Trading, The Gulf Crisis, and Seafood - Interview With Tom Busby - Diversified Trading Institute

Tom Busby is the founder of the Diversified Trading Institute. He is a noted author, trader, teacher and market commentator. Busby was one of the first people to trade live in front of a crowd of clients and peers. The DTI was recently called one of the top 10 trading schools in the country by SFO Magazine.

Tom recently had a conversation with Benzinga's Alex Schiff about trading, the gulf crisis and seafood.

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Can you start off by telling our listeners a little bit about the Diversified Trading Institute?

DTI was founded in 1996. Sort of on a whim. A former client of mine went to one of these other schools, paid money and didn't feel that he got what he paid for. He said, what are you doing? I said well I'm going to play golf. He said let me have your ear for a second and convinced me to run an ad in Investor's Business Daily. And that's where we got started. It was a small ad and people started signing up. And I sure did like sharing what I knew.

Could you talk about what makes Diversified Trading Institute different from other schools and programs?

First let me just say that trading is a very hard skill to learn. A lot of reasons can wreck you on trying to succeed. What we do at DTI, I looked at it from the experience that I'd went through. I told that story in my first book "Winning the Day Trading Game." It's sort of unique in the sense that we deal in the global marketplace. We look at the market on a 24 hour basis. Common sense when you really think about it, you have Asia, you have Europe, you have early New York and you've late California. And you have to learn that those are four distinct markets in the course of the trading day. Everything is interconnected. Everything moves the same way and all you have to do is learn about those different markets in order to be consistent to your trading.

On your website it says that you try to teach people to manage the emotional factors intrinsic in trading, could you talk a little bit about what those strategies are and what you teach your students to combat.

Well, there is a saying: everybody loves a winner. And people that are trading love to win, the hard part of trading is learning how to lose. What we focus on is what you're going to do when you can't find a trade and you just have to stop when you have one of those days when you're not going to win. If you can do that then you can be successful doing this. It takes a lot of discipline to learn that art of stopping when you're trading.

So is it a little bit like learning when to get up from the poker table?

Yes, or from the dinner table, exactly.

I also saw on your website the green circle calendar method that has gained quite a following. Could you explain what that is and how it helps traders keep them on track?

Sure, I tell our students, you've got a set of rules, you're not going to win everyday. And what you want to do is track when are your best days, or your bad days. And I started calling it green circles. When you make one dollar more than you started with. You think in terms of green and red. Green is good and red is bad. You take that calendar. You'll start seeing patterns, you may find out that Monday is a bad day for you to trade. And Thursday may be your best day. And it shows up in the pattern.

Do you think that might be a coincidence or something intrinsic in the market?

No, it's totally unique to the trader. I've seen traders that are good on Monday and those that are terrible on Monday. And you have to figure out your personal style until you figure out what you're doing.

So do you tell people not to trade on their bad days or to trade less?

Be aware of it. Start focusing on the fact that it was just a bad day. Then they start focusing on the fact they lose on that day and then start limiting their losses. By doing that they became extremely successful traders.

Could you talk about the rules that your students follow? Is it a system based program?

No, it's a method. And there is a big difference between a system and a method. We have certain checklists that we follow for trade set-up. When you get into a trade we have rules that we follow.

What is the DTIC and how does it differ from other trading tools?

The market labels people as day traders or swing traders. Look at the history and apply it to our software. For example it shows you technology is weak in January and February. These things can help you manage your own portfolio.

I see that you're involved in a book campaign sale to help the people in the Gulf of Mexico with the oil spill clean-up?

That came from one of our younger employees. He suggested that we give the profits off our book to the Mobile Conservation Society that is involved with the clean-up.

Considering that DTI is in Mobile, AL., has it affected your business?

Not really, we just can't go to the same seafood restaurants that we used to go to. Now we go to the BBQ restaurants instead. Until you've tasted the Gulf Coast seafood you don't know what good seafood is.

Do you think the trading community could do more to help such causes? And if so how can we catalyze such a movement?

Anytime, someone takes a hit we need to figure out how to help the team. Keep a positive attitude. The estimates of the amount of oil is just terrible.

Do you have any ideas on how you think we could stop the leak?

I just have to rely on the experts. It's not my expertise. If we can go to the moon we should be able to stop a leak.

What was your first, and what was your worst job?

Putting windows in a school bus on an assembly line. And it taught me how important having an education was. After working that summer at the Bluebird Body Co., it makes you respect those that do jobs such as that.

What is your favorite restaurant that you've ever been to?

Peter Luger's in New York City. If you like steak it is unbelievable, and they still take cash.

What is your favorite place to vacation?

I'm a fan of reading books from Jesse Livermore, he talked about a place in FL called the Breakers. I've been there one time. Nobody liked it but me.

What is your favorite thing to do outside of trading and finance?

I would say golf. It relaxes me. Golf is one of those games I recommend you get training from someone.

Our trademark question at Benzinga: If you could offer one piece of advice to Benzinga to grow it business, what would it be?

Take care of your customers, and they will take care of you. If you support them they will take care of you.