An interview on complete futures trading systems. Stuart McPhee quizzes legendary trader Ray Barros.

Ray Barros: Mark Douglas, the guy that taught me many things about trading said that irrespective of our personality, some traders may be subjective where they have set of rules but also have got intuition to play with.

There are the fully mechanical who will follow our rules no matter what, and a discretionary who has no rules. That’s fine whatever suits, but the point Mark made was everybody should start with a mechanical system just to learn discipline. In that environment I think indicators play a part.

Stuart McPhee: Okay, that’s a good segue with discipline because that was my next question. I mean I always say its the most important attributes successful traders have personality-wise – the ability to do what they have to do whether I want to or not. I have had a couple of clients come to me in the past and said, ‘Stuart I know everything I have to do.

I have a plan that follows the rules. I just can’t follow the plan. I know disciplines are important but I just can’t do it. I just can’t follow the plan.’ If you had people say that to you do you have any advice to people who have discipline as an issue?

Ray Barros: It depends. You know I run mentor classes. Some students I can assist them and some I can’t because some people have a lack of discipline from sheer habit. We can create new habits. You identify the belief system behind their lack of what payoff there is for not following whatever it is they are not following through. You can substitute positive belief for that negative belief and you slowly create new habits. That’s doable. However, there are some people who really have a problem. The best way of doing that is to tell a story. I had a student and no matter what I did we had this major problem. Mike could not trade leveraged instruments; stock markets he was fantastic, he followed the rules.

This is a true story so this is his real name. Mike if you are out there, forgive me. Mike could trade stocks perfectly. He wanted to trade. Honestly I was at wit’s end. Nothing I did worked because I couldn’t understand why he would follow the discipline trading stocks but shifting into leverage instruments, and particularly futures trading systems, and he became the biggest cowboy in the world.

There was a guy called Dave Hunt who used to run seminar classes for me in Sydney and he did an exercise and Mike got brought into this exercise.

Basically it was a regression exercise where we go back to childhood. In the process of that the story came out. Mike’s grandfather lost the entire family fortune trading gold futures so throughout his life he was brought up with the idea trading futures is a sin. It’s gambling; honest people don’t do it.

That’s what I call a fundamental belief that was running through Mike’s head and he was unconscious of that and so whenever he traded futures he was going to sabotage himself. If you have that sort of problem you need someone who is skilled enough to bring it up and you know I mean a psychiatrist or psychologist or someone very well versed in that area.

Stuart McPhee added: To go deep, deep in the mind.

Ray Barros: Bring out an unconscious fundamental belief paradigm. And he wasn’t aware of that. He wasn’t aware. He broke down and then he actually cried. It was enough for Mike. From then on I think he turned the corner. He was able to start trading with the discipline that he needed for futures trading systems. So it’s amazing. You will see in the blog I continued the therapy and the stuff that comes out is unbelievable I would recommend it to any trader.

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