Shean Gannon has cultivated a strictly dispassionate relationship with the market. It’s business all the way for this systems trader who believes that there is no room for emotion in investing.
A highly organised, extremely clinical approach, a tightly structured system, a generally long-term focus and a well-disciplined mindset has become a very successful format for Gannon, a former civil engineer.
“I don’t do it for the excitement that some people get out of stocks through day trading,” he says. “It’s part of an overall business strategy. I make sure that I always treat my trading as a business.”
Having said that, Gannon admits that trading has an alarming habit of “bringing out your personality” and that despite his best efforts there are still times when the volatility of the market can cause him to wear his heart on his sleeve.
“But I’ve learned to control that,” he says maintaining that recognizing the need to keep his emotions in check was one of his biggest lessons.
His tip for anyone who identifies with this is to avoid looking at stock prices during the day. “Even if there’s a big correction,” he chuckles.
Gannon, who is the convener of the Brisbane Sunday Traders’ Club, which he founded in 2001 based on Alan Hull’s “active investment” strategy, strongly advocates avoiding the temptation to second-guess your system.
“I always tell our group, don’t look; allow your system to do its job,” he says. “Because while you may be down 10% now it’s possible that you’ll be back where you started from by the end of the day and you didn’t need to know about the fluctuation.”
Gannon began playing with shares in the early 80s. He graduated from novice to serious investor in the mid 90s when his then small portfolio began cranking up.
Best-selling author, Alan Hull’s book, ‘Active Investing’ provided him with the answers he had been seeking on charting and he began applying Hull’s system.
Confessing that he always had a problem trying to ascertain the longevity of a trend via technical charting, Gannon says that Hull’s pictorial representation of charts has enabled him to make informed guesses regarding a trend’s strength.
“For me it was a real eye opener,” he says.
Gannon sold his engineering business in 2001 but he retains other business interests outside trading. He acknowledges that without these additional interests he would be lacking mental stimulation because trading alone would not hold his attention.
Weekly trading suits both his lifestyle and temperament.
Declaring that he “couldn’t stand sitting in front of a computer screen chopping and changing all day”, he says, “I like to plan it, execute the trade and then just let it run”.
Gannon’s system is geared to buy upward trending shares that are fundamentally sound, as per Hull’s “active investing” formula, which he has tweaked using some of Jim Berg’s (The Share Trader’s Handbook) features.
The combination of the two systems essentially means that Gannon uses Hull’s search criteria and Berg’s entry and exit signals.
“The sector is irrelevant. You just pick the best performing shares,” he says.
“So you tend not to get too many resource stocks because they are usually more volatile and don’t trend for a long period. The system suits less volatile stocks so you get things that might trend for six to eighteen months.”
Gannon’s daily income is sourced through his trading. He has other investments for wealth generation.
His most successful trade during the past 12 months is mining services engineering company, WorleyParsons.
His biggest loss occurred when the correction happened mid-2007. He was trekking the Kokoda Track far removed from any news service and therefore was unable to activate his stop losses.
Groaning that he probably lost in the order of 15% in that particular portfolio he says he learned an important lesson. “Regarding my short terms stuff I should get rid of everything before I go on another two week holiday,” he declares.