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Andrew Cardwell, president of Cardwell Financial Group, Inc., began his trading career in 1978 as a broker with McCormick Commodities. In 1981, Andrew left the brokerage business to devote his time to the study of technical analysis and to develop a trading program and model around the Relative Strength Index. Today, he directs the trading of the Cardwell Financial Group managed account program, and provides daily commentaries and trading recommendations on his website for The Cardwell Financial Group (cardwellfg.com).

It was a true pleasure to speak to this longtime technical analyst and trading professional of the futures markets. This is Part 1 of our two-part interview.

Optionetics: How did you first become interested in trading the markets?

Andrew:  Market movement has always fascinated me. I was an economics major in college where we studied supply/demand and elastic and inelastic curves. I have learned more about price movement from technical analysis and seen the reasons why prices move the way they do more than I learned in college. In fact, we use the technical patterns in the RSI (our Positive/Negative Reversals) to help us not only target future price objectives, but also to understand upcoming changes in the economic picture.

Optionetics: Which do you prefer, short-term trading or longer-term trading?

Andrew:  My approach has always been to focus and trade in the direction of the trend. My basic approach is long term position trading based on shorter-term entry points.

Optionetics: What are the things you like best about being a trader?

Andrew:  Trading offers you the ability and vehicle to control your own destiny. The independence and freedom you have as a trader allows you to work at the pace that best suits you and offers you an unlimited upside potential.

Optionetics: How do you treat losses and account drawdown?

Andrew:  As part of the game, like a batting average in baseball, a major league player who gets 35 hits per 100 at bats will normally win a batting title. Traders who try and make money on every trade tend to draw their account faster. They are not willing to take a loss and reevaluate the position. Losses are a part of the game and they are inevitable. Learning to control risk and minimizing exposure are what allow you to stay in the game.

Optionetics: What are some of the key rules that you feel are more important for a trader to keep in mind when evaluating any potential trading opportunity?

Andrew:  Risk, Reward, Probability and Maintaining Your Focus to be in tune with the underlying trend. Many traders, while they may consider reward/risk ratios on a trade, fail to assess the probability of outcome. The 3 key rules to success I always share with traders are: (1) a trading program; (2) the patience to wait for the signal; and (3) the discipline to follow the rules of the trading program and control their emotions. Basically, analyze, identify, and execute.

Optionetics: What are your favorite markets that you like to trade and do you ever use options?

Andrew:  I don’t really use options. I focus mainly on futures. If I had favorite markets, that would be those with a clearly discernible trend. When a market is trending, there is greater potential for capital appreciation in a position. Most traders think they trade what they consider their “favorite markets” better than others. If they really looked at their bottom line results, they would be very surprised. The quality of your trading decisions will be far more important than the quantity of your decisions.

Optionetics: What is your most memorable trade?

Andrew:  Almost every trade I have ever made has been memorable for one reason or another. The winning trades were profitable and the losing trades (if I learned from the trade) were still profitable because they were educational. Trades that I’ve missed because of trying to be “too perfect” with my entry have also been memorable. All in all, I guess I would have to say; my most memorable trade will be by next.

Optionetics: With all the different technical analysis tools out there how does a new technician avoid information overload or “analysis paralysis”?

Andrew:  The old adage “the trend is your friend” while it sometimes sounds beaten to death, should be your primary focus. Identification of trend and the ability to determine trend change quickly are 2 key points that most traders do not place enough importance on.

Optionetics: What kind of technical analysis and fundamental analysis tools do you employ?

Andrew:  The Relative Strength Index [RSI] is, of course, the base and foundation of my analysis since I have used it since 1978 and have offered my RSI course since 1987. Technical analysis will help you to interpret the upcoming change in the fundamentals. By the time the fundamentals have changed, most market movement has already taken place. Today technicals write tomorrow’s headlines. I try to incorporate through the RSI the changes, which take place in price, momentum, time and sentiment and set then future price targets with the positive and negative reversal patterns.

Optionetics: Thanks, Andrew, for taking the time to discuss your technical approach and how you go about tackling the markets. Part 2 of this interview will be posted next Friday.


Jeff Neal
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
jeff.neal@optionetics.com                         

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