Interview with Kurt Sakaeda
Winner of Robbins Trading Company’s World Cup Championship of Futures Trading® By Larry Jacobs Larry: I understand that you were up nearly 1000% in the World Cup Trading Championship, which is very impressive. I first wanted to get an idea of your background and what have you done in the last twenty years. Kurt: I have a Bachelor of Science degree in mathematics and I spent the last twenty years as a computer programmer in the financial district, mostly in the back office. I was the guy who was chasing down lost emails or even missing nickels in accounts and that sort of things. Larry: How did you start trading? Kurt: I started trading in June of 1979. There was a jet crash outside of O’Hare airport. All the DC10s were grounded by the FAA. The McDonald Douglas stock was plunging and the stock was down 25%. So I bought the stock in the twenties. I made 20% on my first trade. That got me started in trading. Larry: Where did you go from that point? Kurt: From there I had to learn a lot of lessons from the market. So I did not have another winning trade for almost two years. Larry: What did you learn in your years of trading and what are you now using today? Kurt: I use seasonal patterns in commodities. For example, heating oil is more valuable in the winter than in summer. In summer, it is just an expense. You have to maintain storage. In winter, everyone wants it because their houses are cold. In another example, on the supply side, all the soybeans are harvested in late October and November time frame as opposed to June or July where you can’t hardly buy them at any price. Larry: With your extensive programming ability have you applied this knowledge to your trading? Kurt: Yes, with my current model it takes my computer about 9 hours to run. The computer I use is one I got about 5 years ago. It is only a 500MHz. Larry: So you don’t need to have high powered equipment to make money in the market? Kurt: You just need to know how to use what you have. Larry: Do you use computer oscillators such as Stochastics, Relative Strength and the like in your trading? Kurt: I don’t use those, because they just mostly confuse me. I have joked that one time I went down to the Chicago Mercantile Exchange and was taking a trading class and I got an idea.
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A war had just broken out in the Middle East and I said I think the dollar is really low here, I should buy the dollar and I should be shorting gold and silver and all the foreign currencies. All my friends in the class using all the many computer oscillators and indicators said don’t do that, the risk is tremendous. You should just cross your arms and take no positions. That good advice I figured cost me about $40,000. You have to be careful about not loading yourself with too many factors. Larry: What about money management. Do you use that? Kurt: Yes I do use it and it is very crucial. All systems have guaranteed losses. You do not want to expose yourself to too much risk with one bad trade. Eventually you are going to make a mistake or the system just won’t perform and you don’t want to blow everything with that loss. That is something that I am spending a lot of time thinking about. Larry: What about stocks. Do you trade them also? Kurt: I have a stock picking system that is triggered by large moves. It is based on price earnings ratios. But it makes only a fraction of the money produced by the futures trading system. Larry: Do you believe in following your positions with close moving stops? Kurt: If you are using a day-trading system a close stop is a good idea. If you are a swing trader, you need to give it a little more space, $500 or a $1,000 because of timeframes and profit objectives. For seasonal trading you need to have stops in the order of $5,000 $6,000 per contract, which is unbelievable to most people. Larry: Do you use fundamentals? Kurt: Again, that is another issue that will just confuse me. I concentrate on pure seasonal trading. Larry: Do you go back a lot of years to pick up the seasonal patterns? Kurt: As many years as I can. Some things for example, in grains I can get data back as far as 1959. Other things like the Euro are relatively new and are hard to get the data on. You can’t get histories that go back very far on many new future contracts. Larry: Do you then concentrate on those things that you have long historical data bases on? Kurt: I throw a little bit of money in some of the recent things. You have to be extremely careful there, because of
Winter/Early Spring 2005 • Traders World Magazine
the small sampling of historical data. Larry: In what futures contract did you make most of your money this year? Kurt: It came from energy this year. The model I use overweighs my positions for the energies. When energy does well my model does well. I am trying to rework the model so that it is less sensitive to the price of energy. Larry: It is estimated that 9 out of 10 people don’t make money in the futures market. Why do you think this is? Kurt: What they don’t understand is that the best knowledge for playing the market is from a poker game. A lot of people would be scared if they took $10,000 to LasVegas and sit down against one of the major players in the poker championship. For some reason they have no problem running $10,000 over to their brokerage firm and trading the silver market. Warren Buffet likes to trade silver. That’s a rumor. I don’t know if it is really true. If it is not Warren Buffet, then it is George Soros or other master traders. When they are trading against these masters traders they might be fading their trades. The average person without trading knowledge and experience can hardly compete in this market. These inexperienced traders also tend mix fundaments with oscillators and have not really done the numbers to test what they are actually using and if it even works in the market. I fully back test every thing that I use trading the markets. That does not mean that it fully works in a forward test, because there are other issues that will pop up. Larry: Do you know any day-traders who make money? Kurt: Yes, I do know some that do. John Holksinger at Robbins does. He is a constant day-trader. There are daytrading systems that do work. Larry: Do you have any recommendations on how our subscribers might improve their trading? Kurt: Pick a method and stick to it as close as you can. Also be open minded when choosing a method. They need to have something that works for them personally. For example, I am not a day-trader. It makes me too nervous. I would have to be glued to my screen. I would not like that. I put in my trades and I go play golf in the afternoons, or I go out the airfields and practice flying light aircraft. If a person is nervous and a chain smoker then day-trading might be better for them. If a person is more relaxed then swing trading might be more recommended. They can take action with a trade and then come back in a couple days to see how it has done. For more information and requirements necessary for entering the World Cup Trading Championships®, winner prizes, standings and more go to www.robbinstrading.com.