Rick March Talks Fibonaccis, Options, and Old School Trading Pits
Get to know Rick Turner one of our Inner Circle moderators, in this in-depth interview.
Interview Transcript*
*this transcript has been edited for length and clarity
Michael Comeau: Rick, tell us about what it was like when you got started in the market, and how that's different from today.
Rick March: When I was 10 years old, my grandfather, who drew charts by hand, gave me his book of charts. It was 500 pages for the S&P 500 stocks. 90% of them don’t exist anymore. But I looked at the charts. And I said “when this crosses over this, it's a buying indication.” I asked why, and he explained.
When I was 13 years old, while my friends were going to camp and having a good time, I was a runner on the floor of the Chicago Mercantile Exchange. I was taking orders from the desks. That was my first experience on the floor.
For my first, trade, I bought five December corn at $162.50.
I would stand in a pit and trade one or two months of a commodity, or S&P, or the yen, or cattle, And now I sit at a desk and trade any 1 of 500 stocks and options.
MC: So it was like Trading Places with people screaming at each other and making those crazy hand gestures? Is it actually more chaotic today than it was when you were on the floor?
RM: Everything's computerized now. And it’s not as fun as standing in a pit with 50 men and women, watching everybody scream and freak out. That was fun. Not because they were freaking out, but because you could read the emotions on their faces. Behind a computer screen, I can't tell if somebody's blown out longs.
MC: So it seems like you started on charts from a very early age. How has technical analysis changed from then to today?
RM: Back then, there were no algos. There were no computers. We drew trend lines and watch the breakouts. And if cattle broke out to a new high, we would tell our clients. We would do this all by hand and on the phone. There was no immediate drawing of a chart and posting it in Inner Circle. So that's 100% different.
And now, there's easily 500 methods of of price and time analysis. Stuff like WD Gann Theory and Gartley existed, but you couldn't calculate them quickly enough for the market.
There were guys in the options pits, who had their sheets of what X options should be trading at Y desk and Y price. And they would stand there and look at their sheets. They wouldn't make a trade until something came up on their sheets.
MC: So we should be grateful with all the amazing technology we have today that's basically free.
RM: Absolutely, because it enables me as a trader and an analyst. It’s amazing.
MC: Let's talk a little bit about your trading style. How would you describe it?
RM: I follow the market flow and the options. I'm very blessed to have two partners at Inner Circle. I don’t mind buying something at a high price thinking it's going to trade higher. That's how I do these SPX lotto call traders that you’ve seen there. Kira Turner is great at seeing a day trade coming, and David Prince plans trades better than anybody I've ever met in my life. So to answer your question, I swing trades, I do a lot of options trades, and I day trade.
MC: Many technicians are pretty loosey-goosey and doing things by feel. So how mechanical is your buying and selling?
RM: It depends on what I'm trading. I set alerts in stock where if they get hit, I can buy or sell the stock or option I want to be in.
MC: You have no problem just pulling the trigger when that happens?
RM: If I'm setting it up in options, then I don't. Because I say, at $80, I'll buy this. All right, at $100, I'll sell this. And that's what works for me with the stock.
For example, I’ve been short Beyond Meat (BYND) for months from significantly higher prices. I want to cover in the single digits, but I haven't put the order in because it could go lower.
When you get to a level where you think you should buy or sell, you need to take action.
If you don't, you'll regret it after the trade is done. That’s why we trim and trail.
MC: Let's talk about regret because I don't think people talk about regret enough. When a trade is done, do you just fully put it behind you?
RM: It would be nice to put it behind me. The way my brain works is, I pay attention to that stock or option for a couple of weeks after. I don't necessarily go back into the same price and do the same trade, but I'm aware of it.
Because if I made a mistake, I need to learn from it. So I can build my talent and build my equity going forward.
MC: Do you worry about algos or HFTs when you are trading?
RM: The only thing I worry about during my trading is when the market goes to a standstill. I don't know what to do in a quiet market. My biggest frustration is a lack of action.
MC: Is there ever a time where you just sit on your hands and do nothing?
RM: I'm trying to do more and more of that.
MC: It seems like people have an urge to take action, to just do something.
RM: They absolutely do. For some people, it’s like being at the casino and seeing the craps table. They have to do something.
But trading is not a casino. Trading is not gambling.
We figure out the possible risk versus the probable or improbable reward.
You have to think through risk before you get in a trade. I've been doing it for 50 years, so I think it through quickly. Sometimes I’m wrong, but of course I want to be right.
MC: How do you take the emotion out of a stressful situation where there's real money on the line?
RM: I trade the market, not the money. So, if I'm down $20,000, but SPY hasn’t gone through my level, I will stick with it. I’ll sweat and I’ll be unhappy, but I will stay with a trade until the market tells me I’m wrong. Then I’ll get out. But again, I focus on trading correctly rather than my P&L. This is easier said than done!
MC: Are there particular stocks or ETFs that you prefer to trade?
RM: Right now, Tesla (TSLA), SPX, and Alibaba (BABA) are names I like to trade. But every day, I figure out what's moving.
MC: One thing I'm curious about is how your personality relates to your trading style.
RM: I really enjoy the challenge of trading. But my passion is making people laugh.
So I try to inject some humor into the process while taking on the challenge.
MC: We could use more of that.
RM: We've been used to the market going straight up. The Fed put was real. It was easy money. You'd buy in the middle of the day, buy the close, and sell the next day. Now it’s tougher.
MC: Why is it tougher?
RM: Off the 2020 lows, you could buy high and sell higher all the time. You can't do that anymore. You can’t chase things or buy breakouts. It turns into frustration. People get angry.
MC: What has kept you in the game for so long. Very few people last for more than a couple of market cycles.
RM: I love the challenge. And at my age, I like to give back to charity more. I donate a good portion of what I earn. Sometimes, people need a little help.
MC: We talked about how you come from a long line of traders. Did they mentor you directly when you were up and coming?
RM: I just soaked it up. My grandfather sat down with me and showed me how to draw a chart. My Dad took me to the floor of the exchange when I was 13. And I was fascinated by the chaos. It's addictive.
MC: What were the life lessons you took away from those early days?
RM: Love your losses. Learn to take them. If you're wrong, you're wrong, That's all. Second, don't be greedy.
MC: Do things just click for you when you see a chart?
RM: There's a lot of active thinking and a lot of instinct at the same time. I can look at a chart and draw a Fibonacci level in a heartbeat.
MC: What attracted you to Fibonaccis? To some people, it’s pseudoscience mumbo jumbo but others find it very useful. people find them very useful.
RM: They're orderly and trading is chaos. I'm not a mathematician, not by a long shot. Trading without charts and without Fibonacci levels would be chaos.
MC: What made Fibonaccis click for you?
RM: When I realized I could see the numbers everywhere in nature. You could see them in a sunflower or a seashell. That’s order to the world, and it brings order to the chaotic stock market.
MC: I think that is a good note to end on. I would love to have you on again. This was fun.
RM: I’d love to be back.
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