Barry Burns is a businessman who has owned several small companies. He now runs Top Dog Trading, offering educational seminars and videos to teaching traders how to become consistent in the shortest time possible. You can find the Top Dog Trading YouTube channel here.
Expert Q&A: Barry Burns
Could you tell us how you began trading? What difficulties did you face at the beginning and how did you overcome them?
My father was a stock trader and he started teaching me when I was 8 years old. That was over 50 years ago so we didn't have computers. He taught me to read chart patterns based on price and volume, and then to look at fundamental analysis and news. It was a very different world back then! I developed a feel for charts by drawing them by hand with a pencil on graph paper. With the advent of computers, high-speed internet, direct access, low commissions, etc. I had to constantly evolve my trading but it's been a lot of fun.
What made you decide to start your YouTube channel?
I've always been a teacher and I've always enjoyed creating films (8mm when I was young) and then videos later. In graduate school, I interned at a TV studio. Creating a YouTube channel was a natural blend of my passions of trading, teaching and video production.
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In your opinion, what are the essential elements of a good trading plan?
The first element is a statistically solid mathematical model for your trading system. The second is impeccable money management and risk management. The third is managing your mind. All three are essential, but their importance is in that order.
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Psychology plays an important role in trading. What are the most common things, in your experience, that block a trader’s progress?
If you master the markets, you can be a great analyst. But you must master your mind to be a great trader. The two most common psychological hurdles I've witnessed in trading are:
- Unrealistic expectations. These come from a person's own complete disassociation from what actually makes markets move and are fueled by marketing promotions regarding trading.
- Lack of patience. The markets are to a great degree a "random walk." High probability trades occur when a market starts to move in an orderly manner, which is much rarer than most people think. "Professional traders out-patient amateurs!"
Strategy flipping is pretty common in trading. What’s the one thing traders should ascertain before they decide to change to a new strategy?
It's good to have several strategies to trade. The key is to learn how to read the type of current market condition and then trade the strategy appropriate for that market condition.
Should a new trader use a % amount to configure their risk or a fixed dollar amount per trade?
Managing the risk of your trades must be done on a percentage basis to account for the fluctuation of the size of your account over time, but that must be combined with the structure of the chart. If the structure of the chart setup your trading is broken, then you need to exit. The distance from your entry to your protective stop based on the chart structure must never be more than the percentage risk defined by your trading plan. If it is more, then I don't take the trade, even if the technical setup is good. Risk management is more important than technical analysis.
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In your opinion, what’s the main reason such a huge percentage of traders lose money?
First, some traders don't understand the very essence of the financial markets and what makes them move, so they aren't able to create a trading system that works, or they are drawn to trading systems that aren't based on market auction theory.
Second, many traders are too eager to make money fast. They get emotional, greed gets the better part of them, so they break basic trading rules and they don't employ conservative risk management.
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There are new online prop firms cropping up all the time. When do you believe someone should make the move to trade a larger capital base?
That's up to each individual. Prop firms can provide an excellent opportunity for those who want to take advantage of being able to trade larger sizes and may allow them to make more money. They can also provide an opportunity to tap into a community and get guidance and education.
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When you’re not trading, what do you do to keep yourself balanced? Do you meditate, or take any specific supplements to keep a clear mind?
When not trading I like to get out and do physical activity. I practice Krav Maga, lift weights and run with my dog!
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You often hear traders saying you need to put the time in to become a consistently profitable trader - but what does this mean to you exactly and where should a trader be putting in the most time?
All beginners need to learn the basics of trading and that can be learned through free online resources. After that, it's important to start engaging with the live market ASAP (on a simulator or demo account) to start getting a feel for trading in real time on the hard edge of the screen.
You have to be involved with the market for a while to experience its ebbs and flows, going through trending and non-trending periods, high and low volatility iterations, crazy parabolic moves and times when it barely moves for extended periods. While "getting your reps in" with the live market, it's critical to participate in continuing education. Markets continue to evolve so learning never ends.