How to be a trader for a company?

Dear Trader888,

Thanks you for your sharing and i learn so much from your words.

Right on Trader888. I used to be a big believer in technical indicators. Until I stopped making money from them. There is too much noise on an intraday basis for my trading. The way I have been making money for the last couple years is "Go long term and always remember "The Trend is Your Friend."

Trader888

First of all I take my (imaginary) hat for your very personal and
clear statements on this business.
The sharpness and clarity of your posts separates you from the rest
of the crowd.
By reading between the lines I feel a lot of frustation but also the pride
having belonged to this "inner circle" as I call it.
I'm participating in this community since appr. 2 years and this is really
the first time someone from above the cloud feeds us with some
teaspoons of forex reality.
Thank you a thousand times for your personal effort !!!
That the reality is as described by you was an assumption I had for a longer time.
But now I see a lot clearer regarding this stuff.
If you don't know him I recommend that you read some of the posts
from Darkstar.
He is now a fulltime private currency trader and trades without
indicators.
He only based his trading on option barriers and magic numbers.
(Darkstar please correct me if I missed something..)
I know this is hot stuff and I wouldn't go deeper here.
I'm using it since 1 year with good success.....
Perhaps you can throw in some comments regarding this stuff....
My personal goal is to become a private trader and to grow my
private account.
You are right in mentioning that trading as an individual with
a private account is trickier than to be employed with a yearly bonus
salary !!!
Nethertheless it would be great to read some motivational
statements for all the guys and gals who have similar goals.
I Know its achievable and I'm working on it on a daily basis beside
my daily job as an engineer.
The fact that I have a daily job pushes me trading longer timeframes
(daily, weekly, monthly) and this push saved me from blowing my account
because for some months I concentrated only on shorter time frames <= 1h.

So I wish you a peaceful and quiet private life with your family and
hope deeply inside that you stay with us....

Greetings and happy trading without drugs !!!!

Bernhard

Trader888,

I'm wondering. Among your trading colleagues at the banks, isn't there anyone who strictly position trades? Place a trade and then do nothing for 1-2 weeks. If they trade this way they probably dont need to be under so much pressure (and thus avoid the drugs and marriage catastrophes). What do you think ?

I echo what Trader88 has said.


You cannot rely entirely on a set of indicators. You have to know the characteristics of the pairs you trade.

You have to know the current bias or pressure on the pairs you trade. For me this comes as a GUT feeling after doing a lot of reading of articles and analysis everyday.

Your trading brain cannot be sharp for trading if it is not totally immersed in the stuff of trading - financial news, commmodities, eco data, country economics, cross market analysis, and yes a few basic techincal indicators (for me its stochastics and a couple of MAs)


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I agree. Becoming a master of one-two pairs is better than just being OK at many pairs.

Detonator, I am sorry all full...

Luqmanz, yes there are many who do this,

The problem is that you grow your position over time and sooner or later your position is so huge and you are managing it so tightly (due to the size) that a lot of them lose sight of everything else.

I have to share with you my moment of realising that I am now a proffesional successful trader.

See, I was also struggling like so many on this forum. Trying this, trying that programming this indicator then that one then a combination of these then applying oil action to gold via forex etc etc etc etc. Above all else I really struggled with letting my winners ride, until I spoke to a veteran and told him my problem. He suggested I take the opposite position next time I decide to cut a positive trade. After three losers like this I found it very easy to hold on to my winners!

All the old-hands always told me to go with my gut - I never could, I always wanted some kind of confirmation. Until one day I was so fed-up with yet another "system" not giving the wanted results that I decided to start reading about the fundamentals. Now, just reading them does not help, you need to know what their implications are as well. By this I mean it doesn't help you just read that NFP was up so the FX MUST do this or that, I mean the NFP is higher than EXPECTED so this will fuels inflation so this will mean next week if the Empire State BCI does not confirm these figures we should see a slight pullback and hence a good entry level. And so on and so forth so you become a master of the art of understanding what the fundamentals mean not what it means when a number comes out thats why many a time a number will come out suggesting a certain direction but the opposite happen, it is due to the interactions that the opposite happen - in hindsight you can always say "ohhhhh, that why this figure caused this reaction" The truth is all the information was available before hand so if you really understood the figures you could have anticipated the direction.

After months of reading and learning I started taking my positions on "gut-feel" and lo and behold it proved to be a better choice than technicals. Not all trades were positive - there were still losers but because I backed my trade with a long-term view it was easier to manage it and let the winners really win. So one day I was driving home wondering how much I made that day. I just couldn't remember no matter how much I racked my brain - I had no idea how much I made...I knew I made some cash but how much I didn't know. That was when it struck me - the money doesn't mean anything anymore so I am one with the market rather than one with the bankroll.

I had a good evening that day...The next day was the worst...I was thinking - ok so thats the secret to trading - now what am I going to do with the rest of my life? I lost a lot of my passion for trading after realising its a job like any other in the world.

There are an old saying that something like 10% of traders "make-it" but its not entirely true. The success rate when trading for a firm is much higher while on these forums the success rate is maybe 1% because people aspire to become traders but they never really understand what it takes.

Its like a first year at university...out of the thousands of aspiring medical doctors only 1 or maybe 2 will become known in their fields as specialists. Many students change courses, drop-out, get pregnant decide to just become a GP and not specialise etc etc. I think it is fair to say that only about 1% of first year students ever become successful specialists. And only after very hard work and many long hours. The same is true for traders. The forums are the same as maybe first year students maybe not even so advanced...With one distinct difference: as a trader you can never become a GP you either specialise or go broke. Nobody can survive as a trader if he/she is just an average GP earning a steady income. You just don't have enough cash to be average, you want to live off the money you make from trading, you want to pay your bills with the money you make from trading, but unfortunately there is no GP's in trading, even if you just barely make a living from it, it still takes specialist skills to make this happen. It is no wonder that so many fail. When trading for a firm at least you have many things going for you like other traders and a bankroll and the support of a salary hence the higher success rate.

I hope this helped a bit

Just googled hans123 mentioned in another thread.

This is another example of an intraday system trying to capture the daily trend. Not a bad system at all, not backtested enough, if it was it would have been seen that you MUST expect these kinds of drawdowns. I have once worked on a similar system but as I was still in "get-rich-quick" mode I discarded it as it's drawdowns was for far too long a period - something like 4-5 months of being in a drawdown. How am I supposed to pay bills while in this drawdown? This kind of system however helped me to develop a "scaling out of positions" money management system when the market was working against my position/system.

In all honesty, I think the Hans123 system is now ripe again to start making money. Always a good time to start a "discretionary" system is when it is in a big drawdown. You almost weigh the probability that the system will have a drawdown twice the size of its previous drawdown and decide that its not likely and then use the system. If you are wrong and the drawdown continues then your "gut-feel" on the system was wrong and you live with it. So basically you trade a system on a system... as if the hans123 is a currency itself being in a pullback at the moment so after a new high we buy the pullback. If you are only interested in trading using technicals then this kind of method could be your best help...get a lot of systems, monitor them each and trade those that are at x% of their historical drawdowns. I don't do this but it will work the same as trading a currency outright long-term.

Hope this helped

Trader888,

Thanks for the reply.

Hi Trader888,

I have just come across this thread. I have really enjoyed reading your posts and it is very interesting to read the view from "the other side" of the trading business. (Trading with OPM vs trading with your own)

What you say is remarkably similar to a friend of mine who used to be one of my brokers (but who has now gone out on his own and trades his own account...very successfully, I might add.).

Your excellent perspective, experience and advice is very worthwhile and has significantly increased the level of trading expertise on this forum.

Please continue to post here.

I have now bookmarked this thread....(that is a remarkable achievement for me as I am a Techno-moron) and look forward to reading many more of your posts in the near future.



PS Having been married for 30 years, I immediately understood your statement about no females....... Been there, done that, not allowed anymore.


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this is an interesting thread. thanks to everybody

I just wanted to say thanks for the insightful information you have provide to this thread. I also wanted to thank Jacko for giving me the link to this thread.

I have been trading live since Jan 1st, and was doing the things most newbies do (short term trading, not following the trend, etc, etc) and my trading account showed...

With the knowledge provided by some long term traders, I changed my view at the beginning of this month.

And it has proven to be "very" successful.

Looking at long term charts, learning to understand the news and using my "gut" have given me more confidence to trade and less time spent in front of my computer.

Just wanted to say thanks and please continue posting.

Tell Kathy Lien that lol...by the way shes pretty hot

and no disrespecting the ladies, some of the best traders I know trade so they can have enough money to get it on with the ladies


but seriously trader888 can you tell us more about how the gut feeling is developed? How do we understand the connection between fundies? more expamles, thanks

great thread. this forum is getting the best traders posting here. keep posting, Trader888. I like the 888 feng shui in the name, Trader888. you worked for an Asian based bank maybe?

No I did not trade for an asian based bank but one of my brokers was asian based...

A current example of a gut-feel trade might be on the EURGBP. I believe that the EUR will weaken against the USD before the GBP weakens against the USD. So overall EURGBP going down, my first entry was at 0.6758 with a possible bounce coming in at 0.6800 so I took minimum position at 0.6758 and then at 0.6780 I closed about 75% (for a loss) and put it back on at 0.6792. This happened over the last 2 weeks or so. Last night I decided to add a bit more at 0.6768 to see if we can go below 0.6750 initially to target back to 0.66 at some time this year or next. Should my view be wrong then I will cut back again at 0.6790 and close everything at about 0.6820'ish...Idon't know whats going to happen but after looking at inflation etc. I feel the eurozone will first start making noises about the "strong" EUR and cause EURGBP to fall. Maybe I'm wrong but I'm willing to back my view and know that if I'm right I can have at least another 3 such losses without braking the bank.

Another gut trade at the moment is on oil reaching $80 in the very near future as first target. All indications is it should hit sometime. I won't like $80 anymore once we trade below $70 without hitting $80. This is a very short term view maybe in the next 2 weeks to month.

Also on the SA market the All Share index will hit 30,000 sometime this year before it goes back below 28,000. In fact it should hit the 30,000 very soon. It is a big level and there is a lot of development and investment going on in that country regarding the 2010 world cup soccer so it should be a one way bet up until such time as the cup takes place...beware the dips. Also on that countries currency...they have introduced a new "National Credit Act" and already indications are: less cars sold as well as less homeloans approved. Now this might give the governor of the reserve bank the reason to NOT hike rates any further. Should this happen we should see 7.50 against the dollar by year end. There is also indications that the government is actively buying dollars below 7 at the moment shown so by their USD holdings increasing. The fact that interest rates might stabilise for the remainder of the year might mean people/investors going for the All Share again instead of the government bonds as investment vehicle. Hence the target of at least 30,000 on the all share - probably more - but i am expecting a pullback once they hit 30,000. Of course to enter now on the All Share is crazy as the target is very close.

That is typically how I would make up my mind as to the direction to trade.

Now I can easily be wrong but I don't care about that anymore because I know I need only one good strong long term trend to take care of all the little wiggles trying to get in on a trend.

Once I have made up my mind about this I will bounce the ideas off my fellow traders to get insight into their thinking as well, I try and speak to the ones actively trading these markets as they are very close to all the information on it. These discussions will not change the direction I am willing to back but it might influence the size I take as a first punt. Remember nobody knows where the market is going to go they are guessing just as I am.

Hope this helped

Adding to my post above...

When I started trading I felt that the broker knows my position and is keeping the market just out of reach of my orders so I can't get closed for a profit, while they run on to my stops at speed and close them easily. It even happened that I decide to close a trade as soon as I reach breakeven again...waiting and watching the screen seeing a single pip loss but not taking it because I want to close at zero but the broker just won't move the market that 1 pip towards me to make it zero.

Well, these feelings are all fabricated and false. See first of all the execution is very fast and they offset the position to the market almost immediately or they might pass it on to their "client" desk to offset positions there. BUT if you trade interbank you have to "click" the broker and then before confirmation of the trade is done you physically book the trade using another system and the booking of that trade could happen hours after the trade was actually done via the broker-station so they don't know if you might dispute the fill or decline the trade completely (you can't just decline it but it might not show on the broker statement etc...there are some admin issues)...so they can't honestly trade against you until the trade is confirmed by back-office. By that time so many other trades were done that they honestly don't know your position anymore. The broker-stations used do not record the P&L, margin etc like some "trade-stations" like fxcm I have seen. All it has is two-way prices and then an "audit" of what was recorded on it. There is also nothing like double click and "are you sure?" or any of that you click your done and thats it. So NO throwing balls in the dealing room.

Also the spreads are very tight while at news times it is very wide and getting filled is almost impossible...BUT some of the brokers are very good on filling orders at news times but you are not guaranteed anything and should plan for slippage. It is your relationship with the broker that determines everything. However if you trade on a small account at an "internet" broker I think you wont get good service and if your account grows to a certain size you will run into significant "execution" issues.

I have read these news trading services and actually laugh at them making money because in the "real-world" it wont be possible to get fills at any respectable broker. They are just exploiting a shortcoming that does not exist anywhere else but with some slow brokers. This gap is being closed as time passes.

In my next post I will tell a bit about the most spectacular blow-up I have seen...

This can't be posted enough times as some people still believe in the "weee, NFP is big money making day" myth and that newstrading is a profitable pastime and that a BAD broker is the one that doesn't have an exploitable flaw.

Newstrading as in straddling spikes etc pp is NOT a proper way of making money in forex.

Trader888 its great to read your posts and as jacko said, by posting here you are adding enormous wealth to these forums, something myself and many others I am sure GREATLY appreciate. Thank you for taking the time to post, the same for jacko and his posts which I still greatly enjoy reading. Thanks again guys.

Actually I was also hoping you can tell us how this gut feeling was formed? like is it from looking at news headlines, from looking at CPI, retail sales, etc...

One argument I heard from a millionare stock broker towards investing in stocks rather than forex is that there are too many variables to concentrate on in forex...you never know which one is gonna cause a reaction....

the only current example of long term trend I can think of is carry trade...

Also, I remember you mention something about following the trend and not trying to predict the market...can you tell us how your feelings are following a spoted trend rather then fortelling a possible prediction? thanks

It is a difficult question to explain how to develop a gut-feel. The way it has worked for me is to read read read about economics of a specific currency and see how new data cause the market to re-act. From this you will get a feel for the sentiment that exists. For instance if bullish data for the USD comes out but the currency do not re-act bullish then this tells you a lot about where its going. From everything you have read about a specific country you also develop your own feeling of where it is going. I receive various newsletters from many banks re their interpretation of the current economics, I read it and decide whether the market is reacting as these writers expect it to react if it does then I go that direction if it doesn't then obviously the market is either flat or in transition to a different trend.

When I say the market is in a specific trend then I do not imply you go look at the chart and see if its up or down or if it has been going up or down. What I mean is that the sentiment in terms of reactions is telling you something about the underlying forces working in the market. Take the EURGBP as an example if you look at the charts there is no discernible trend that stands out - however should you apply almost any technical system to it you will quickly notice that your short trades were more profitable than the long ones so I perceive that there is a "short-bias" undercurrent to what the eye can see on the chart. It is almmost as if there is a hidden layer only observible should you take the time to understand the fundamentals of a market and the way the market reacts to fresh news.

How to develop this gut-feel? I think after many many articles read and opinions listened to it comes automatic.

Take for example something like a sport that is not well known- say the world hockey tournament. Which country will win this year? You don't know, you don't know the teams nor the stats nor the injuries or nothing. You look at the nice colours they wear and decide you are going to bet on the red team winning. You make this bet without knowing what is underlying any of the teams. This is the way almost everybody tries to trade forex. Then the red team loses a game and you switch to the blue team. Now, if you just get a program and a profile on each team and the players and the history of them and read up on it without caring for which team which player plays. Then you will get a feeling for which players are strong and witch are weak or inexperienced NOW if you look at the team with the most strong players and the most weak players you have a winner should these two teams ever play against each other. You still don't know who will win but because you know the strengths and weaknesses you are betting in the direction the trend "should" go. Not many forex practitioners take the time to investigate the weak and strong economic numbers in their chosen currency pair. They blindly bet on the one with the nicest MA crossover or funniest wiggly socks or is that stochs?

Hope this helped a bit to clarify