Carolyn Lueck: Intensity, Focus And Balance
Compared with men, there are relatively few women traders, and fewer still who have as much trading experience and overall market savvy as Carolyn Lueck. Although we only hear from her weekly in her commentary, she is very active in the market every day. Despite her very busy schedule, she still makes time to wind down and avidly pursues her other passions. Brice Wightman brings us this fascinating interview with Carolyn.
Brice: How did you become interested in the market?
Carolyn: When I was in college — I was an economics major — I had classes where we would have paper-trading competitions. When I left college, I got involved in construction and real estate, but always had an interest in the stock market on the side. I couldn’t trade full time, but I always did it part time. I got out of real estate in 1995 and started to trade the market full time.
Brice: Where did you go to college?
Carolyn: Lake Forest College.
Brice: How did the transition to full-time trading go?
CaroIyn: Part-time trading was going well. In real estate, I was fortunate to be a part of a big housing boom here; it was great. I think, for my temperament, though, trading was better for me. I was getting more profitable trading than I was in real estate, and made that transition to full time. After we built our own home, we ramped up our computers, and converted a room to a trading office, which helped me leave real estate behind and trade full time.
Brice: When did you meet Goran?
CaroIyn: I met Goran in 1987.
Brice: Was your style of trading pretty well defined when you started?
CaroIyn: When I started trading, I was definitely a daytrader — in and out of positions all day long. In the a bull run, I would hold positions. Starting in 1998, 1999, 2000, I would actually hold positions, but when I started, it was pure daytrading…it was a lot of scalping. As I evolved, I tended not to scalp. I may take daytrades in the SPYs or the Qs, or in certain stocks that I follow, I will take a daytrade, but my style now is intermediate-term trades anywhere from a couple of days to a few weeks.
Brice: Is that because of the market?
CaroIyn: I think the market makes it very difficult to trade and hold overnight, plus my temperament is not there for daytrading and scalping anymore. I don’t feel the need to do that. I like to take longer-term trades and catch more of a profit by staying in that trade. I’m much more of a technical trader than I was when I first started. I look for technical indicators that will tell me what the trend will be in that stock for the next few weeks, or even a couple of months. I don’t like to scalp anymore. The longer you trade, you know what your style is and what you enjoy doing. The best part about trading for me is that I love to trade. It’s something I Iook forward to every single day. It’s not something I find a chore. When I do get tired of it for any reason, it gives you the luxury of walking away from it for a few days to get your head back into it. The best part about trading for me is the freedom that it gives you.
Brice: How do you pick your stocks?
CaroIyn: We have a set of technical indicators that we use. We have 24 monitors; we each have identical systems with eight monitors. with an additional eight that we share for all other services and trading systems. For one stock, I have a 2-, 5-, 15-, 60-minute, daily, weekly, and monthly with all my indicators on each. I have the same indicators on each — momentum studies, relative strength studies, stochastics, MACD, moving averages, Fibonacci — just tons of studies. I’ll pull up a stock and look at each time-frame and determine if I want a short-term trade in it, or if I want to build a large position in it and hold it over a month or two. Definitely MACD, definitely stochastics will clue you when in when a stock is ready to go long or short. Candlesticks are key, key, key. If I’m going to do a long-term trade — Evening Stars, Morning Stars — I’ll start to look for topping patterns, bottoming patterns…
Brice: You definitely have a lot of monitors there. What’s the best and worst thing about having all those monitors?
CaroIyn: I can’t think of a worst thing. As a matter of fact, I’d love to add more real estate.
Brice: Really? The reason I ask is that it seems to me that at some point, you would have so much information going on, it becomes hard to process it all.
CaroIyn: If I walk away, or have a phone call, I want to be able to look at each monitor and immediately know what’s going on. I have four screens of just different parts of the market — the SOX, the banking index, and all the stocks in those. I have futures charts. I have one stock with all those charts that I mentioned. I have one screen with Level IIs on what I feel are key indicators for the market —
^IBM^, ^MSFT^, I used to have ^JNPR^, I don’t anymore, ^CIEN^ — stocks like that where I can see where they’re all trading, what type of bids and offers are there, what type of trades are going by. I like to know that I can look and know what the market’s doing, even if I had to go away and come back. I can process information quickly, maybe some people would be overwhelmed by that; I’m very visual in what I do.
Brice: Do you have an idea going into a trade how long you’re going to hold it?
CaroIyn: If I have a stock, I’ll look at where I want an entry. I’ll look at what I really want as an objective — not a short-term objective like I know it’s going to come down here and then bounce a couple of points or go up and pull back a couple of points. If I know ultimately what I really want that stock to do, where I see it going. If I’m short a stock and I see a gap from two to three months ago that I know it’s going to come back and touch, just from what I’m looking at from the feel of that stock, I know that I’m going to sit through the ups and downs and wait for that target. That may be two weeks or it may be two months. If there’s some event, I’ll probably get out. I’m not going to be ignorant and sit though it. In general, if I see a real solid topping pattern, I’ll ride out the ups and downs.
Brice: Are you looking for confirmation on indicators?
Carolyn: Generally, two to three.
Brice: How many trades do you make per day?
CaroIyn: If I’m going to daytrade, I would say two to three, tops. If I’m trading intermediate, I’ll start to fill positions over a few days’ time. If it’s great trading conditions, and I’m really in tune with the market, I may take more trades on throughout the day. I used to make 40-50 trades a day. The most I’ve made recently is about ten trades. That’s me, myself. As a group, we do more active trading. I myself, for my own account, that’s what I do.
Brice: How do you approach a longer-term position?
CaroIyn: Let’s take ^EBAY^, which we did recently. EBAY had a zone of resistance at 71. It kept chopping around between 65 and 71. We knew we wanted a core short position in EBAY, and every time it would go into the 70-71 zone — which it did for about a week and a half — we would add to that short. Add a couple of thousand, 5000 — just keep adding to that short until we reached the position that we wanted. Now we realized that if it broke out above the 70-71 zone, we’re going to take a lot of heat probably to 75-76. It was for our group to make the decision if we were going to take that heat at that point. When we build a short or a long, we’re going to identify where a stock has a zone of resistance or support and keep building into that area.
^IBM^ was the same thing. IBM kept hitting 117-118 and failing, but it kept bouncing at 112. You keep watching that zone. If you’re looking to build a long position and you recognize that it kept holding 112, you probably keep buying 500, 1000, 2000 as it was hitting 112, knowing that you have to immediately stop out if it went below. On the short side, keep sjorting into the 117-118 zone and ride it, looking for the break below support.
Brice: What size positions do you build?
CaroIyn: On EBAY we went up to 50,000. In general, we’ll go anywhere from 5-50,000, depending on how sure we are of the trade.
Brice: How do you handle stops?
CaroIyn: It’s all about risk. A lot of the way we used to trade as far as day trading a few years ago has become so commonplace, market makers know how to use that, and often times when a stock is going to break one way or another, it’ll first break the other way. If a stock is going to break down, just before it breaks down, you’ll get a quick punch up through obvious stop out levels, so it’s very hard to stick to the old stop methods. I look at areas of support and resistance. Say I’m short THQI, which I am (Note: this interview was done on July 18). I’m looking at the 57-58 level as an area to stop out of if it broke through it. If I was short Microsoft, it’s pretty clear that MSFT is finding resistance between 72 and 73. I would stop out if it would clear that area of resistance. If I shorted it below 72, I probably wouldn’t stop out if it took out the day’s high of 72–if it went to 72.01–I probably keep that stock short unless it cleared 72. I use stops more as areas of support or resistance versus a day’s high or low break.
Brice: Does your idea of stops change with position size?
Carolyn: Yes. You’re buying or shorting at a lot of different levels, so you’re going to give a little more leeway. When we were short 50,000 shares of EBAY we weren’t going to stop out over the day’s highs. We weren’t going to stop out unless our area of resistance was clearly taken out on a closing basis.
Brice: Outside market hours, what kind of research and study do you do? What’s your day like?
CaroIyn: I get up around 6:30 a.m. to 7:00 a.m. We subscribe to quite a few newsletters, so we’ll start reading those. I try to do a little yoga before the market, drink a couple cups of coffee. We run through the charts that we identified the night before that we’d be looking at to take some trades in. Check all of our news sources for any news on position that we are in. I always read all the guys on TradingMarkets every day.
Brice: Good answer!
CaroIyn: We subscribe to so many services that it takes a good hour just to weed through those and pull out what we want. I don’t subscribe to stock scanning services; I like to scan my own charts.
Brice: What about your interests outside the stock market? I know you like animals.
Carolyn: I have my cats, which are my babies. I’m very much involved in a big cat sanctuary located in Wisconsin. We donate our time as well as money. They rescue large cats — lions and tigers — basically any large cat that has been abused by people or zoos or circuses are finished with, that would usually be sold to canned hunts. Many of the animals were owned by drug dealers, and were tortured so they would become vicious. They try to rescue as many as they can. They have, I would say, 50 big cats, and they give them a better life. We spend a lot of time there helping clean, building enclosures. We had a lot of construction materials that were sitting in storage that we donated to them. (Editor’s note: See https://www.votk.org) I donate to a lot of environmental groups. I love to be outdoors. I spend so much time indoors trading on computers, for hours and hours and hours and even when the market ends, you’re in front of computers at least another four hours a night doing research and getting ready, so any time that I have free I like to spend outdoors biking, kayaking. In the winter I go skiing, and just generally like to get outside — it’s a big part of my life.
Brice: What do you do after the close?
CaroIyn: I used to do a lot of my research immediately after the market, and what I’ve tried to do for the past year especially, is as soon as the market ends, take half an hour, wind down, look at what’s coming after the market in terms of earnings, or any announcements, and then I try to take a good two hours to get away from the market — clear my mind and then come back at night and do some research. I have a couple of companies that I’m involved in. I have group of people that design trading systems; we’re launching that in the next month. I try to get away at least a couple of hours before getting back into work. On the weekends, I try to escape as well.
Brice: Tell me about the trading systems.
CaroIyn: A Website will be available in the next few weeks. The groups that I’ve been involved with — we’ve been building them for traders. We really haven’t marketed it to a wider group. We just added personnel and really got a beautiful site working. We’ll have beginning systems, but it will focus mainly on very complex systems for hedge fund traders, intense traders who need systems that are very focused on trader’s needs. I think people think you just need monitors. There’s so much that you need to have a reliable system. Our systems has four computers. I have had two hours of down time in the last ten months. That is the most important thing. If I don’t have my data, I can’t trade. It’s absolutely essential to have the right computer for trading. Which is why I’ve gotten so involved with this group–they came in and worked on my system with me–they’re so dynamic. I wanted to be a partner with them to offer traders a system that will work for them.
Brice: What do you do on the weekends?
CaroIyn: A lot of biking; we spend a lot of time on the boat. We try to hit the boat at least two to three times a week, to relax.
Brice: You mentioned yoga earlier…how does that help you?
CaroIyn: I think your mental state is key to trading — absolutely 100% — and you have to have a clear mind and a very focused mind. Yoga helps me do that.
Brice: What’s it like trading with a partner?
CaroIyn: I’ve gotten some e-mails asking what it’s like to trade side-by-side with Goran. It’s incredible. He’s very outspoken, he has an opinion. Incredibly talented. We’re involved with a very small group of traders online every day in a voice chat room. It’s key to have at least one person or a small group of people who know you and your trading style to bounce ideas off of. To see what everyone’s thinking, to have a fresh view. You may have an opinion, which can be a very dangerous thing sometimes. You have to have an opinion, but sometimes you need to have somebody help you see just what the market’s doing that day. Trading with somebody — whether it’s in the virtual world or someone side-by-side — has helped me immensely. Trading with Goran has helped me immensely. I’m less emotional than he is. We both bring very different styles to our trading. I think people should try to find a few people that they can trade with. I visit the market part of the message board, and what I notice is that a few traders really bounce ideas off each other all day. Finding a partner is a key part of trading, to help keep you even and open-minded.
Brice: Tell me more about your voice chat.
Carolyn: We’ve been trading with them for at least four to five years. One guy is 22, and he makes all of us work so hard. (Laughs.) He’s been involved in the market since he was 18 or 19. We’ve also got a futures guy in there that’s been on the floor trading, and a couple of ex-market makers. They bring a great perspective to us; they help us in understanding a lot of dynamics to the market. TradingMarkets is so key, with the new TradersWire Interactive chat, in bringing traders together.
Brice: Just out of curiosity, what percentage of your trades are winners?
Carolyn: I would put it at least 85-90%, at least through May. I’m actually going through those numbers now.
Brice: That’s tremendous. Who makes better traders, men or women?
Carolyn: It’s not a question of better; there are just differences. I trade out of a home office with a small group of mostly men, and TradingMarkets has introduced me to a lot of female traders. Contrary to what most people think, women are less emotional. We really are. I think that’s a key difference from what I’ve observed between male and female traders. There’s less of a need to prove what you’re doing. We’re very different in our styles of reward. Trading is an incredibly hard business for women to be successful in just because it is viewed as a man’s business. You have to be willing to stand up for yourself when you’re trading. The situation is similar in construction, so I was kind of fortunate coming into it. Being a female in trading, you really have to quietly prove yourself.
Brice: Why do you prefer candlesticks over bar charts?
Carolyn: Candlesticks tell a better story of what’s going on with a chart. With candlesticks, you can get meaning out of the formation. It reminds you that trading is people, not just numbers. You can see what’s happening. You can understand the emotions behind the formation. I also love the two ways a candlestick formation is described: Either from a warrior point of view or a farmer point of view, and I love reading the stories behind each formation name.
Brice: What advice do you have for new traders?
Carolyn: Treat trading like any profession. You can’t walk into being a doctor. You can’t walk into being a lawyer. You study and you work your ass off. You read as many books as you can. You talk to as many people as you can. You study the markets. The markets are very cyclical. History always repeats itself in the market. Go back and look at the cycles of the market. Look what happened in the ’20s, the ’30s, the ’70s. Go back and look how markets reacted to things. Study everything you can get your hands on. Learn candlestick charting. Learn Fibonacci. Learn everything you can so you have as many tools at your disposal. Always treat is as a profession. It’s not gambling; it’s not a game. It’s a true profession if you want to be a trader.
Brice: Thanks Carolyn