Andrew Keene – Option Trader Interview Series

Andrew Keene was an independent equity options trader on the Chicago Board Options Exchange for 11 years. During this time, he was a market maker in over 125 stocks including Apple, General Electric, Goldman Sachs, and Yahoo. From 2006-2009, Andrew was the biggest, independent on-the-floor Apple trader in the world. Currently, Andrew is actively trading futures, equity options, currency pairs and commodities.

Andrew has become one of the CBOE’s most recognized faces in the media and financial community, making regular appearances on Bloomberg TV, BNN, CNBC, Fox Business, Sky Australia, and CBOETV. He is also a regular contributor for Bloomberg Radio, DailyForex.com, Trader Planet, Minyanville.com, and Jim Cramer’s TheStreet.com.

Let’s hear from Andrew:

When did you first get started in the trading business? 

I started trading right out of the University of Illinois at Champaign-Urbana and I cant imagine doing anything else.

Can you remember your very first trade? 

I remember the first Trade that I made money on.  I bought some Puts in KFT, Kraft Foods, and when the stock sold off hard one day on Guidance report, I made almost $45,0000.

What did your trading education entail?  Did you have a mentor that guided you in your trading?  If so who was it, and how influential were they?

I started in a class of 13 Clerks, we had classes everyday, tests once a week, and mock trading after the close.  Out of those 13 Clerks, I was only one of 3 traders that got to trade.

When did you first realize that you could become a full time trader? What gave you the confidence to take that step? 

Making money really increased my confidence, but trading has taken me 11 years to master and there are still things I learn on a daily basis.

A lot of people want to become full time traders, how much base capital is needed to trade for a living?

I would say $100,000 is the right amount to start with if a trader wants to be serious, take some losing trades, and still be in the game.  I am up over 30% on my cash for the last 11 year, but that doesn’t mean I didn’t have losing days, weeks, or even months.

What psychological challenges are involved with trading full time? 

Never to take trading personal, I think I can make money on every trade, but I do lose money on trades.  Not every trade will be a winner, so just keep myself in the game and remember that I am only as good as my last trade.

As a traders’ account size grows, small percentage movements suddenly have a large dollar impact. All of a sudden a 5% loss is the equivalent of buying a new car. How did you manage this transition?

I used to freak out when I would lose any money, but now I realize that there will always be ups and downs, just so there are more ups than downs.  In 2007 and 2008 my Net Worth was moving $25,000 a day, so it took awhile to transition to that, but I feel comfortable with it now.

Do you have any other tips for beginner traders or for those hoping to make the leap to full time? 

Join the best live trading room out there at http://keeneonthemarket.com if you want to learn to trade like a pro.  Its almost as good as golfing with Tiger Woods next to you.  You can read every book, every video on golf, but imagine how much better a golfer you would be if Tiger Woods was telling you how he would play every hole, which club to use, and his approach.  The Live Trading Room offers this for beginning traders.

What is the most important trait of successful traders? 

Have patience, always define risk vs reward.  I have Andrew Keene’s Non Blowout Trading Plan, where I always set up my risk vs reward set-up.

What is your number #1 trading rule?

Never blowout, the stock market can be more irrational than I can stay in business.

How would you describe your trading style?

Conservative and active.  I trade all day long and often have as many as 50 positions on.  I trade all the Unusual Options Activity as well as Earnings trades.  I trade more active than 90% of the traders  on the trading floor.

What analytical tools do you use in your trading? 

I use my Propietary Trading Plans, the OCRRBTT and HIMCRRBTT that I have used to make over $7 million in my trading career.  However, have to get into my LIVE Trading Room to see my use them.

Can you share your trading results for the last few years? How did you fare during the financial crisis? 

2007 and 2008 were my best years, because I am a trend trader and I know personally I trade better to the Short side.

Are you willing to share your worst trading experience?  What happened and how big was the loss? 

I lost $140,000 trading CECO.  I was short 140 Puts that went from $.05 to $.50, I could have covered them for a $12,000 loss, but the next day they went to $7.50.  That was a rough day for me.

When did you launch Keene on the Market? 

We launched the LIVE Trading Room in February 2012.

Is there anything else you would like to add? 

For a 2 day free trial to the best trading room, shoot me an email personally at Andrew@keeneonthemarket.com  I am very different than others in the Options Education space, because I am actually trading every trade real time with real money.  I am not one of those educators who doesn’t put his money where his mouth is.

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