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INTERVIEW WITH A TRADER

1. How did you get into trading?

I had an interest in the stock market from around the age of 10. No one I knew invested but I somehow I just got into it. I used to read the business section of the paper and honestly had no idea what I was reading.

A few years later our commerce class had an excursion to the Sydney Futures Exchange and the Australian Stock Exchange. Visiting the stock exchange was great, but walking into the futures exchange was a 'wow' moment. I was hooked. From then on, I would gather anything I could on futures. Remember this was before the internet and books on trading were wickedly expensive for a kid earning money from a paper run.

2. What has been your progression? That is, what did you first start trading and what have you traded since?

I started out trading bank bill spreads, because the daily movement was small enough to fit in with my small account size at the time. I also traded the 3yr and 10yr bonds. Intraday volatility back then was great and you could ride several moves per day.

Back then I was working as a technical analyst and we weren't allowed to trade so I had to run into the bathroom with my brick sized mobile phone to place orders with the broker.

Moving on from there, I started work as a broker. Being an analyst was a good learning ground but I wanted to be closer to the action. I spent a year doing that then moved into managed accounts with a focus on index options. I was a director of a CTA (Commodity Trading Adviser) business, which is much like a hedge fund.

3. What do you trade now?

From options, I moved back to futures spreads and that is what I trade today.

4. What kind of strategies do you trade?

I really like seasonal trading and I combine that with identifying markets that are doing things they don't normally do. It's a combination of technicals and fundamentals.

5. What is your most memorable trade, either at Propex or elsewhere?

I would say trading through 9/11 was most memorable. We had a large bullish options position on the FTSE100. By large, I mean large and what happened really was a turning point in my life.

Early in the European morning, before the incident, my partner and I were chatting about our position. It was trading a little against us, nothing much, but neither of us liked it. We just had a bad feeling about it.

We called the market maker for a quote to close the entire position and walk away with a small loss. After receiving what we thought was a terrible quote, we decided to leave it for a day and reassess tomorrow. That was a bad decision.

An hour or two later the incidents in the US began. Our position went from slightly offside to very much offside. Bid/ask spreads blew way out and that made it virtually impossible to unwind our position. We attempted to hedge here and there with all sorts of option combinations. In fact over the next week or so our daily volume was equal to about what we would normally average in a month! We traded many thousands of contracts all in an effort to make back that initial loss. In the end, we lost so much it was pretty much the end of the business as we knew it.

After that, my partner wanted to give up, but I wanted to keep pushing and rebuild. I saw it as a challenge. It took a year but we did it.

It's interesting to look back and think if only we closed the position when our gut told us to. I learnt a lot from that.

6. How do you find working for Propex compared with trading from home?

It's a good environment and a good learning ground. You get to be around other traders all trying to make a living. There is a lot to learn in trading and being around other traders is the best place for it.

7. How do you find trading for a living versus being in any kind of job?

Many people think trading is a lifestyle choice. In a way it is, but not the kind of lifestyle you might initially think. There are no deck chairs and daiquiris here. Trading well takes a lot of time and focus. It's not easy.

8. How have your views of trading changed since you started?

No really. I've always seen trading well as finding your niche and being opportunistic as opposed from finding 'the million dollar system'.

9. What does it take to do well as a full time trader?

Lots of time, focus, resilience and flexibility.

10. What advice would you give a newcomer?

  • Don't spread your focus too wide. Start looking at 1-3 markets. Know your market and what moves it.
  • Spend time understanding the fundamentals of futures trading.
  • Learn as many techniques as you can, not just what you think might work.
  • Use a demo account or simulator, but don't use it to trade the way you want to trade. It's a simulator, so the P&L does not matter. Use it to learn by trying different strategies.
  • Work hard and keep working hard.

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