chat with traders episode 89 this is
your key to the minds of trading elite performers those who profit in
relentless markets here on the chat with traders podcast you'll hear about the
skill sets and tactics that lead winning traders to win so you can level up and
become a better trader here's your host Aaron fight field okay with getting new sponsors starting
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OV a TA try to break com /a traders hey traders what's good nice tell you listening to episode 89
now let me introduce this week's guest like Mauro also known as peeps are on
Twitter like started out as a stockbroker in 1995 but this only lasted
for a short period of time before I switch teams to become a trader will see
friend put up 50 thousand dollars in starting capital which black lost around
about thirty thousand dollars of it within the first six months before
wiping out entirely black was able to turn that remaining twenty thousand
dollars into roughly 1.5 million dollars and the next few years that followed he's since been involved in various
trading and technology firms but today like is the chief currency strategist
for wise tried co-founder of 4x analytics and most importantly an
independent FX trader over the course of this episode you'll hear about black
story in greater detail how he navigates forex markets using charts and technical
analysis as well as an understanding of economic drivers some tips for beginning
traders using leverage and plenty more to so here we go on there and fight
field and you're listening to chat with traders featuring like tomorrow I'm excited about this because it's been
a very slow day to say the least I mean that this is like the worst week
to be in the markets a side from you know the the the time between
thanksgiving and christmas especially that last couple weeks so so was it
sighs slaughter it's just you know lack of liquidity you got a lot of European
traders are gone a lot of you know a lot of North American traders is their last
week a holiday before there are we have a labor day weekend here in the US so
things are you know it's a long weekend so everybody usually wraps things up
after labor day weekend then it takes a good week or two to get things back in
the flow because you get you get you get a lot of hedge fund managers you know
they come back on the 15 sep tember 16 sep tember and then they have weeks of
meeting a week meetings you're trying to strategize and liquidity start support
back in after that so you know it's just everybody's wrapping up their summers so
and everybody knows is typically a slow time of the year ok so maybe even though like 4x you know
everyone can refers to it as the most liquid markets in the world when a lot
of people go on holiday ID you still kind of have an effect like that like 20
oh absolutely no such that you say how do you change your trying to kind of
work with that us interesting question it's usually it's usually actually just
making sure stops are a little closer i pick up my my position size sometimes it depends on the the
environment though you know sometimes all if if the Rangers like today the
ranges were a little bigger so I i narrowed my my my trade size is a little
bit wide my stops a bit and kind of let the trends take hold best they could some days when I know
there's a 30 pick trading range and there isn't much i just i'll keep a
tight stop and I might even actually take a little bit bigger position so
instead of trying to make out of 30 pics or 50 pips in a trade i might only look
to make 10 or 15 but a little bit bigger position will compensate for you know
some of that lack of liquidity yeah right like I co yeah right like will
let's just get let's just get started i may not cover if I mentioned this T
beforehand but I'm I constantly get hounded by listens to bring on more
effects try to so I just want you to know you're probably making a lot of
people really happy right now our grade talk to us about your introduction to
trying like hell gee how'd you get into this was you're in charge well that's a that's a that's a oh you
know a funny question that a lot of people always ask you know it's
especially where i live i live in Phoenix Arizona so I'm not in the center
of the financial universe i'm not out of a neat or crime not out of Chicago here
in the united states where you know I'm probably more of a you know more about I
guess than a normal trade i guess if you will and so when people ask me like how
did you get into the currency market it's always it's always an interesting
question and I got a long-winded answer but when i left the military I i was in
college and I was going to school full-time and and and working my way
through college and I i was a was actually a doorman at a bar and I was in
my twenties I was on early twenties and worked some retail during that during
the afternoons and then I'd I don't go to school during the day and at night
and you know I had one of my best friends who was a stockbroker and this
is you have to think this is back in that this back in the mid-nineties he
was a stockbroker and he was kind of like that i don't want to say a boiler
room type of setting but he was a you know he got on the phone and dialed
three four hundred people a day and it was just a numbers game but he'd get
people on the phone and some stock and and he's like you know Blake you got the
gift of gab you should try being a stockbroker knee i said i don't know
anything about the stock market you know it's not really my interest he goes just
really matter you know you can you can you can you can talk and you can prise
sell you should try it was making a lot of money at the time especially me being
in college and I saw the car that he was driving and the lifestyle I was living
in Mike now you know i'll go in for an interview and I did in and I got the job
I didn't know anything about the markets I got
the job i went and got my series seven and you know mymy state license which
was a 63 at the time I think it still is anyway and i became a stockbroker and I
didn't really I did it for for for over a year about a year and i really wasn't too
happy with selling people stocks over the phone I I was good at it and you
know we we brought pixar public we were part of that public offering which was
pretty neat so my clients did well but it wasn't it just it just wasn't
something that really interests me and unfortunately that same guy he had
learned how to trade from a market maker they parted company public back in the
nineties called go to net and he sat with the market maker for like a couple
months straight and this market maker really taught him you know you know
order flow and you know the depths of the market and how to navigate through
him and he was right at the time that the day trading in the united states was
getting really on its feet and Jeff Burke and Chris block of block trading
there on the front cover of in magazine and you know that they were called the
the bad boys of trading or the souls bandits I forget exactly what what the
title was there are on the front cover and we we had a mutual friend who is
extremely wealthy in the insurance industry and he was a friend of he was a
friend of who's the boyfriend of a woman i do and so we approached him with this
you know magazine article and saying and we told pay we can we can do the whole
training thing should be easy so I of course it's always easy and it
was in 1996 and we we went to the same offices that those guys were written up
in there they're called block trading they had an office in Houston and Dallas
they had one in scottsdale arizona and so we went to scottsdale office and and
in the mid-nineties and start trading there and and I are really so funny I
when I first start right doing it start with a certain amount of
money and within the first six months then the first six months I think i lost
like 60 percent or close to seventy percent of the equity now keeping in
mind that as a traitor you you live off the markets not like I'm drawing a
salary anything and I really struggled at first few months and durand and
eventually found my wings you know over the next several years I i trade my
myself in a nice prosperous position where i left my investor I also
partnered up with a couple other traders one of the one of the one of the
principles that block trading office in scottsdale he moved with us we'll move
to dallas and we open our own brokerage firm and we had a license at the time
nasd and sec you know license firm and we had our own day trading operations so
back in the late nineties you know even into you know the early two thousands
the technology wasn't as as it is today I mean internet was still in its
somewhat infancy people didn't have high speed internet in their homes are you
know when i downloaded my charts i used to have back in the nineties i used to
download them you know via you know telephone cable and it would take like
hours to download like 200 charts it was ridiculous but with that . time there
are a lot of day trading offices so we had our own office and and so we had and
I think that are at our peak we had about 15 or 18 traders that were in our
office and all you know from all different walks the lives and really
really great traders that I learned a lot from and eventually you know we sold
our we had a technology company that was spun off from that brokers from the
built direct access to trading technology and we sold that company to
the wise trade group in 2003 i think was early $MONTH 2003 and so I've been with
the wise trade group ever since and that's where I really got my might you know my trading my training started
in and I'd lived off the market for many years just solely in the nineties and
early two thousands trading yeah excellent yeah that's a really great
story black and I just like to backtrack a little bit too sure once you left the
brokerage you said you went into town to block trading block training was that a
proper might like it oh no excuse me that was just drinking
some coffee or was uh it's actually it was a we didn't they didn't have proper
terms they're all independent traders kind of like the firm that we had in
Dallas so you'd have like let's say let's say an individual like yourself
for myself and and I had let's just say you had 50 50 grand and you want to
start date rating will back back in the nineties and even in the early two
thousands regulations were pretty lacks where we used to have some major
leverage with some the leverage you could have trading the equity markets
was much different than you know in the mid-2000s maybe late you know I i forget
what years it was it was probably two thousand seven or eight or nine they
they change the the the leverage that day traders had you not use that you
never you didn't have back then you didn't have to have twenty-five thousand
dollars in your account to be able to have day trading margin and you could in
the margins that we have were incredible it was like you know 20 21 or maybe even
greater than that and so with a you know 50,000 our account a
hundred-thousand-dollar account or in our case that we you know we had
accounts that were you know in the half-million-dollar range at that time
we could trade whatever we wanted as much as we wanted i mean i would trade
568 thousand shares of yahoo a time and it you know i never ran into any type of
margin issues so we do a lot of individual traders would go there there
were i'm sure there was there were certain prop firms I just wasn't aware
of them block trading was more of an independent
traders would would go there and like I said that we didn't we didn't trade from
home no one really trade from home because we didn't have the technology so
everybody would go to these trading offices where we'd all share ideas and
and and we all had the the this the speed to be able to trade from there
okay yeah right that makes sense that's
really interesting and you know you mentioned your you will see friend help
you out with that capital in the Gita I mean it'd be nice if we had a will see
friend like that but I'm was hesitant to hand his money over yeah you know if he was he was but he
also if I could if I could explain to you that the the kind of person this guy
was he was he lived a pretty lavish lifestyle down you know he had exotic
animals and exotic cars and exotic girlfriends for that matter so I think
he was probably more of the risk-taker you know type of person and but he was
he was he was very street savvy and one of the things that he did I remember
when you first when we first opened our accounts and you have to have like a
long account short account because you can get the way that the the the back
office work back then that's what you had to do I remember when we first got
the accounts open he goes he goes alright here's a book and and and it was
the it was the mark douglas the discipline trader that was like the
first book that I ever read on trading and unfortunately is the the late mark
douglas if you don't know might have known personally actually work with them
on a couple of projects maybe about seven or eight years ago is one of the
was one of the premier trading psychologists and wrote many books on
trading psychology but i remember i got this book the discipline trader and then
he uh he also i sign me up to be coach with a several different traders another
trading psychologist 22 technical traders where I learned really my skill
set of how to how to read in and analyze the
markets using Fibonacci's at that time and uh and and that was a really those
those stepping stones I didn't really think about it so much at the time but
looking back that was probably you know what really set me off in the right
direction was really understanding how to look at charts how to analyze them
and and and and and identify where proper entry points were and those types
of things and but he was unable to answer your question he was he was
pretty nervous at first but he also took what I feel where the proper steps at
that point 2222 to get us you know where we needed to be and be profitable ok and emily haines send voice than
anyway like did hate aika at oh yeah the prophets yeah yeah absolutely we split
the profits we had a we had a percent home sharing plan of course ok so how did they react when you lost
your night between sixty to seventy percent of that capital head handed over well you know when that when that
happened in keeping mine i think i was about 26 or 27 at the time he was you
know this wasn't a large amount of capital for him so he didn't really
think about it a whole lot I he had confidence in me and the the funny thing
is over the course the next I I guess over the course of the next
two-and-a-half years because of the time now you have to imagine the time that
time in the the the mid to late nineties was the internet dot-com boom if you
will and so we ended up doing really well we had a lot of positions and some
smaller internet name stocks and ended up blowing up and really kick-started my
trading career so he ended up doing extremely well but at that point I'm you
know he knew it is like you know listen you're you're you're new and you're
going to get this and he hosted who did I it was more of a you know I i if I'm
going to eat and I'm going to survive i'm going to make it work and I told
Mike I'm going to make this work we're gonna we're gonna we're gonna make this
work and he had the confidence in me and I think really what turned it around at
that point is my my BOB trading partner he had his own account but you knows a
guy that actually got me into being a stockbroker at that point time he really
was the driving force behind me you're sitting me down and saying listen you
know we have to be disciplined and how we trade you know it's not just throwing
darts we have to really you know start to analyze the markets and understand
where you know entry points are and what your risk isn't and all the things that
i really wish i would have learned you know right at the very beginning and it
took me some time to told to learn some of the things that I I try to teach
traders in today's today's trading world yeah ik and just before we move on to
this to talk more about your actual turning point I'm just interested in are
like how will you pay your bills how are you 18 and keeping up with
expenses and what during that during that period when you were starting out
and you lost my key mention sixty to seventy percent of capital how you get
boy so fortunately I was a car i was always really good with my money is far
as you know squirreling away for for a rainy day so I i lived a lot on ramen
noodles and peanut butter and bread and uh fortunately I had a I had you know oh I was in I was in my my mother had a
UH she had moved she had moved as Sacramento California at the time to
take on a a contractor position and she had this rental property which is over
by our local university here in Phoenix and and it would it's definitely nothing
to write home about but it's it's where you know a lot of college students were
around there as well so I i got to live there not run free but she was pretty
lenient if I was running a little behind so but those stresses mounted those were
really stressful times and and and and those are those are times where you know
really them the market and this is where you have to dig down really deep as a
trader you have to you after really is where your strength
comes from is through these trying times and I i I'm I'm really I feel fortunate
that I had to go through some very tough times early in my career to really make
sure i could turn around and and it's because you know in retrospect you
realize man i never want to put myself back in that situation but also a you
know helps you really dig deep and in and really figure out what you need to
do to be successful in the markets and and why I was one of those people that
you know west coast trading for us in the United States especially where i
live you know the markets were opening at six thirty in the morning that means
i was up at four-thirty and-and-and at the office by five thirty in the off and
then then you know the market opens at six thirty closes at one but i would
still be in the office for four hours on end afterwards looking at charts
analyzing the markets trying to figure out what I wanted to do the next day and
I think a lot of that drive came from I i really need to feed myself and put
but they don't put food on the table and and make this work yes essentially like you almost feel as
though you wouldn't have become as successful as a try to out to die if it
wasn't for these tough situations in the beginning there was kind of like I'm to
a dog absolutely and you know i think one of
the it's the I i agree with you and and one of the
things that I I tried to explain to traders now is you know make sure you
have enough money set aside if you really want to trade for loving make
sure you have enough money set aside so you don't have to deal with some of
those dresses because you know depending on where you're at in your
your-your-your lying it went well . you're at in your life you can you maybe
take some of those wrists but you know if you have a family if you have a wife
if you have kids it's much harder to take those types of rest i I'm I'm glad
that I went through those experiences when I was young and I didn't have a
family and I didn't have kids and i was i could take on those risks arm I
wouldn't have done it any other way but you know it for for traders that are starting out and
they're trying to you know just just just you know become successful getting
rid of some of those risks are probably are probably really important as you
start your journey has a traitor i think yeah yeah so let's focus a little more
on your actual turning point as a try to so you've obviously gone through a
pretty rough patch what happened in order for you to guy
from the losing tribe to to a profitable try to you know a lot of it first i
would say is is a little bit of luck at that point I'm like I said we we took a
couple positions and they ended up doing really well which gave me a little bit
of cushion so that that obviously helped quite a bed after that it was more about
discipline it was more about discipline and and realizing that I needed to wait
for a certain set up to evolve uh I got caught just like a lot of people at that
point time and even traders I you know Here I am 20 years later and i watch
traders trade the markets everybody gets caught up in the the the inertia of the
market at that moment and and the excitement and the chase prices all over
the place they think Oh a move is happening i've got to be on it and by
the time they get in it's already too late the markets have turned so what I
realized early on and and one of the things that's really been the i would
say the backbone of my trading has been being patient and waiting for the market
to set up that is taking me so so far in the markets and it's one of the things
that I think that if i would have learned early on i would have been put
in this situation that I was put in initially because it because at that
time Aaron you have to realize that there wasn't there wasn't it traders education wasn't like abundant
in the internet was an abundant at that point time either you couldn't just
search anywhere 40 what is a good chart pattern and oh you know what does it
take to be a successful trader there just weren't that many web pages
available there wasn't that those types of resources so
a lot of what I did at that point my life was trial and error and and based
off of what I've you know the the few books that i read at that point but i
think really the turning point was the discipline the discipline in and
actually waiting realizing that I didn't have to be trading every second of every
day and realizing that i needed a letter trade come to me and if the trade came
to me and I could plan around what it looked like i could realize okay where's
my stop going to be at what point am I wrong and where am I looking to get out
and what is my risk/reward look like risk/reward was one of those concepts
that I that I fortunately picked up very early in my career and realize that hey
if I'm gonna risk a dollar I i need to make two or three or four or more you
know and and and and if i'm going to risk that dollar i need to make sure
that that is the maximum amount of risk I'm willing to take and in that trade
and those are the types of things that really got me to where I'm at today and
know those those basic rules okay so-so for you to increase your the amount of
discipline you had as a traitor I mean what specifically were you doing
to to increase that discipline was it just a matter of being a lot more self
aware of what you were doing was there any sort of practices or do things you
tried to do to actually increase your discipline and you know sit on your
hands that's a that's a great question and I'm
glad you asked that because fortunately I had uh my best friend even to these
days I i just actually had beers with him last week I he is the guy that
really got me into the industry and and taught me how to trade he is still to
this day even though he's not in the industry he still is a very he does
trade from time to time and he calls me offices hey we know I what do you think
about this and I'm thinking about shorting that that type of thing so ed
dabbles in the market even though it does other things now I fortunately I
had him sitting next to me and he was a an absolute drill
instructor if you will like a military drill instructor he would sit next to me
and he would smack me on the back of the head say what are you doing you know why are
you doing that and I you know if I was if I've made a couple grand that day he
would pull he would and he literally unplug my computer as I was sitting at
it and say it's your done any unplug my computer and make me go home but despite
and I didn't ruin the rest of my day you know it might have only been eight
o'clock in the morning but those those little things that I can I could sit
back and laugh at now and you know now you know the you know years later those
of us have those types of things really made a difference and and now I traded
and so fortunate had somebody that I could talk to I guess the point I'm
trying to make is I had a companion a trading partner somebody who I trusted
arm you know that I can i actually grew up with that that really I could rely on
him and ask you know what do you think about this and i'm looking to buy this
and he's like what were you gonna buy it there just you know that the stock just
moved it just moved ten dollars you know and and just this morning somebody is
buying a ten dollars cheaper so here you are paying this tent our premium on the
stock why would you do that I you know I had somebody that walked me
through the process that we could talk we could both you know banter back and
forth and that middle that made a huge difference in my career and just to
continue on that . you know when you're starting out you don't necessarily know
what's a good tried and what's a bad tried or I don't know if that's the
right way to frame it but i think you know where I'm heading with this how were you able to kind of realize
what worked and what didn't work so much for you well you can figure out what didn't work
really quickly by your P&L the hopes that was pretty that is pretty obvious
but um you know you know that that that's a great question because I
learned I learned from charts i mean i-i didn't come from you know I
wasn't an economics major I wasn't somebody who you know was who prepared
to enter the market through an Ivy League school education and you know made my way into the markets
that way I i really learned through charts and charts was we're almost taboo
at the time it was kind of a you know now charts are seem like they're
incorporated everything that everybody does no matter what they do in the
markets but at that time it really wasn't and and so the the benefit that I
learned is that utilizing a chart i could use historical price movements to
help me identify where a possible entry point was and I could actually know at
what point I made a mistake now as i have spent twenty plus years in the
market I've learned a lot about what what
drivers move the markets you know especially being in the currency market
now when i made the switch really back in two thousand three to four right
around then is when I really stop trading equities and when strictly in
the currency's but one of the things that are some of the things that I've
picked up over the years is really learning on learning about what drives
an instrument or an asset class from you know whether it's a macro or micro
perspective and that has also helped me as far as my my my my you know entering
what knowing when to enter the market so i can i can actually basically have a
theme on what I'm trading and why in the direction I'm going and then find a
technical point point of entry you know a based on what I've learned over the
years and so what I've what I found though just to answer your question and
i know i'm probably going in a circle here though Aaron is what I learned is I
didn't have to get really fancy with my analysis the analysis that I do today is
basically the same analysis that I did 20 years ago and so for me I learned
more of a process and once i found the process that worked for me you know that
I don't want to say it's a secret sauce but something that you know you know if
I look for this fib hold on this trendline you know crossed
over with this trend line and this bar SI look at the probabilities are that
you know more times than not it's good the trains going to work out if i can
put up up maybe some sort of macro theme behind what I'm trying to do I'm just increasing those probabilities
and it really didn't take me too long i want to say too long you know you know
of a few years where I could figure out on a chart this is what i need to look
for in order to have what i would consider a good shot of having a
successful trade and then you know it's interesting what's more interesting is just like any
any trader i would fall into the normal traps you know i would i would make a
lot of money quickly and i get to i get to my mind my head would get too big
than my risk management goes out the window then I take a big loss and then i
have to take a step back and what I always realized is how I always went
back to the same you know same setup that I've learned years ago and say okay
well when I see this this and this that is you know that's that's that's
what typically will work for me so I always go back to the basics and and so
now what I to more than anything is I just do the basics i don't i don't try
to I don't try to vary my process much of my process always stays the same okay that's that's a good answer like
that so let's let's go into this a little further and then we'll probably
get into some Swiss to the specifics about FX like I mean just give us an
overview of how your training today like one of the type of opportunities that
you look for and try to take advantage of it can you can you ask me this
question in September like maybe mid-september couple late August is not
the best time no of jokes aside I mean all the type of
setup side i really try to do is I really try to match up just some basic
technical indicators I'm not doing anything fancy and that's
what I I I you know I host a daily webinar and I've been doing it for 13
years now and everybody knows when they when they see my charts and they see
what I'm talking about my charts look the same it doesn't matter if it was today or you
solve that you haven't seen me for four years and you're popped on my webinar
for years ago you'd see the same charts and same indicators and same trend lines
and everything looks exactly the same as it did for years ago or six years ago or
eight years ago so um you know I I typically will look for pullbacks i I
don't I don't chase price and that's one of the things that I learned the hard
way as i mentioned to you earlier I learned the hard way early on is I never
chase price always wait for prices to come to me so in other words i was
looking for some sort of pull back Fibonacci's are great tools because that
tells you how deep a retracement as and you know obviously the the deeper the
retracement is the the less likely a continuation of that trend is so you
know i'm always looking for a 30-percent retracement or 6 18 which is the golden
fit that that that really you know produces the most you know most i want
to say hits or-or-or retracements will come to those those prices the most you
know if I can match them up with it what I'm looking for for an RSI or I'm
looking for for trend line if I can match up those areas together the more i
can get to lineup the the higher the probabilities are and and that's what is
a traitor I'm really more of a risk manager you
know I managing risk and I'm trying to I'm trying to line up as many
probabilities as possible in my direction at any given time and so you
know for a typical setup for me it's like I'm looking for a pullback I'm
seeing if I can if it if if that pullback will pause somewhere where
there's a general trend I i do look at correlations correlations at this time
of the year when there's less liquidity they tend to be less reliable because
you just don't have as much liquidity in the markets of you know if somebody's
buying gold today or you know that doesn't necessarily translate on buying
gold so therefore i'm selling the dollar you don't get those correlate she's tight when there's not as much
liquidity but I do look at correlations I look at the cross rate effect meaning
that if the euro dollar is doing something specific on a major cross
that's going to influence i look at the rest of the euro crosses as well so i
can say well the euro dollar is really really selling off today so therefore if
I'm trading a gyro cross meaning like the euro new zealand currency of the
euro Canadian currency i might be looking more as a short-side trade in
that because of the Cross rate effect so that there are several different things
that i might look for as a currency trader but but but typically they're all
the same things kind of boring but you know people always think that trading is
some some you know glamorous thing but I'm our it's really quite a boring
process that follow every day hold the thought team has a quick word
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up on the spelling it spilled take our I day are the ITA our guys thanks so much
for listening now let's get back to the interview with black guys so I asked
this question to Nick legit when I was a good friend years when she was on the
podcast at-bat Fibonacci's sorry why do you think Fibonacci's work like
was that something what do you think that's something useful to watch for
especially that the 61 . I'd well Fibonacci's there is such an interesting
concept first of all you know Fibonacci's really
go back to you know the the mathematicians and-and-and-and-and how
we have come to the conclusion that almost everything natural has some sort
of Fibonacci ratio of attached to whether you're talking about the
distance from your your forearm to your wrist to the distance to your you know
wrist to the you know your your pinky finger the distance between your pinky
finger to your pointer finger again on a horizontal basis to a leaf in nature or
you know or or pretty much everything everything has like a Fibonacci equation
and a number that that really correlates IN and what's interesting is that you
can be translated into human emotion that's why when when when everybody
looks at a when everybody looks at a move and they say okay you know that was
a strong move in the market and now we're getting a pullback a 50-percent
pullback automatically you know relates to somebody in their head subconsciously
that that was a now it's half off thats it was it was it was so much more
expensive but now it's half-price you know if it's a 618 it's it's like a
natural emotional response area for people and so if you know that about
traders and around about people in general the the herd mentality can
really be used to your benefit and knowing those Fibonacci ratios really is
where you know the herd mentality is meeting
so what why become so important and so valuable
in my opinion is when you can match up different Fibonacci's based on different
view points of the market so i might be looking at the euro-dollar saying okay
well there's this big move from you know from from 110 to 115 and it's pulled
back to where we're at today I want 11-50 oh great you know that that's
pullback about you know a 618 or maybe you know maybe maybe 62-percent you know
retracement but then i can look at it from somebody who's on the short side
say okay I was short from here to here from you know 113 to what about 114 113
and its extended itself 161 percent extension and it's now gone so far where
I've almost have to take profits at this point where i can get different
Fibonacci ratios whether it's a pullback or an extension if i could get them want
to line up at a certain point the more I can do more what we call confluence or
clustering the more Fibonacci's i can get to line up at a certain point the
more I you know I can argue that we're going to have a turning point whether
it's a balance or it's a pullback from that specific area and Allah it's
something that you know I've always found very fascinating but i think it
has more to do with the human emotion component behind the market than
anything and and as a traitor i try to capitalize on that i always think i was
thinking about i always think about you know the this one simple concept when I
trade the markets when people are buying I want to be the one selling it to him
when people are selling I want to be the ones buying it so that's why when when
there's a pullback in the market and and and you know we just had a strong move
higher or lower in the dollar if it's . back people are selling it they're just
trying to get out there rushing out the doors i'm looking at a strategic place
to be a buyer and and people are rushing into by the
dollar or sell the dollar they're just rushing in and get in i'm usually one I
want to be the person selling it to him and so keeping that in mind that always
keeps me thinking one step ahead of everybody else and using Fibonacci's
house me strategically find those technical points on the chart that I
think are going to be those turning points where you know it switches from
being you know all the buyers coming into the cellars coming in or vice versa ok CB pretty much using it as something
like as a raid on the market psychology i guess absolutely yeah and and you know trading
and is all about is all about you know I know that it's that's drawn a lot of
computer algorithmic type of trading the better trying to beat the human so to
speak in the markets but really it all comes back down a you know human
emotions and and and and what's driving it and understanding what's driving
those emotions and now what tipping points that people get you know they get
to answer where they have to salivate get the they they feel like they need a
Russian and by kind of understanding what other people's positions are in the
market and where they're coming from has really helped me a lot it's kinda like
you know I'm sure you've heard this before interviewing so many traders over
the years Aaron you're trading is like playing chess but when I when I play
chess time playing against a lot of very advanced people in the markets and you
know they might be trying to think three or four steps ahead i'm trying two three
four five steps ahead of everybody else so that's where a lot of these kids come
into place because i can i can look at the market say well you know if that was
if they're if they were buying up here 114 and here we are 111 at what point do
they get nervous and at what point do they need to feel like I need to get out
here this is my deur die well as they start to exit the market that's where I
started thinking okay well you know as they're exiting those masses are exiting
I want to start looking to be a buyer and so I always try to take an approach
that way and then you know I mean there's a lot that goes into it
obviously but at that at that point just saying okay if I want to be a buyer here where's my where's my risk and at what
point do i need to get out and say I'm wrong because I will be wrong and I'm
and I am wrong quite a bit just like every trader out there but being able to
manage your risk is also equally important part of of of trading
undoubtably so early you reference that this 61 night photography and you talked
about how you'd like to say every trace men to that level when looking for an
opportunity to buy pullback how much variance do you give that level like I
presume that you're not expecting that the process going to pull up right on
the saint or at that very level like how much variance do you give that level to
say whether it's hill or not that's a that's a great question I levels are levels you know whether
using a support level or Fibonacci or you know some sort of horizontal
resistance or whatever channel channel support resistance anything technical I have to look at it as a zone you know
a zone and I have to keep it in the context of what chart i'm looking at two I do consider myself a fairly active day
trader but i also like to swing trade the markets and I i tend to take you
know a lot of positions that i might be in for a day or two you know depending
on the environment like this week I tend to be a little bit more active just
because the markets not giving me you know opportunity to sit in the market
for several days at a time so but the reason why I needed to make this point
is because it depends what are you looking at and you have to realize that every every
level you know whether it's a fib level or resistance or whatever it is that
you're looking at technically levels are meant to be broken and they're meant to
be probed above and below so you very rarely stop right on up a fib and and
that's why I'm I i would say that you know technical analysis is not you know
do you you don't look for perfection there's a lot of imperfections and
there's a lot of you know where for judgment you have to you have to to
gauge for that so if there's like a six 18 retracement and it's a it's like
let's say we've we've seen a multi-week run higher in the euro and it's about
ready to come down our it's been coming down well if I see the 618 being it
let's just say 111 I would expect that there would be a move below 111 maybe 2
1 1080 maybe 110 70 but I want to see how the price reacts around that around
that Fibonacci you know how how buoyant are we and and so that's when you start
looking at you know what what charter you what charter you actually
referencing if I'm a day trader i might be looking at an hourly chart i'll be
looking for how do those hourly candles respond around that that that level you
know if I'm like if I'm more of if i'm going to take more of a swing or or or
position approach to the market I i start to look at the daily candle care
we're gonna close above or below it you know and and Japanese candlesticks have
have proved to me to be such a valuable tool in the markets because that the the
Japanese candlestick and how you read that candlestick is how you read price
action especially for the day those daily candles are so important because
it can tell you who's who got caught holding the bag today you know in the
markets whether you're trading you know an individual stock or your trading
currencies or or any instrument for that matter those candlesticks and tell you
you know hey there are buyers early on in the day somebody got caught you know
buying early in the day and by the end of the day we closed that Arlo those
those people that bought at the highs are probably gonna be really nervous and
selling tomorrow so understanding that the anatomy of the candlestick is
equally important so if you factor that in with some of the you know fib levels
that you're you're dealing with it can become a very value or very powerful way
of trading especially when you're trying to time your your entries to get in or
out of the markets ok so you talked about the the the was
it that the close of a candle and sort of the open the following die yeah i did and i still as important as
they might be in like equity markets because you know in FX your trading
pretty much around the clock for what is it like six days awake is the hardest in
clause is it still as important it is it really really is I I find it extremely
valuable you'll notice the most most brokers that
that you use whether you know I know you're in here in Brisbane and and is it
that's correct right yeah you're ok you're in Brisbane and and I know
australian traders that have their charts cute into their brokers closing
at a New York close that means your daily candles probably closing a5 p.m. ah which was just just you know a 40-45
minutes ago they would have that daily candle close no matter what part of the
world there and European traders the same way and and the reason why is so
many brokers in the FX will use the North American clothes because it's the
it's the very end of the day for the world so if if you talk about you know
where you live in Australia whether you're talking you know australia or new
zealand you guys really stick off the next calendar day so North American
traders really have the the the the the the the closing price and it's it's
really important and I've had so many European traders say well my my my
clothes my candle looks a little different and their their brokers are
closing at the London pics let's say and and I was Tom you know hey
try to find a broker that actually gives you a a daily closing price or can close
there you have the option to close the candle at the New York close because
that really i think is the most important if you're dealing with a
24-hour market mmm yeah I could see how that could get
confusing especially for the new traders now just backing up a little bit you
know you started out your Korea as an equities trader and then later on I
think was around 2002-2003 you transitioned to trading forex and you've been hiding for
extra sense and it wasn't anything that was particularly difficult to get used
to when you're coming over to trading currencies and what was the appeal for
actually doing so as well that's a that's a that's a great question and and
I not say air and the the hardest part for me to understand at that point was
oh my god the markets are open twenty-four horses and are realizing
that i could for so many years I used to just say okay the markets closed and you
know and they even even back when i first started trading there were in
premarket post-market trading the market as close as close as like okay the days
over and then they started in pre and post market strain but that really just
kind of kept in the market with very liquid situations for for a couple hours
at a time like it is now but when when there's a 24-hour market took a little
bit of time to understand that you know wow ok maybe the evening here in the
United States but you know things are rocking and rolling over in city and in
Hong Kong and it took me a little bit of time to understand that they're you know
where we look for major overlaps in the market so you know when when the asian i
would say you know made the specific area where you're at you when when the
asian markets overlap with the european markets you get this you know massive
amount of volatility and then also when the European markets in North American
markets crossover get a massive amount of volatility and then you get kind of
get a deadtime yeah it is delinquent he kind of tapers off as as european stocks
closed and and and and kind of understanding that part of it was was
definitely a learning curve and and I think if I didn't if I had kids at the
time like I was just starting that that that chapter of my life for my wife got
pregnant maybe your year or two later if I would have had kids at the time i
would have been a little bit more challenging not knowing you know and not
knowing because i found myself i found myself up at nine ten eleven o'clock at night
monitoring my positions where I hadn't done that before getting up a lot
earlier than than before just to be around during the European
hour so that was uh that was like one of the big i think one of the big
challenges for me but it was also a lot of fun and edited it seemed like to meet
provided so much more opportunity and I'm somebody who's always been very
passionate about the markets i have i love trading the markets I I i think i'm
in front of my computer probably good 15 hours a day and an even if i'm not in
front of my computer i'm i'm running around with you know my phone watching
quotes so I'm pretty much got a bead on the market as long as i'm awake and so
that it provided in my opinion a lot of opportunities to and-and-and-and ways to
take advantage of the marks that I hadn't seen before in the past i can say
you brought up an interesting point there is actually something I want to
ask you about your actual mind trying out so you said you're pretty much in
showing with the markets for about 15 years and I what are you your mine
training sessions like within those 15 hours I'd like a few hours with your
most active yes there are and and one of the one of the the the drawbacks to
living on well i'm on west coast hours i don't
actually live on the west coast of the United States but I I trade during west
coast hours seven months out of the year one of the drawbacks to that is I do get
up extremely early because that's when the European markets are opening and
you've got most of the traders in New York restaurant oh you know that are
really sitting down and getting in front of the computer so you know I get up
extremely early and my blood my day is pretty busy until the european markets
closed once the european markets closed on the date the liquidity tens 222222
pair back a little bit so my busiest time is like a like I explaining when
you have those overlaps with when the European markets are open and the North
American markets are open and you get that that that new york stock exchange
open if you will that is a very busy time in the market
that's and it's early in the morning for me but I i guess im an early-morning guy
and I've always have been so it's it it kind of fits to my my schedule like a
6-foot locking you a try to you might be listening to this right now as someone
who is just starting out in trading and especially for X do you think it's a
good idea for them to be changed into the market for that site you know 15
hours a day or like not necessarily like sitting in front of a computer glued to
the screen for those 15 years but it might be checking if I'm checking quotes
same or process that is that something that is beneficial or is that almost
unhealthy or like too much noise for somebody who's just starting out like is
it good to have like a time with a engage with the market and then at other
times when I completely switched off from it yeah I i think the reason why I don't
want to scare anybody who's knew that the reason why spend so much time in
front of computers more of a product of my what I do you know I'm I'm a
full-time trader I also I'm you know I have a company called forex analytics
where we you know I have a team with nicola Duke obviously she's you know we
we analyze the markets we put out analysis for perpetrators throughout the
course the day so I kind of it's been my job and with being the chief currency
strategist wise trade that I kind of have to sit in front of computers all
day and it's good it's what I do but for somebody who's a new trader I really
don't think it's it's it's so important but it also depends what you're trying
to do and the the great thing whether you're trading currencies or whether
you're trading the markets in general I think you can approach the markets
different ways you know you can you can say well alright why just want to be a
just want to be an active trader I want to kind of get in and out you know over
the course of a couple hours and then you know be out of every position and be
done for the day well then you look for those those great
overlapping times you know whether it's where the asian so it'd be like midday
for you like the asian more circuits in the european markets where
they cross over that's an active time to be in the
markets you could you could really be you know being there to you know take
advantage of some quick opportunities bien out and be done for the day the
flip side to that is if you're if you're if you work a full-time job and you're
like okay well I'm just trying to tackle the markets more than just trying to
make some extra income then you probably are taking more about a longer term
approach to the market for a position type of approach you're going to use
them more of up macro backdrop behind what you're doing you know i'm buying
the dollar because the federal reserve is actively raising interest rates great
okay i'm only looking to buy the dollar so then you look at you you're looking
for those those opportunities every few days where the dollar is pulled back and
you're looking to to take advantage for a day or two as it pulled back and then
you can buy the dollar on the cheap and then spin out of it a day or two later
you know and and if that's the type of approach that you're you're you're
you're taking and I really don't think you need to you know I uh spend that
much time in front of the computer looking at you know all the different
screens what I do like though Aaron and one of the things that I've learned as
being a traitor is I've always got I've always got some sort of position on no
matter how how small it is I've always got you even like you know
this time of the this time of the mark where I know the liquid is kind of poor
I've gotten I've got positions in the market that I keep open based on
whatever reasoning I've got to buy or self the currency but I do it because it
forces me to always be looking at quotes because if I'm looking at quotes I'm
always keeping a beat on the market the markets are not like a bike and I and
I'm i've i've found this to be so true over the years of trading it's not like
a biker you can just you know you haven't ridden a bike in five years and
I pick up a bike and just ride in the markets it takes some time to get your
head reengage back into the game so by having a position in the market i called
a mark her i have a position in the market
maybe I may not making a whole lot of money i may not be uh losing a whole lot
of money but what I'm doing is I'm forcing myself to keep an eye on prices
so this why I'm always keeping an eye on price action and it keeps me aware of oh hey you know the euro was just
trading at 115 the other day and now it is a 113 but we've had a broken big toe
pull back just over the course the last couple of days why is that and then
forces me to find out the reasons why that pullback has occurred and and
therefore i'm always engaged in the market it's kind of like I'm riding a
bike and i'm still on it I haven't I haven't I haven't hopped off
it i'm just still I'm still kind of on it even though i might not be you know
riding too quickly or being too too too too overly aggressive with my bike
riding if that makes any sense it doesn't make
sense and it's quite interesting it's um so what if you don't have a what if you
don't if there's nothing that's really like standing out to us as it being a
good opportunity to get into the market you still just put a very small position
on regardless my understanding that right I was four I always find something to do
there's always something there's always something happening in my in my opinion
there's always is especially in the currency market there's always an
overarching thing that's driving the market so whether it's um you know i i'm
i'm extremely bearish the Kiwis so I'm gonna have some sort of kishore takes
those are going at all times or I i think the i think that the dollar is
extremely bearish so I want to keep some you know dollar dollar shorts going at all times
and then i am i'm extremely bullish the N right now so i might have a small
short dollar/yen just to keep it helps me keep an eye on the market i tend to
have something running almost all the time but that's my own that's my own
personal strategy I don't necessarily think it's right for everybody but it's
something that I do because like I said it forces me to stay engaged in the
markets ok ok show so talk to us about those
overarching things you know macro events economic factors how important is it to have a grasp on
those sorts of things as a 4x try to like can you would you suggest someone
tried 4x purely based on technicals and processed shin or economic factors and I
saw the few things i mentioned that i really important to have a grasp on toe
that's that's a that's also a great question and i feel that i feel that
having some sort of basic understanding of why the markets are moving up or down
is important i really i really do and because if you if you're just looking at
charts it's kind of like driving with you know
one hand over your you're right I everything with one eye closed you
you're not seeing your periphery or not seeing everything around you so I think having a basic understanding
of what address what drives the currency market is good you know there's a
there's a there's a there's a you know website called investopedia it's it's
such a great resource for for for traders you know no matter what
instrument your trading I think that's a great place to start just trying to
understand what what drives you know what drives individual currencies there
are some you know economic events if you're not aware of them they can really
alter the outcome of whatever you're attempting to do in the markets and
that's why it's important to know you know what news events are coming you
know like you know tomorrow for example that just I know people are gonna be
listening this at different times with tomorrow in Australia there's a couple
key events of the week that if you're not you're not in tune with knowing that
those events are happening tomorrow morning in Australia it could really
influenced you know what you're doing with australian dollars so they you know
I think it's I think there's a lot of great resources though that will help
educate are you you know you the individual trader out
there so where's a good place to be inching with those type of events that
are coming out that is scheduled for release like is there a website you can get all
this information from yeah there's a there's a few great
websites are first vol III think that if you using any of
the big brokers FX brokers no matter you know who you're using in the market they
were going to have some sort of resources for you whether they have
their own analysis team where they see this they contract that out to another
team they they tend to offer some analysis and probably a schedule of
events on the site somewhere you know it depending on what broker using but most
of them offer that that type of information one of the websites that i
love to use for ex-factory it's a it they've they've got a forum i don't read
through the forums because i don't i don't like to get caught up with what
everybody else is saying about the markets it you know i don't like anybody
influencing my my take on the market but I i like to see what events are coming
and if you go to their calendar they've got a really intuitive calendar to use
it it's very easy for the average trader to go and look at it and say who you
know there's an important event coming up in Australia or and in Europe so that
4x factory is great there's a there's also a team of traders
they have a free site it's called 4x live a wonderful team of traders out
there I i really have the most respect for all those guys behind that that that
that company the guys that started it I've I've I know and I've you know been
associated with four for the last several years I've communicated a lot
with those guys and the guys that run it now are all very sharp individuals so I
have a lot of respect for them as well and that's it it's a good place to get started you
might feel a little lost as a new trader you might say oh god I don't really
understand that but don't worry you know it takes time it's not it's not
something that you know it's it happens overnight but the more you read and the
more you learn you know the more comfortable you comfortable you're going
to become with-with-with what's happening around you globally but it is
a global market it's important to have a have an idea of what's happening in each
of the respective currencies in countries that you're trading right okay
not really what amounts of like I pressure you sharing that with us sure so one
other thing I would like to talk about while I've got you here is 4x Barca's
now there's a few different things i want to ask around the subject but let's
stop with actually let's start with leverage so you know as we know many
people are attracted to 4x4 the huge amount of leverage that are available how do you use leverage and what advice
would you give to less experienced riders using leverage I'm so glad you asked that question arm
i am the leverage is not important to me I I could almost trade on a cash basis
but that that just happens to be my situation is not the situation of
everybody excited understand hey you know i'm trying to get started and not
only have a have a small account I feel I've you know I feel I can't I can't you
know it's hard for me to get around in the equity markets because i need more
money to buy some you buy shares our stock it's it's just more difficult so
they come to the forex market because the leverage um I always I I try not to think so much
about the leverage I tried to think about the risk associated associated
with each trade alright so what I mean by that Aaron is
like let's say I'm buying one lot of the you know the euro-dollar you know
whatever whatever lot it is a you know whether it's a regular water it's a
micro water however your broker coins it if you're buying a lot of the euro
dollar and you say okay I'm gonna buy it 111 but i only want to risk down to 110
what I was tell people is figure out because whenever you trade the first
thing you should ask yourself before you even get into a trade is what is my risk
that's that's like that's like that's question number one most people have it
backwards where they say okay well i'm gonna buy the euro I'm a bite at 111 i
think it's going to 120 great what's your wrist that's the club's first
question I'm going to ask at what point do you think you're going to be wrong at what point you have to pull the plug
and say alright I need to get out of this thing well if you bought a 111 it goes down to
110 you have to figure out how much money that's going to cost you to be
wrong and you go okay well if i bought the euro 111 and I sell at 110 i'm just
going to use easy numbers here I'm going to risk a hundred box that's
honor dollars great you're risking a hundred dollars now if you have a
thousand-dollar account and you risk a hundred dollars you're now risking ten
percent of your account I don't care what margin you had
available to you you're losing ten percent of your money in one trade
that's unacceptable now if you say okay well i'm buying the
euro at 111 I'm gonna start a 110 if I'll if I if I if I'm if I take a loss
i'm gonna lose on a box well if you had ten thousand dollars in
your account and you lose a hundred dollars now you're losing one percent of
your trade I feel personally I feel that's more you
know that that's more acceptable that's within maybe somebody risk parameters so
again it's not about the leverage it's about what your risk is in that
particular trade vs your account value that you have because you know i could
take a trade a bind the euro and selling the euro buying at 110 and if i take a
risk our file if i take a take a loss in it and I get out of 110 you know that
risk to me might have been a thousand bucks and if i have a hundred grand in
my account I'm i'm risking a percent of my trade excuse me a percent of my count in that
trade that's acceptable risk for me but if if if you only had ten thousand
dollars in your account that's not acceptable risk that means you have to
you have to adjust your position size accordingly to sustain you know the the
whatever you think is appropriate risk and I think if you if you have that
approach to your trading Aaron and you have reasonable you know our risk
parameters and I say reasonable you know I don't think he should risk more than
1% in anyone trade at any given time that's just a nice rule of thumb is very
ea