How Hoffman became a better trader

January 25, 2016 09:00 AM

Rob Hoffman was interested in trading from a very early age; he would read books on trading from the library as a teenager. In college he studied for a career in the military but poor eyesight ended that dream. Instead he went into law enforcement and continued to study trading. 

Hoffman worked at a suburban Chicago sheriff’s department. He got a lot of court overtime, which allowed him to earn extra money to stake his trading and also time to study markets.

In the late 1990s, after dabbling in stocks, Hoffman decided to focus on stock indexes; the new Dow Jones futures in particular. However, Dow futures were not liquid enough at the time. 

“You just couldn’t get anything done,” Hoffman says. 

He moved on to the S&P 500 futures and now trades a vast array of markets including currencies, gold, crude oil and stock index futures.

Hoffman puts on trades with great profit potential and gets out quickly. He doesn’t pay too much attention to fundamentals. He says the market can be slow to react to fundamentals and it is hard to know how much a fundamental outlook is already worked into the price. 

“I focus on the technicals that tell you what people are actually doing, not what they are saying they’re doing on CNBC,” he says.  “I am a trend trader. I like pullbacks in the trends to take fresh entries. I travel all over the world speaking to retail and institutional clients and find that countertrend traders tend not to perform well.” Hoffman travels a lot because he has turned his successful trading into mentoring business: “Become a better trader.”

In late 1990s, while working and trading out of Rockford, Ill., he was part of the American Association of Individual Investors. “Basically, it was a bunch of middle-aged guys learning how to turn on a computer and looking at stock charts for themselves instead of relying on their broker,” Hoffman says. “Because I was a well-known trader in the area I would come in and do monthly presentations.”

That was his introduction to teaching. By the mid-2000s one of Hoffman’s brokers asked him to speak at a Traders Expo event. He did a presentation in Las Vegas that was well-attended, which led him to do more sessions in conjunction with CME Group. 

“The trade shows tended to put me front and center and I had won several real money trading competitions around the world. That is how the evolution of the business came into play,” Hoffman says. 

He teaches 26 strategies. While technically focused, Hoffman is not systematic or mechanical. In fact, his greatest inspiration comes from his many early failures. 

“I would always find myself getting stopped out,” Hoffman acknowledges. “I was a guy who needed the big green bar to give me the confidence to get long. No sooner would I get in then the market would turn around (same thing on the sell side). I kept seeing the same pattern happening, I tracked it because I was so consistent (in my losses) that I literally turned them around and reformatted them into actual set-ups and strategies.”

By sharing his disappointments, Hoffman is able to teach more than simple trading mechanics. 
“I am sharing techniques but more importantly, sharing the psychology,” he says. “People seem to relate to that. I say, ‘see, this is where you used to get stopped out, [and they say] ‘yeah that is me’ and they can relate to it. You show them the psychology of why they took the trade and why they need to do the opposite.”

More of Hoffman’s time these days is spent on his education business but he still trades every day. “I try to spend time in front of my screen each day.  I do a lot of trading on the road. I keep pretty close to the market,” he says. “One of the secrets to my success is that I am not just talking about the markets to people but I am actually trading them. A lot of people talk about the markets; they don’t necessarily trade them anymore.”

Hoffman says he is different from many in the education business because he is not living off of a great trade from the past. Trading every day allows Hoffman to keep his edge. “I am in the trenches doing it as a product and service and as a private trader as well,” he says. “We are not living off of something from yesteryear.”

Hoffman has won four live trading competitions in 2015, three domestically and one international competition trading the Dax Index, which is how Hoffman continues to become a better trader.

About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange.