-screen monitors to face the external windows of his office. Don would stop by and note the closing prices in the markets he followed, often in the cold and rain.

The advent of electronic trading changed everything. Now orders are entered immediately and filled quickly as buyers are matched with sellers. As opposed to the stock market with its market makers and preference for large order size, today’s commodities traders benefit from a transparent supply and demand market in which the first order in is the first order filled.

But, although the trading opportunities improved, Don missed one thing: the human element. He recalls a losing Friday before a holiday weekend when he wanted to make a “revenge trade” and his broker told him not to do it. Don was impressed that the broker was able to give him good advice even though it cost him money. Luckily Don was able to develop strong risk management skills which, more than the success of his trades, are the factor to which he attributes his success as a professional trader.

In his classes, Don encourages networking and peer support. The goal is not so much direct advice as an opportunity to see how others view the markets, and perhaps vent if a trade doesn’t go your way. After students have completed one of his multi-day futures courses, he’ll encourage them to stay in touch and regroup the next week to develop a collaborative trading plan. It’s not perfect because they’re new traders, but it’s far better than anything they could do on their own.

We asked Don if he has any tips for new traders, and here they are:

  • If it looks too good to be true, it probably is.
  • A $30 software trading system that removes the emotional element is mostly helpful if a trader needs something to blame.
  • Remember that when a product or system is “proven” that means it was developed in a different market and may or may not apply today.
  • Nothing beats watching the market and learning from it through practice and experience.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.