Since famed trading instructor Rob Booker was nice enough to ask a few questions of me about my techniques and experiences, I've decided to ask Rob a few questions as well. What followed was a fascinating interview where Rob relates his personal experiences, and how they inspired his book. Please read on...
*How did you get started in trading?*
A friend of mine had invested $750,000 (or even a bit more) with a currency
trader in Los Angeles. The terms of the deal: it was actually a loan, which
would pay at least 5% interest per month would be paid on the investment. When
I heard that this currency trader was paying 5% per month, I realized that
he must be making some serious cash. I decided I needed to know more about
that. However, I have to also say that during law school, I had a lot of
exposure to the financial industry in San Francisco, and it was during that
time that I "caught the bug," and I knew that somehow I would be involved in
the financial world.
*What inspired the "Harry Banes" character in your book?*
Some of my own experiences. Some of those trades in the book are my actual
trades. Working at a law firm inspired the depression that Harry feels at
having to work for someone else. Also, I believe that there is a little bit
of all of us in Harry Banes. He sort of goes through the real heartache,
terror, euphoria, and other emotions connected with trying to make a living
as a trader.
*What's a favorite trading war story (present or past)?*
This one is hard for people to believe but I am going to tell the story
anyway. I was teaching a seminar in Las Vegas two or three years ago, and
the 2nd day of the seminar was the Non Farm Payroll report. The night
before I had dreamed that after the report, the USD/CHF moved 121 pips
upward. I actually remember dreaming that I saw the candles move in a
particular order and speed and I could remember what I had seen on the chart
in my dream very clearly when I woke up. When I got to the seminar that
day, I announced it to the group. Also that morning I told Maxwell Fox, my
trading partner and good friend, that I was so confident that the USD/CHF
would move 121 pips upward that day, that I would insure any losses he
incurred by trading the report – that I would actually pay out of my own
pocket for any losses he took. I basically told him to light it up and
trade like a bandit.
Sure enough, the USD/CHF moved in exactly the same way that I had dreamed. It
was a surreal experience. I tell people now that if they are willing to
look at the same thing every day, in the same way, with the same indicators,
over and over and over again, that they will start to have an intuitive
sense for the market. By becoming an expert in one thing, they can actually
start to sense for when a move is going to happen.
And what did Max do that day? Typically, Max traded responsibly and
conservatively. He made money but didn't use a wild prediction of mine to
trade irresponsibly. That's one of the reasons Max is still the trader I
admire the most.
*In Chapter 12, Banes visits a hedge fund and is surprised at what he finds.
Was this inspired by a real life experience?*
Yes. My wife worked at a hedge fund in San Francisco during the time that I
was in law school. I was often shocked to see how that fund, and other
funds, were either terribly spendthrift, or cheap, or undisciplined, or
disciplined, in their trading. The fund she worked for lost something like
$70,000,000 – probably more than 25% of the total funds under management --
in one day on a bunch of OEX options. She had to reconcile those trades. The
story can be found in Jack Schwager's New Market Wizards under the chapter
for Dana Galante. My wife reconciled those trades; she came home absolutely
shocked. One of the first things she did the next week was walk back into
work and ask for a raise. She knew that she was needed more than ever.
There are lots more stories like that, as I visited with hedge fund traders
during the roaring 1990's.*
*
*What advice would you give to new Forex traders?*
You get better at trading by doing three simple things:
1. You focus on just one method of trading on just a few currency
pairs;
2. Make just a little bit of money at first – get disciplined with a
small amount of money, and then you will earn the right to trade with more
money;
3. 99% of traders can probably do 1-3% per month returns consistently,
but they fail because they're trying to get 10% per month.
Thanks Rob!
