Seeking Consistency: An Interview with JUNO

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In this interview

• The appeal of consistency
• The difficulty of episodic pivots (EPs)
• The type of stocks JUNO favours, and why
• Why execution is more important than stock selection
• How traders can improve their execution
• Tips for reviewing your trades
• How JUNO plans his trades
• Patience while trading

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Thanks for your time! From my research, I feel like you’ve found a very relaxed way of trading. Could you tell me more about that?

I like to go for singles and doubles — I’m not looking for a trade to go to the moon, I want my system to go to the moon. However, I see few traders thinking that way. Most get greedy, looking for that home run.

I find that the longer I trade, the more appealing consistency becomes.

I’ve learnt that being in a positive feedback loop is the only thing that prevents me from engaging in destructive self-sabotage. My healthiest relationship with trading is when I can wire money out every month, and my equity curve is smooth.

Is that why you don’t really trade EPs?

That, but also because I find it really difficult and, quite frankly, random to spot which EPs will trend for weeks to months.

All too often, we remember the ones that do exactly that but forget the majority that don’t. That’s faulty memory, and something we must take into account as we determine the true expected value of a setup.

So, what types of names do you like to trade?

It depends on the environment. Take the latest earnings season, for example. Names like $CVNA just kept you guessing, in spite of their ability to make good moves, so were better to avoid on this occasion.

More generally, they tend to lack repeatability — and therefore the consistency I’m looking for. They’re also not very scalable.

Meanwhile, in the past earnings season, had you been playing some less-watched names, you could have made some very nice, headache-free moves in $WGS, $TMDX, $PRCT, and $ASPN, to name just a few examples.

Besides being less watched, what else do you like about these types of names?

Reduced visibility is a huge part of their appeal — they’re not overcrowded, and don’t belong to old, played-out themes [health information services, medical devices, medical devices and building materials].

That allowed these stocks to respond well post-earnings. Combined with their technical consolidations before reporting earnings, and you’ve created much better odds for yourself.

If a technical setup is primed prior to earnings, you get different trading styles coming together: breakout and EP buyers. But you also see signs of neglect and long bases that, if the stock breaks out, tend to lead to a more explosive move. The less anticipated the move, the better.

How important is stock selection to you?

Very. But I don’t see it as a trader’s top priority when you’re looking for consistency.

To an extent, the right stocks to trade is subjective to each trader’s system. For example, if your system concentrates on large caps, but we’re going through a period where small caps are the ‘broken slot machines’, I can’t fault you for being in a drawdown — you’re picking the ‘right’ stocks for your system, which just happen to not work right now.

But when you go through these periods — or, for that matter, a strong period — it’s your execution that will determine, over a long period of time, whether your system is going to the moon.

I’ve seen many different traders, who all trade different things, have very positive long-term performance. They all had one thing in common: consistently executing their system well. Notably, they weren’t all picking the same stocks.

Even if they were, picking the right stocks isn’t enough. You also have to enter and exit them at the right times, and manage risk well. You have to size up at the right times — you can pick the biggest winners in the market, but if it’s a tiny position, it’s not going to move your account.

We can land lucky trades here and there, but the long-term metrics don’t lie. And these are determined by proper, consistent execution.

In your opinion, how can traders best improve their execution?

By reviewing their trades — specifically, their executions. People especially need to do this if they’re doing a decent job at finding the hot stocks, but don’t have the long-term results reflecting that skill.

This, by the way, is speaking from experience. In years 1–3, I put in a lot of work into better understanding trading and the markets, but I didn’t have the results to show for it. There was clearly a disconnect between what I was telling myself and the truth.

Execution is a hurdle for all of us. There isn’t a single month where I don’t review at least half a dozen trades and go ‘what was I thinking?!’

Equally, you might find that even though your stock picks performed well, you didn’t make money on them when others did — that’s an execution problem. You then have two options:

1. Improve your execution; or
2. Avoid them because they just don’t fit your trading style and/or personality.

It’s okay to admit you just aren’t good enough in some areas and avoid them completely. Mastery isn’t all about addressing your weaknesses — a lot of it is about playing to your strengths.

Could you be more specific on how to review your trades?

You need to determine your most viable setup or setups. Even if you didn’t make a profit, you’ve got a good chance of having at least one viable setup — but it’s hidden away among the hundreds of impulsive ‘hunch’ trades.

You then want to look at:

1. Specific criteria for that viable setup.
2. How you can find setups that meet those criteria.
3. How to manage trades of that setup — so, typical trade duration, and entry and exit criteria.
4. Risk management — how will you determine your risk per trade and position size?
5. Managing your emotions — once you’ve established your system, you need to figure out how you’ll remain on the straight and narrow.
6. Record-keeping — market dynamics change; you want to give yourself a means of learning from them.

For a discretionary trader, I believe these are the core elements — the ‘meat and potatoes’ that determine your bottom line. You don’t want to keep adding stuff — simple is better if you want consistency.

What sort of work do you do outside market hours?

Most of my work is reviewing trades and reverse engineering which setups and patterns are working in the current market.

So, after the market closes, I just review that day’s executions, identify mistakes and isolate any tickers for the first half hour of trading the next day.

I usually don’t trade the first 30–60 minutes, and if I do, it’s because I have a setup and plan prepared from the previous night. Not because something popped up in the pre-market that has me feeling impulsive and reactive.

That style of trading is becoming less and less appealing to me over the years. I believe the real money is made on those moves I can see coming several days or even weeks in advance.

Those multi-day swings take time to build. They’re rarely the ones that catch your short-term attention span on a random day because it’s gapping up pre-market.

What work do you do while the market is open?

During market hours, I just sit and watch the market. When I’m trading at my best, I’m patient. That’s my #1 job during market hours — sitting, waiting and stalking. Not trading.

When you boil down the factors that drive worthwhile trading, it comes down to just timing and exposure. We’re not paid by the hour or through hard work alone. We’re only paid based on opportunities and execution.

The irony is that we get into trading to escape the 9–5 grind, but are then clicking buttons all day as though we’re some sort of wage earner.

That makes no sense to me. Maybe that’s just me maturing.

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