Morning: Continued with my trading strategy planning on EMA. At this point, it looks as if this is the strategy that I will in fact continue with, but it is likely to be merged with the idea of using technical chart patterns in determining the setups. For me, it does require a LOT of thinking. Studied the charts of DAX, Oil and Cable (GBPUSD).
Lunch: Curry lunch on Brick Lane with two business partners from a previous project – the project that I left about 15 months ago to pursue trading full-time, continues to do well – and is growing. Both the guys are close to 20 years older than me and have a lot of business experience – so it was great to hang out with them. They did question the soundness of my big-picture decision-making and strategies – that I am sticking with something that doesn’t seem to be working (i.e. trading) and leaving projects that are working and making money (i.e. the prior project). They also felt that the entire area of Technical Analysis is basically voodoo – interesting viewpoint. Nevertheless the lunch meeting did lift my spirits.
Afternoon: Did some risk-management type work with one of the colleagues in the office – this had little to do with chart analysis, but more with some simple mathematics – he pointed out that although he has been on various courses, several months in duration, the topic of how to calculate position sizing for CFD’s, particularly when adding to positions, was never covered. We will build a simple model in Excel for that. I will need to think of a good pseudo-name for my colleague, as I will probably mention him on here from time to time. I have given a small amount of trading capital to trade – he seems to be an excellent trader, but has had to skill up in the area of risk management – now that he seems to have proven that with 6 months of carefully managing risk on a demo account he is starting off with a small amount of real trading capital provided by yours truly. Let’s see how it goes.
Evening: Attended the Traders Network drinks. As soon as I got there I proceeded to the bar to buy beer – I really didn’t feel like talking about trading. However I did force myself to go there nevertheless. As it turned out I ended up talking with two guys – a full-time trader from Canada, with 30 yrs trading experience (swing trader on futures and equities) and a London-based independent trader who has managed to make 30-40% p.a. the last two years using conservative risk management, primarily trading the US index futures (Nasdaq, S&P, Dow) on an intraday basis 2-3 times a day. Some good stuff came out of that conversation, and it did make me think again about the idea of switching from CFD’s to futures for some of the instruments I trade – for the benefit of lowering transaction costs and better transparency of executions. Also talked a lot about the US-based TradeStation broker – with whom I have a brokerage account (with money in it!) but which has been lying dormant. The Canadian trader, Blaine Maber, also keeps a blog – and it looks very excellent. Check it out here.
Main lesson learned from today – don’t try to do it alone! It seems that over and over again, one thing that really helps in the area of trading – surround yourself with other traders – you can learn from them, you can share knowledge, you can impart some skills to them, you can have a laugh together, you can navigate practicalities (tax, platforms, brokers, etc) more quickly. Thus as you can see, I make a conscious effort to attend seminars, networking meetups, get-togethers for this purposes. It increases the odds of you making it in trading. And of course, if you can manage to get yourself set up in a trading office, then even better!
PS A trader I used to work with back in 2010/2011, trading gaps in the US indices using futures (we used a service called Master The Gap), as well as some systematic trading on forex, started following this blog yesterday – really great to hear from you PJHTrader! Hope to catch you for lunch/dinner/beer soon!