If you missed the first interview with Rachel Fox back in November, you should check it out at Rachel Fox Interview Part 1. The following is Part 2 of an exclusive Stockerblog.com interview with Rachel G. Fox. You should pay attention to her for several reasons. First of all, she is a female stock trader with a very successful track record in a field that is dominated by male stock traders. Second, she is a very young trader, only 16 years old, in a field that is dominated by traders who are much older. And third, she is an actress, who starred in Melissa & Joey, and had a reoccurring starring role in Desperate Housewives, in which she was nominated for a Best Recurring Young Actress in a Television Series Award and a Best Recurring Young Actress in a Comedy Series. Rachel Fox is also the publisher of her own blog, FoxOnStocks.com. Check out this fascinating interview.
Now that the Fiscal Cliff is no longer much of an issue, are you bullish on the stock market in general for this year?
The fiscal cliff is a non-issue for the moment but there are going to be three more Fiscal Cliff related deadlines coming up during the year; the next one is in March. It's not fully off the table, so there are still some things that I'm just a bit concerned about. I just don't usually trade based on the year. I don't think long term, I just think more day-to-day, and what it is going to do next week, a week-to-week thing. I have been doing a lot of shorting recently on a lot of different stocks that are overbought.
Speaking of holding periods, what is the shortest holding period you have ever held a stock?
Seven minutes, I got out super quick.
What is the longest holding period you have ever had for a stock, not counting your first bad investment?
I had a trade in the Chinese technology stock, SOHU. I had a long position in it back in May, when the entire market did a dip downward, and it dropped like seven dollars. I had this feeling that I would hold on to it and it will come back, so I held on to it for five months, and it ended up rising back up the seven dollars that it dropped plus another seven dollars, and I made a great profit off of that.
If a trade turns against you, do you hold your position, add to you position, or bail out?
So many factors affect it, it's so hard to tell. Some stocks I'm absolutely confident on, and say it drops a bunch, then I do what a lot of people say not to do, and I will dollar-cost-average. I know people say never do that, it is so ridiculously risky. I try never to get lost in my ego, and try not to get emotional with my trades, but sometimes when I just know it's going a certain way, I'll dollar-cost-average.
My biggest trade ever actually I made the most doing that, with the oil stock, SLB. I had bought it, then it had dropped; I dollar-cost-averaged, and it ended up rising to a great profit.
The follow-on question to that is at what point do you make that decision? In other words, if you do dollar-cost-averaging, is it a gut feel, or do you wait for a certain percentage drop, or a dollar amount drop or what?
I don't have a specific amount necessarily, and I don't have a specific percentage where I've got to get out of it or have to average out. A lot of it is personal to every person as to how much they feel like risking, how much they are comfortable with. It's personal to every single trader. It's just like not taking a stock tip from anyone.
Do you ever trade microcap or penny stocks?
I have not ever traded a penny stock. Well, actually that one stock I blogged about, RAYS, my first trade that ended up turning into a penny stock after I bought it. Other than that, I don't. They can only move a penny up or a penny down, and it seems like there is more logic to trading higher priced stocks.
Do you prefer limit orders or market orders?
Market orders. I'll watch the stock, I'll watch the ticks, and I'll have the market order on the next screen, and I'll be waiting to hit the order. The second it hits where I want to I'll hit the order button. I usually get pretty close or exactly what I wanted. That way, I don't leave it up to chance whether I get it or not. Because there have been times where I left it up to chance with limit orders, and it doesn't quite get there and it ends up doing what I thought it would,
Do you ever use stop orders?
People recommend that a lot; I don't. It's uncomfortable for me to think that it could barely touch the price then have the sell order be placed on the stock then have the stock go up where you thought it was going to go. I leave it up to my instincts.
And other than my first trade, I haven't had any humongous losses; I'm pretty good at controlling when it's dropped enough, I know when to get out.
How often do you short stocks?
As of about October, about 70% are shorts and 30% are long buys. I short a lot; it just works. I get psychological ideas of when something's going to drop; I just have a good feel for it.
Do you think your profits are better on your short side or your long side or about equal?
It's hard to say because I have been buying long for a lot longer than I have been shorting. I think they're pretty neck and neck. Actually I'm going to say when I short I make better profits.
Are you planning on getting into options trading at any point?
Definitely, 100%. I think the idea of options minimizing your risk and maximizing your gains, I just love the concept of it. I think it's amazing. The other thing about options is that you have to really, really know a lot. I feel like with stock trading I understand it and I can place trades, but options I will have to really understand a lot about them.
I'm also really interested in writing covered call options and collecting the premiums on high paying dividend stocks. I just read about that strategy a little bit ago and I thought 'Wow, that's so cool. I've got to try that.'
When you have losing trades, do you ever get really stressed out, and if so, how do you deal with stress?
Denial works really nice. (laughter) Well, when I have a losing trade, I never let a stock lose so much where I know I'll start to lose sleep. I'll never let it get to that point. I'll try to take as much control as I possibly can. Sometimes it will just fuel my fire, where like if I lost this then I have to make double that in the next trade, so here we go and find a winner again, and be all motivated again; it really puts the pressure down and I have to make this back. I try to twist it in my mind to be like that.
Do you have any college plans at this time?
I finished high school early and next semester I'm going to be taking some music theory classes actually at a college in LA. I also have a band and I'm really into rock and roll music and I really want to learn how to write great songs. Right now I don't have any plans to go and study at a college anything financial, except that I am in the process of studying for my Series 6 license. I think what they teach you and what you study, all that information would be so good. That's were I first learned about the concept of options.
Any New Year's resolutions that you would be willing to share?
Take the stairs instead of taking the elevator. (laughter) I don't really have any, but it's cool that you asked that because I actually did just write a blog on people who are wanting to make trading their New Year's resolution or investing long term or day trading. I have this blog on how to turn the resolution into actual realty. So they should go to FoxOnStocks.com and anyone who wants to trade or invest should read it.
Also, I'm starting to dabble in forex trading. I just opened an online virtual trading account where you trade with fake money and that's pretty fun. I'm trying to learn a lot about that as well. I placed my first virtual trade the other day and so far I'm making some nice virtual money. So I'm looking into that.
You've provided a lot of great information. Thank you for doing the interview.
Thank you so much. I'm happy to do it.
No investment recommendation nor any investment promotion is expressed or implied by either Stockerblog.com or Rachel Fox in this interview.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.