discovered a curious thing - often traders come from families that have shown a steady interest in trading. To what extent has this affected you? Did you talk to your dad about stocks when you were younger, or did you stew in your own juices?

A: I mostly read The Wall Street Journal, but when he talked to his friends, I always kept my ears on top of my head.

Q: What happened after you lost money in your account in college?

A: Nothing worked for me for a while—I made a deposit and lost the money again, but later, in 1988 or 1989, I started a company, got into copper options, and turned $2,000 into $40,000 in about six months.

Q: How did you find time to trade while running a startup?

A: Oh, I spent a lot of time on it [laughs]. Moreover, I also invested the money I earned in my company.

Q: Did you replenish the capital of the company by playing on the stock exchange?

O: Exactly.

Q: You have a clear entrepreneurial streak. You managed to turn $2,000 into $40,000. Did you manage to catch a major uptrend? What happened in the copper market?

A: She jumped great. Поднялась с 57 до 85. Can сказать, на моей улице наконец-то наступил праздник. I was thrilled about this - I was buying options for 70 cents, which expired in December, and at the time of their purchase, copper was worth 50 cents. I think I bought them in May - and she has risen great. (Dana bought the right to buy copper at 70 cents a tonne when it was trading at just 50 cents. This is a speculative strategy for a large price hike in a short period of time. - Approx. Auth.)

Q: You're talking about a one-time deal - did you buy the options in May and end up making a huge profit?

Oh yeah. I sold some of the options as I went up, but the profit was very, very good, 2000 percent or so.

Q: People often close positions too quickly, what made you hold the trade?

A: Technical analysis. I followed the chart and since it looked quite viable, I didn't close the trade until it started to lose momentum.

Q: Did you follow the daily chart?

Oh yeah. Now I have better options. But then it was probably the only option. [laughs].

IN: Can ли сказать, что эта сделка была результатом фундаментального изучения ситуации, или вам просто повезло поймать удачный рывок и удержаться на этой волне? Why did you go long copper?

A: I thought it was undervalued and watching the chart saw it drop sharply, it looked like it lost momentum, slowed down, option premiums became very small, I thought it through and I was lucky. This has happened to me a couple of times. When the market turned around in 1982, I bought a Boeing. Я купил 25 опционов колл, когда акции стоили 16, и они поднялись до 28. Я рискнул всем, что имел [laughs]. I had very little money back then, but this deal made me a huge profit. Earnings per share were four times the selling price, and by the end of November it was up to 28. Now that I know so much more about options, I don't think I would have dared to play that.

Q: You made a good bet. So the options were trading at one-sixteenth? It must have been very cheap.

A: It seems like three-eighths, or even less, maybe one-eighth, somewhere in this range, definitely less than one-half. As a result, I earned about 3,000 percent on this deal. But I have also been wrong. I had a great piercing in 1998. Я прочел несколько статей, где весьма убедительно доказывалось, что акции S&P сильно переоценены, начал закупать опционы пут на S&P 500 и потерял уйму денег [laughs]. I stopped fighting the stock tickers. Once again I managed to hit the mark at the end of 1999. There was a real frenzy in the market, and I entered it on this wave. At that time, I was just working on a start-up Internet company, and the prices of offers for sale were simply wild. I expected the market to crash in March-April 2000. This feeling has not left me since January, and I was not alone. It seems that [Bob] Metcalfe of 3Com and [Gordon] Moore, the author of the famous "Moore's Law", published articles in Forbes magazine about why the dot-com bubble should burst. If I could go back in time, perhaps I could invent some options trading technique that would capitalize on this crash. But at the time, I wasn't in the mood to short stocks because you never know how far that will go. Plus, option premiums were insane back then. I think now I would open a back spread put or something like that, or maybe I would use credit spreads - these are all good options for playing in a falling market. (Backspread puts mean selling near-the-money puts and using a premium to buy two to three times as many far-out-of-the-money options. This strategy is effective when the market falls sharply, allows you to break even if the price of the underlying asset rises sharply and leads to losses if the price of the underlying asset decreases slightly.

Q: But at that stage you didn't do anything because the bonuses were already very high?

A: I practically did not try to short, which means I missed the chance. I could make a lot of money, and I did make some. But, looking back, I can say that I could have achieved much more, because I foresaw what happened next.

Q: Up until 2000, you were doing a lot of startups and playing the stock market just for fun.

O: Probably yes. I didn't spend all my time on it. Two years in a row—1998 and 1999—my profits were 50 percent, and not just from high-tech. I myself worked in the field of high technologies. In 1998 and 1999 prices were inflated. I bought worthwhile stocks and avoided those that were overvalued, and at that time it was not the best tactic.

Q: When did you say to yourself "I intend to become a trader and devote all my time to trading"?

A: I got serious in 2002 when I discovered some very interesting automated trading systems and discovered TradeStation. I made a lot of money from their stocks too. In fact, I started using such systems in September 2002, and that's when I devoted myself entirely to this activity.

Q: Did you develop your own systems, or did you buy ready-made ones and modify them?

A: I traded with my own systems, but I used the TradeStation software for this because it allowed me to backtest my own system on historical data.

Q: What attracts you to automatic systems? Are you technically minded?

A: Yes, I was in charge of software development. In addition, many argue that it is impossible to create a fully automated system that will be effective. But we all know that emotions are the worst enemy of trading. People start selling at the most inopportune moment. In this sense, I am no better than others, but if you checked this or that system on historical data, I am sure that you will be more successful.

Q: So you trade mostly with systems these days?

A: Yes, but we are not talking about full automation, and now I am working on it. I can automatically open positions. One of my systems is pretty dumb - it's designed to buy stocks that have collapsed, and you don't know what it can buy. Using a list of over 200 stocks, she buys the ones that drop the most. В скверные для рынка дни она может накупить уйму разных акций [laughs]. So I have to manage the positions myself. This system works, but sometimes it seems to you that you are losing money, and only summing up everything by the end of the day, you realize that you are in profit.

Q: Isn't this similar to an airplane crash landing?

A: Yes, and that's why I want to automate this process.

Q: I would like to know in more detail how the system for buying up collapsed shares works. Apparently, it explores the market based on a given algorithm and automatically provides you with an entry into the position. She just buys according to the condition you set. But do you manage exits manually?

A: That's right, and while you're watching one of the stocks, the other might drop another 2-3 percent before you have time to look at the screen again. Поэтому пока я от нее не в восторге [laughs]. Of course, this requires debugging. Another point is to automate exits from positions - they can also be tested on historical data. I've worked out the basic exit rules, but I haven't been able to put them into the computer yet. I think in the process of testing I will come up with something better than to close positions by watching each stock individually. Wealth-Lab, which I currently use, is great for testing.

Q: Does your system buy stocks that have fallen, does it sell stocks that are rising in value?

A: Testing has shown that she is not very good for shorting. After a surge up, they continue to grow, and a check on historical data suggests that it is two to three times more profitable to buy something that is collapsing. You are not buying something that has been falling for a week. I'm talking about falls during the day. The stock drops sharply, after which you can catch signs that the collapse is coming to an end. Of