Trading From the Cockpit: An Interview With a Pilot and Bookmap Trader
This article is based on a conversation with Kevin, a flight instructor-turned-trader. Edited by Owain Higham.
- Tell us a little bit about your background.
I’m a flight instructor by profession. I’ve been an instructor for 20 years. I have my own aircraft, you can see me on YouTube. In the course of that time, I went to a couple of colleagues to get higher ratings of mechanics with the airplanes and jets, and I was involved in the Olympics for mechanics. I was the captain of my team, and we competed and got a bronze medal in that program. Before I started teaching I was going to go into the airlines, but when I had my family I said, you know what? I am just going to limit myself to flight instruction until my son goes off to college.
I’ve always been fascinated with trading. I’ve always been constantly watching videos and things like that. But this has been the first time I am semi-retired, so I have the time to be able to commit 8 to 12 hours a day to trading.
- How did you discover Bookmap?
I had the Thinkorswim platform and I asked them if they had anything they recommended. They said, “We have Bookmap”, and I was like, what is that? So I checked it out, I became a subscriber, then I got into SpotGamma and everything else too.
I always had a passion for the market, but I could never find a mentor or a platform that fitted the way I think. I have a basic brain, I’m not one of these rocket scientists to do all this math, so for the last 30 years I was always trying to find something. I can name dozens and dozens of platforms that I’ve tried out. I also watched YouTube until there was a puddle of blood on my lap from my eyeballs, and I kept thinking to myself: If I just try as hard as I can, I can figure it out.
I never really understood how the market worked to begin with, so I would go and I would just trade, and trade, and trade. It was just helter-skelter out there, so I quit. I was devastated, and I said to myself, I don’t understand that if I can fly a twin-engine aircraft in a storm and land in an airport while watching the instruments, why can’t I trade the market? It should not be that difficult.
Years went by, and I decided to devote myself to trading again. I started to YouTube “Bookmap”, and then all of a sudden there was a lightbulb that went off in my brain. I was like, are you kidding me that liquidity, resting orders and different types of Icebergs are affecting the market? I had no idea that it was even possible. I had no idea this is how the market works. Not that it’s guaranteed, but there is a higher probability of which way the market can move and how it respects different levels of liquidity.
- What are the similarities between flying and trading?
One of the things that I appreciated is that the effective traders out there have one or two specific setups that they trade, and they will not trade unless that pattern presents itself. It’s exactly the same thing as flying.
When you wake up in the morning, you look at the weather, you look at the radar, you look at the winds, and you make a decision. You say, “I am not flying today”. That’s what keeps 99% of the pilots alive, because they say no to that day of flying. The number one reason why pilots kill themselves every single year is flying into bad weather, if you can believe that. And the reason why they kill themselves is because they’ve gotten away with it for so many years. They’ll pick their way through, they’ll be able to see what’s going on, and they’ll land the plane and they’ll be fine. But it’s that one time that completely wipes them out. Just like in trading! It’s that one day that crashes when they don’t have a tight stop loss, and they lose everything.
So there’s two types of flying. One is VFR where you’re looking out of the window, and all that you’re doing is using pattern recognition based on the way that the winds are affecting you for the rectangle that you’re flying to take off and land, which are called touch-and-gos. The touch-and-go experience is basically taking off and landing a million times until it’s pattern recognition and muscle memory. If you take a pilot, they can do it blindfolded, because they understand how the plane feels. The airplane is not a machine—it’s a horse, okay? It has to be treated a certain way. You have to understand how it wants to be ridden. If you start getting aggressive with it—just like the markets—and you start overtrading, or you let the market take control of you, then who’s flying the plane? Are you flying the plane, or is the plane flying you?
Trading is exactly like flying a plane. You can just look at a market, and you can get a feeling of how that market is gonna respond for the day. It’s not that you have to go to indicators or liquidity. You can just look at it and tell if it’s healthy or if it’s strong, and then over the years and the thousands of trades, you just get a warm fuzzy feeling for that particular market.
The next level is the indicators, which are the instruments in the airplane. We have altimeters, air speed indicators, climbing speed, RPM, and things like that. Every single one of those instruments represents an indicator on Bookmap. So the amount of size that you’re gonna place, the velocity of the market, how aggressively it’s moving up, how fast or slow it’s going down: it’s translated to an instrument in the cockpit. If you are trading for that day and you see an explosive move, that would be considered either the horsepower of the aircraft, or the throttle, or something like that. In a nutshell, that’s basically how the cockpit gets translated into the market.
- You said you check the weather before you fly, but the weather can change while you are in mid-air, just like a trend can change in the market. How do you navigate something like that?
If you’re flying from good weather and you look out and see really bad weather, what you do is do a 180-degree turn, and you land back at the same airport or one closer to where you came from.
Once I was taking this airplane back, and people could watch me on something called Flightwatch. You could type in my tail number and you could see my track. At one part of the track it said “26 minutes”. You could see my track looked like a horseshoe. They said “Kevin, what the hell are you doing?” I said, “You have no idea, man.” I took off and it looked like Independence Day, it was completely black.
You could say to me that you trade every day, but if I was to look back into your history, I would say that there were some days that you woke up and you said, “You know what? There’s no way I’m trading today.” For the most part, you fly everyday, or you trade everyday. But there are gonna be some days where you say, “I am not trading today, because it does not fit my pattern recognition”.
- Maybe today is a good example, because at 2:30pm ET there is going to be the FOMC release.
Exactly! Right, so do you place trades right before the FOMC meeting? No? So that tells me you look at a certain pattern—like the radar—and you are not gonna place a trade when that news comes out, because it’s so volatile. How many times do people place a trade without no clue that a meeting is coming out? Now you can say to me, after the meeting is over, and when the market responds in a positive or negative way, then you can take advantage of that particular news. But before, you’re not gonna place a trade.
- What else do you consider to be “bad weather” in trading? We know big events are something you avoid. What else do you consider untradable?
I would say that the SpotGamma levels are incredible. If that Friday is the expiration of those options, then you should not trade on Friday, because it’s not a high probability trade. The market markers and the specialists are equalizing out the funds, so that they are not directional. Friday’s are not a good trade, so guess what? I don’t trade on Fridays. I just don’t do it.
- I assume you’re more of a day trader than a swing trader, right?
Yes. I would say I’m more of a scalper. I’m more of an opportunist. I’m a fair-weathered pilot: I only fly when it’s a nice day. I don’t have the confidence to trade every day, I don’t have the pattern recognition. I just have what I see on Bookmap. And guess what? If I trade a couple of times a month, I’m fine with that. I’m not gonna pressure myself. That’s where the pilots kill themselves, because they pressure themselves to fly. Whereas the professionals and the instructors say, “wait ‘til tomorrow”. There’s a better trade tomorrow.