What would a job interviewer for a clearing house like, say, The Rand Corporation, want to know about you to hire you as night time forex trader? submitted by
This is for the opening chapter of a book I have written, but I basically had to bullshit the details up to now. I'd prefer to get them right.
My experience working in this business is limited to a year right after college. I worked at Rand in Chicago (CBOT) as a runneclerk, but my contacts are gone.
I’ve learnt everything from baby pips. Is there anywhere to learn more advanced concepts? Fxevolution seems pretty good but their course is $1000 submitted by
How to Trade submitted by
Last couple of these have been personal stories and anecdotal. Here's Part I
, Part II
, and Part III
This ‘Guide’ is meant for retail investor education. I really hope it doesn’t sound condescending, it’s honestly not meant to be. There’s all kinds of material out there for the new, the intermediate, and advanced DIY investor. Looking up different views and perspectives is a good idea. But fundamentals won’t change. Nobody needs another ringtone.
For the retail investor, this is the most important of the bunch. Bar none. If I only made one post, this would be it.
Get some money together, open an account at a broker, sign a 20 page document that’s been written in 4 point Calibri, and off you go. You’re a ‘trader’.
Imagine if getting a driver’s licence was the same way. You pony up for a car, gas it up, get in, and have at ‘er. Thankfully it doesn’t work that way.
That’s why insurance is required by law. There’s driving schools & road testing. And one of your parents got you to that point by taking you out when you were old enough, putting you behind the wheel in an empty parking lot, all while silently praying that you won’t fuck it up.
Yet despite all this, bad drivers exist. Many don’t know they’re bad drivers, and would never see themselves that way. Worst of all, they’ll never get better at it. Ever. No matter how many driving courses they take, they will still suck. There’s reality shows made about it.
The bad driver might improve slightly over time. And hopefully they won’t take out a bus load of nuns and orphans while they’re improving slightly.
Unlike driving, there’s only four things to know about trading.
- Holding period
Position is directional. That means short, or long.
Exposure is the amount of $$$ you stand to lose.
Risk is the likelihood and magnitude of prices moving against position.
Holding period is defined by the amount you are willing to lose or gain until you close a position.
Risk can be estimated in several ways. Some like u/GoBlueCdn
find it in costs and financial statements. u/CytochromeP4
knows emergent industrial processes and the plant and validates scalability against economics.
Fundamental analysis, management decisions, market potential….etc are methods to approaching it, and to get a handle on it.
Trading equities is a total bitch compared to commodities.
I sometimes see equities like the guy who nobody knows and none can remember inviting to the the party, who shows up, drinks all the punch, eats every cocktail wiener, drinks the last beers in the fridge, and then grabs the neighbour’s wife’s ass on the way out at the end of the night.
Yes, I’m biased, because I’m a commodity guy. It’s my opinion.
In commodities I can get positions and exposures on exactly
what I want in exactly
the time periods I want. I can find leverage easily. I can alter exposures through hedging down to a few dozen basis points. I can separate physical from financial exposure. I see risk having less moving parts, and purer. I get notional and realized PnL closed daily, and crystallized regularly.
Equities are filled with dirty hedges. You can get risk - by no want of your own - picked up in some CEO’s shitty pet project in a non-core division he spent $100 million on using debentures. Hedging forex exposure isn’t as easy because you can’t walk it to a penultimate. Holding periods aren’t well defined. Exposures need to be rebalanced, and it’s worse in volatile markets, ffs. Equities can be a pain in the ass to me, all in all.
With equities - some mutt you’ve had in your portfolio for years could hold a patent to a process that’s just been adopted industry wide. The clouds part, the sun shines, and the birds sing. That isn’t commodities tho.
It’s also a reason why I’m hard on retail guys who diddle with options but don’t know the exposures. Not knowing your exposure is the same as giving a 5 year old a chainsaw.
This isn’t a commercial for the NYMEX or the CBOT, or dissuading you from trading. This is for illustrating the differences between position, exposure, risk, and hold period.
I’ve seen and heard things over the past year, both from people I know to claims made on the internet. A lot of it is idiocy.
Length can make money simply by being in a rising market. Just as a gambler can by hitting a red 7 on the nose with a stack of chips. The market isn’t going to rise forever, nor will that red 7 keep hitting.
Good traders don’t care about direction. They care about position and exposure based upon assumed risk.
If I’m whining about a specific company or regulatory moves, it’s usually in context of changes in assumptions I’ve made about risk, or, about the potential changes in it. A trader doesn’t care about the horse, they only care about how it finishes. Or maybe that it won’t.
And a trader doesn’t gamble.
Games in a casino are fully described by game theory, and governed by mathematical law. Risk in these games is fully articulated, known, and quantifiable. The future is predicted by actual probabilities. Cost is known in advance.
A good gambler takes measured risk, understands their exposure, and adjusts position.
Trading isn’t gambling, because underlying a trade is assets that are predicated on generating future cash flow. Gambling is ‘betting’ on the outcome of a unique cash flow on a single event: there are no assets. Another try requires another purchase - another position.
I hope this is useful. That it gives context to posts, and why I sound like I do. In my work experience, there’s a bazillion who talk a good game, but they sure as fuck aren’t traders.
I seriously don’t care about who is going to take over the world of cannabis. I only care that I had the right position and exposure to have made my day. Or month. Or year. Or decade. I’m aiming for a target when I shoot.
Whenever you hear things like ‘catching a falling knife’ or ’strong hands’ or a hundred others like them - this is fuckwad backfilling bullshit. To a trader, they’re just like hearing a toddler trying to say words. They are phrases surrounding price events. And they are utterly useless.
If I’m opening a position to get exposure to a risk I want to accept….and then closing that position when my underlying risk assumptions change or a target gets hit in a hold….that’s trading.
Nobody likes to hear they’re bad at something. But it’s better to figure it out before you drop 20 large finding it out.
By applying the basics of trade - you can at least learn to drive defensibly, which will give you the best chance of getting home safely.
Catching a falling knife? You aren't even gambling sucker. You're on a midway.
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