Millionaire TradersQ: Did you trade currencies based upon fundamentals like you
did stocks? Or did you introduce technicals into the picture?
A: I actually mixed them. That’s when I really started getting into
the charting. I would say I traded the majors primarily at first. I
traded euro/U.S. dollars almost exclusively for the first few months
just to get a feel for the pair. Then I started seeing a lot of volatility
in the Japanese yen, so I wanted to trade it as well. Mostly I would
trade the majors. I tried to stay away from the crosses because I
didn’t really understand how they were working.
Q: Can you walk us through the thought process of one of your
trades?
A: Well, I am contrarian just about all the way. When everyone
is bullish, I’m normally looking the other direction. I always like
to look at a psychological level that seems to be a big mover,
and I like to be in the market around that time. If it’s a solid
figure, 1.25 in the euro/U.S. dollar, for example, I want to be there
when the market sells through that level. I realize that there’s risk
there, but technically I know a lot of people are getting pushed
out of their positions at that level. I want to be the guy selling
at that point if the market’s moving down. If the news pushes
it through a technical level, that’s just fantastic, and everybody’s
going the other way. I know they’re trapped because I’ve been
there.
Q: How do you manage stops then?
A: I’m very careful with placement of my stops. I really don’t
like to use them unless I’m going to be away from the computer.
If I’m in front of it, I want full control because I want to make
the decision right then. I have a general idea every time I place
my trade where my stop will be. But I don’t want to just leave it
hanging out there for anyone to pick off.