How did you get into trading?
I can remember back to elementary school, long before I had any clue whatwere, a friend came down the hall in school flashing a stub with a sports bet on it. I couldn't believe my eyes! It never occurred to me you could bet on sports! I was immediately drawn to the idea of speculation and knew this was something I wanted to check out.
I grew up in Toronto and the province of Ontario had legalized sports betting. You could go into any convenience store and pencil in your picks like you would a lottery ticket. Even at that time, I knew the draw was more than just the excitement and thrill of winning. For me, it was about the analytical work required to study the games and prepare as much as possible to find that edge and come out on top.
It was the idea that here was something that everyone considered a write-off for a loss and yet I would find a way to beat the odds. Of course, it didn't hurt that I loved sports and was excited to do my homework. I looked at home games, away games, weather, injuries, day games, night games, holiday games, you name it. I looked at match-ups and track records.
This wasn't something I was just going to throw my money at without putting the time in. So naturally as time went on, I learned about things like scalability and liquidity and as I grew older I found my way into trading. It was a natural fit for my passion.When was your turning point? When did you get to the stage of trade for a living?
There is no glamorous answer to this one. It took many years. I am not the type of guy that just hits it out of the park as soon as I try something. I was dedicated and I loved it from day one.
But trading markets is exceptionally challenging and just like any profession, it shouldn't come as a surprise that it can take years before you find your way into making it a proper livelihood.
Think about a doctor or a lawyer and the time it takes before they can start earning a living. Trading is no different and many people forget this fact. I suppose the turning point for me was when I realized I didn't need to be chasing trades.
Once I sat back and let the market come to me, everything changed. In the early years, I would look for trades when there was nothing there and then when I forced a trade, I wouldn't want to take a loss as I should have never taken the trade in the first place. Of course this often led to massive losses. But I kept pushing through, slowly learning from each new experience and each new failure.
At one point, things just seemed to click and I realized I needed to stop looking for trades. If a trade was there, the market would let me know. I suppose it's kind of like playing hard to get. Once I trained myself to think like this, I found a whole new level of confidence and knew I would be able to have a good shot at paying the bills.
I suppose I would describe my approach to markets as techno-fundamental, with a contrarian based strategy. I look for markets that are highly extended one way or the other and try to fade the stretched moves in anticipation of mean reversion.
Though the trades are grounded in, I will often use as an added confirmation filter. I am a trader. I will trade equity and from time to time, but my comfort level is with currencies.
I am happy to trade any and all currencies from the majors to the minors to the emerging markets. At the core of all of this is discretion. I am a discretionary trader. I take all of the information in front of me to help make a decision, but at the end of the day, there is an element of discretion which I believe is a talent in its own right that is very hard to teach. I think it helps to have a feel for the market and this is something I haven't needed to struggle for.How much did markets change since you started and what do you think about HFT and algorithmic trading? Do ordinary retail traders get to keep their edge in the age of technology?
I'm not sure markets have changed all that much for me. I suppose different markets are morethan others at different times, and I will just find myself trading different currencies because of this. I simply go where the volatility is.
If we look back to when I was starting out, thewere a big deal and markets like EURCHF and EURGBP were reliable range trades. And now the Yen crosses have been less interesting to me, and trading commodity currency crosses is more exciting. and are no longer the markets they used to be.
But while the markets in focus may change, the dynamics have pretty much stayed the same. I don't have much of an opinion onand algo trading per se, but I am all for anything that helps with the volatility and this area has most definitely helped on this front. As far as ordinary retail traders are concerned, it is only getting better and better.
Not so long ago, the regular self directed retail trader didn't have the kind of access to markets the way we have today. The tech boom has brought amazing advantage to the retail trader, who now has the ability to access markets with the same pricing and execution as the institutionals. So whatever edge an ordinary trader can have, he should be getting it with the technology offered today.
Here are five tips for someone starting out:
- Forget about the money
- Focus on the percentages
- Keep it simple
- Really understand the power of compounding your returns
- TRADE WITH ZERO LEVERAGE IN YOUR FIRST 12 MONTHS!
If you aren't genuinely interested in markets and trading and are only after “the big trade”, take your money and go to Vegas. Your focus should be on enjoying watching the markets and waiting for trades that really make sense to you. But above all else, as per number five above, trade your first 12 months with no leverage!!! If you can make money in your first year, you will have plenty more years to ramp up and really work towards making a living.
But in your first year, just focus on taking good trades. You will and should make mistakes in the process and these mistakes will be lessons well learned without having blown your entire savings. It may not sound glamorous. But it's not meant to be.
Keep an eye out for Joel's. Details will be revealed during August 2015.
Important note: There is no such thing as “the big trade”.
You have a popular website: JKonFX. How do you help your visitors, members in their quest to become successful traders?
I come from the strategy side. I have always had a passion for strategy and writing and love getting my ideas down on paper. Naturally, when I went off on my own, I wanted to continue with this process as I found it to be therapeutic and of great benefit to my trading.
I kept up with my analysis and interactions with anyone who wanted to experience my thought process on a daily basis. I don't go into the hard finance in my analysis and tend to just spend time talking about what I'm thinking on a daily basis. I keep it simple and focus on the macro picture. I have been told sharing my insights this way is a big help to others out there looking to be connected with someone who is trading for a living.
I prepare a daily update with my thoughts and a daily technical overview of markets in video format. The site has grown quite a bit since inception and with the help of my wonderful partner, we have managed to build out and offer some amazing tools and resources.
We also give our clients access to my Trade Journal so they can follow my trades and see what I am trading. We are closing out our first full year of trade with the JKonFX book and am pleased to say the unleveraged portfolio is up 30% year to date.
With so few out there having success as traders, and even less sharing their daily thoughts, I think our clients find comfort and confidence in the fact that they know and are connected with someone who is trading for a living and keeping his head above water.
We are very committed to our clients and value their support at the highest level. I will always try to get back to clients via email, whenever they reach out with any issues or questions about the market that concerns them.