The diary of a fund trader who “works” only 10 minutes a day
“If you call trading for as little as ten minutes a day “work”, then you are in the wrong business.”
Discover how a fund trader makes more from doing less
It was four years ago in June, 2008, when I decided to embark upon what would be the best mistake of my life. It was to immerse myself into fast moving and apparently highly lucrative world of foreign exchange trading. As a freshly graduated journalist in a desperate bid to trade my way to financial freedom, you can be sure that along the way, I managed to make every mistake in the book.
If I was wrong in my preconceptions of trading being “easy money” then I was at least right about my ability to get pretty much every trade I took wrong. Every time I went long, the market went short and every time I went short the market went long. It was as if my broker was perched over my shoulder feeding off my wrath while filling his pockets with my money.
It felt like a prison sentence, getting out of bed two hours before my usual awakening for 6am GMT to trade intra-day, only to lose more money than I gained. After a losing trade, frustration would turn to anger and anger would turn to revenge. This was reflected in my trading and my account was haemorrhaging money. Does this sound familiar? Many traders, even the best traders of this day have apparently gone through this. But what separates them from the majority is they have persevered in the face of adversity.
That was then, this is now. I have since been able to transform what was a time-consuming, loss-making business into a carefree, profitable and relaxing “hobby”. Having achieved consistency, I now trade for a London-based fund, in addition to my own account. I also mentor. The delicious irony is that despite the extra responsibilities that have arisen from both trading bigger money for high net worth clients and mentoring people who were in my position four years ago, trading currencies for “a living” has never been so effortless.
Turning things around
A brief encounter trawling through the majors, minors and cross currency pairs before I go to bed is all it takes to satisfy me nowadays that my “job” for the day has been done. If I am out having a “good time” in the evening then my work can wait until first thing the following morning, preferably without a hangover. Just like profitable outcomes in the market, there are simply no guarantees there.
I’m a swing trader who trades the daily chart and this is how I roll.
No wonder the older guard of bank traders despise my time rich antics which are synonymous with my shameless declaration of being a “part-timer”, or rather, a “lifestyle trader”. I hear stories of some bank traders working ten hour days. That certainly does not sound like is cricket to me – more like self flagellation.
The truth is, I actually find trading quite dull. You will never catch me talking about it to my friends or family unless they bring up the subject. It is simply a vehicle I use to achieve decent capital growth on both my clients’ and my own account.
Today my entire trading plan is dedicated to being in the “opportunity flow” of the markets every day with spending as little time as possible watching the charts so that I can have my money working for me, and so too, my clients. Anything other will mean me actually having to work for my money, like having a 9 – 5 job. No thanks.
Higher highs and higher lows
My hands-off style of trading is a far cry away from four years ago where I was often reported to be seen to be salivating over my charts like an over enthusiastic, biscuit bribed dog wagging its tail and being drawn to the flashing lights of the broker platform like a month to a light bulb.
In the early days, numerous trades were placed, many of which, losers, and as for a strategy – you can forget it. I simply did not have one! It was not until I successfully managed to wipe out three separate trading accounts did the feeling of being “in deep” manifest itself. I could not give up after decimating my third trading account by a thousand paper cuts – that would be quitting.
Determined to defy odds and be within the 8% of people who trade financial markets who actually “make it”, I decided to migrate from the 5 minute chart to the daily timeframe under the proviso that if I was to be consistent loser then at least it would be a slower process on the daily!
Since becoming consistent and being consistent, it became apparent that trading less actually gained me more, and since adopting my new found style in 2010, my trading has come on leaps and bounds.
Take the second quarter of this year, for example, which, for me was summed up in 19 trades, with an overall gain of 11.77%. Yet two months into the second quarter I have only traded five trades. Current gain of the third quarter so far: breakeven. However, the final month of the quarter, September, could be a game-changer, with the randomness of the opportunities the currency market yields.
But with such little trading activity over the past weeks, months and years, you may be wondering what I actually do with my time: This self-moulded “lifestyle” trading is a far cry from the early days when I was successfully unsuccessful in pretty much every trade I took.
But that was then. Today, trading pin bars off horizontal levels on the daily timeframe equates to about 80% of all I do. It may sound dull and uneventful, but such low maintenance set-ups are low in frequency and above all, profitable. I have proved to myself that I can do more from less and reap the benefits of freeing up about 95% of my working day to do whatever I please.
I would not have it any other way and, if you trade too, you owe it to yourself not to too.
A Day in the life of an ‘end of day’ trader
Just coming to the end of a coaching call with one of my more studious clients who asked whether the French Trade Balance figure released the next day would be enough of a reason to abandon the EUR/GBP trade I recommended to him. He seemed at best bewildered, at worst, aggravated to learn that I do not actually care about news. Not one jot. “Turn off Bloomberg and Reuters,” I proclaimed, “For your own sanity”.
After all, for us daily timeframe traders, most news announcements are simply noise in the market. If I am risking 1% of my trading account on a trade with a risk/reward of a 4:1, then what is the worst possible thing that can happen if news sends my trade against me? I lose 1%. But if news goes in my favour, then it helps perpetuate the profit on my trade where I aim to make 4%. I then asked him, what would be the worst possible thing that could happen if he did not lose the trade. He replied: “To potentials miss out on 4%”. I replied: “Correct”.
This concept was clearly a paradigm shift for him. He was doing well though and was clearly progressing at a faster rate than most at his stage in the learning process.
I receive an unsolicited, mass email from a so-called forex signal service. Apparently USDCAD is going to “tank”, and I have to subscribe to their services to find out exactly what I need to do. Out of morbid curiosity, I log onto their website to find out more. Trading results? They simply did not have any. Testimonials – nowhere to be found. I chuckled to myself – more small fry out there trying to make small fry out of small fry. I wonder how many people signed up to them. Perhaps one too many.
My phone buzzed uncontrollably. It was my trading partners from the fund, Tom Franklin and Jitan Solanki on WhatsApp. It was that time of night. Time to “work”... heck!
We discussed whether any potential set-ups which had manifested themselves across the range of major, minor and cross currency pairs. As August is traditionally holiday month where the markets are less liquid and move less technically, we wanted to be cautious and preserve capital in advance of September. With no positions running, we established there were no fresh opportunities which fulfilled our high standards. We declared it a “night off” as far as the fund was concerned. It is, after all, better to be a pilot on their air wishing he was in the air rather than a pilot in their air wishing he was on the ground.
I respected the collective decision, despite rather liking EURGBP for a short. It met my own rules for my own account.
It was an ‘inside bar’ neatly placed within the previous day’s range. It was also a seller bar, which indicated that sentiment was starting to tilt in favour of the bears. Furthermore, it was touching a trendline for a fifth time, which is seldom on the daily timeframe and testing the previous swing low (at: 7957). This also correlated with both a 0.618 and 0.50 Fibonacci retracement making it a ‘Fibonacci cluster’. Further still, the hourly timeframe gave a near perfect head and shoulders pattern which, for me, sealed this trade idea as a ‘pink elephant’. The type of trade which conformed to everything I look out for. I placed the trade and sent out the trade signal to my subscribers.
An unread email in my inbox stuck out like a sore thumb in and amongst all the “you have a new Twitter follower” notifications. It was from a new client on his two week trial, venting his rage as to why I did not send him at least three trade alerts on a daily basis. He evidently did not read what he was signing up to. Don’t bother me with the small change. I can’t hold everyone’s hand – not at 11.15pm!
Time to play. Jitan, our friend Raymond and I venture out to Elk Bar in Fulham, London to unwind and do what single men do. Funnily enough, trader talk is not one of them! Elk is a fabulously relaxed place to hangout, enjoy chinwag with friends and mingle without the pomp, pretentiousness and exorbitant prices you often get in the City. With no white collars and ties ever in sight, it was and will continue to be a regular haunt.
It was time to head home to hit the hay via a kebab shop. Were any open at 3:10am? No chance.
Woken up by the screeching police sirens outside my house, I realised I had received a text from an acquaintance who works with a leading hedge fund in Mayfair, London. Apparently I had to buy the Aussie Dollar, based on his “top hedge-fund trader” friend’s tip. Whatever, I thought to myself. It’s not his money at stake and if it is not in my trading plan, it does not get traded – not for anyone.
I replied to my client’s email, gently explaining to him that the market owes him nothing just because he has decided it is time to play, and that I only trade high reward, low frequency set-ups on the daily charts. Ok. His question was certainly valid. It was certainly something I would be thinking back in 2008 if I was not in a trade and I wanted to be.
After completing some trivial, admin related odds and sods, I went to the gym to work out and reward myself for going in new hot tub and sauna. The place was dead as it was rush hour in London so I enjoy the place virtually to myself and met a very forthcoming chap in the sauna, who broke the ice in seconds. Apparently he is very interested in what I do and knows scores of people who want trader mentoring and to have their money traded. I will have to see that to believe it.
Break for lunch. Today it won’t be botched three day old spaghetti bolognaise...for once. I met an old university friend for lunch and we enjoy burgers and a throwback to the past where we took our long-lens SLR cameras out for a spin in Angel, London for some urban photography.
Arrive back in Fulham, exhausted. Time for a nap.
Ooops! Oversleep yet again. I now feel guilty and scamper up to my office to see how I can offset the guilt. I open the charts to see how markets have run.
Our EURGBP trade has triggered and stands nicely in profit. The account has so far made a gain of approximately 2%, risking 2% for the trade. As I am targeting just in above of the previous swing low I have to wait a little longer. After my blitz market scan yielded no further opportunities in the market and my trading plan dictates I can only trail my stoploss on my EURGBP after the second seller bar, I declare the rest of my “trading time” a night off. Ah, the simple life.