Prop Trader Interviews

[email protected] | http://www.futex.co.uk 1

FUTEX

Futex Masters

Interviews with Futex Elite Traders


FUTEX

Contents

Introduction

Paolo Rossi

Mark Rossi

Daniel Goldberg

Gabriele Gandini

Adam Percy Whiting

Waqqas Ahmed

Olly Thomas

The Big Interview

The Big Interview 2


FUTEX

Introduction

Futex is the leading Proprietary Trading and Investment House providing individuals with

successful trading careers. As a group, we have been training individuals to trade for more than

a decade beginning on the LIFFE floor and as a result we offer unparalleled opportunities to

those individuals with an absolute passion for the financial markets and a burning desire to

succeed.

te trader within the Proprietary

Trading industry, we have compiled transcripts from a series of interviews and panel

discussions conducted with our traders during 2010/11. The traders in question have each

achieved trading success they are now part of the trading elite - and their experiences serve

as a priceless insight for those of you embarking on a similar trading career. Trainees that join

daily basis. We hope you enjoy this snapshot of that experience and that it helps you in your

own trading.

Futex

The Ultimate Trading Career


FUTEX

Paolo Rossi

Paolo Rossi is the Executive Chairman of the Futex

Group. Paolo has been a government bond trader since

1990.

leading participants in the bond futures markets by the

end of the 90s. With a keen eye on the derivatives

first electronic trading floor for independent traders

and investors in 1998, specialising in highly liquid,

professional-level markets such as CME, CBOT and LIFFE.

Now, as founder and chairman of The Futex Group, he has made it his goal to achieve new levels of

excellence in derivatives trading; establishing trading floors second to none, and providing training

programmes for new talent that are the envy of the futures and options world.

The following transcript is taken from one of the many Q&A sessions that Paolo holds with trainees that

join Fut These sessions give trainees the opportunity to

fire questions

founder himself. This particular session gave trainees an insight into the mind and lifestyle of a

successful trader and provides invaluable experience for those of you starting out in the industry.

philosophy which has at its core the ability of traders to

establish and maintain an edge over the market. Futex enables this philosophy by providing both an

impeccably high standard of training and state-of-the-art facilities; this gives every Futex trainee the

opportunity they require to become successful.

Q: What are the essential lessons you must learn as a trader when starting out?

Paolo Rossi: First of all being able to identify the probability of you being right or wrong in a trade. This

is commonly referred to as a risk/reward system. An increase in the amount of risk taken on in a trade

should be proportionally reflected in your reward. Your ability to measure this among other skills

defines how good you are as a trader.

Observing a process repeatedly enables you to pick up on information that will give you an indication of

the final result. It enables you to spot factors indicating specific outcomes and to develop a familiarity

with what is happening thereby increasing your probability of being right. Only through constant

guidance and concentration can this ability be developed over a period of time. This goes for anything in

life and even more so in the trading world. At the beginning you are wrong a large percentage of the

time - or being right for mostly the wrong reasons - but over time you form a bank of information for the

rules and patterns which take place in front of you and develop the instinctive ability to understand the

markets and make money. As a trader you are not going to develop this ability over night, it will only

come after years of hard work.


FUTEX

Q: What are the key components traders must include in their everyday approach?

Paolo Rossi: Every morning before sitting down at their desk to trade, every trader must read the

Financial Times. This is an investment in your own knowledge and gives you the ability to get in tune

with the markets. If everyone else who trades in the market reads the FT then it is vital that you do also.

current in the market, what the markets are concentrating on and enables you to

form a list of topics on which to focus throughout the day.

Before the markets open be prepared for the day. You should know what levels you are looking out for,

the highs and the lows from the previous day and how you will act when the price reaches those levels.

You must be confident of how you are going to trade when the prices reacts and behaves in a certain

way giving you conviction in your trades. Conviction only comes from planning and conviction is what

gives traders opportunities in the markets.

Hard work and discipline combined give those traders starting out a chance of making it. Any cutting

corners will only be cheating yourself and will not provide the answer to becoming successful.

Q: What is the key to increasing your size?

Paolo Rossi: Increasing your size at any stage of your career is mentally a difficult process so try to do it

in an nvisible fashion. This is done by increasing your size by small increments each time for example

from 10 to 12, then from 12 to 15. It is important that upping your size does not affect your trading style

and is based on successful performance at the size you traded previously. If you are trading poorly

upping your size is never the answer. It is important for a trader to start off trading no less than 2 lots as

this means a trader can either add size to their position or have the ability to take profit but remain in

the trade. This is impossible when trading with a one lot as you are either in or out of a trade. It is

important when adding to a position to be able to exit the trade if the markets turns against you as this

could well prove costly.

Paolo Rossi: The best traders have the same characteristics and it is vitally important for traders to

adopt these in order to be successful. The best traders have the ability to get involved in the markets all

the time. When you first begin and are on the simulator it is essential that you trade and trade and trade

in order to build up your experience and get to learn how the market behaves. You should be looking to

add to positions as well as decrease and practice, practice, practice so you can learn as many lessons as

possible while they are free! On another hand, it is important you look to understand the economic

effects of what goes in the markets. Emerge yourself in the economics and how it affects the markets

you trade. The hard part is to fully understand the economics behind the market and how it affects

market behaviour; once this is grasped, the trading part becomes understandable.


FUTEX

Q: Does trading become easier throughout your career or is it continually this difficult?

Paolo Rossi: It becomes easier. The longer you are trading, the greater your bank of knowledge and

understanding of the markets, the better trader you become and the less difficult it becomes. The

continuous hard work does not stop but once you gain an understanding of how to make money then

the less stressful trading becomes. When traders first begin it is usually a negative and sideways pattern

in which they struggle to make money. It is often when they are about to quit or give up that the

concept of using their huge range of knowledge and trading skill to make money finally clicks and they

become profitable.

For a trader to become profitable they must understand why things in the market are happening. The

only way to learn trading is through trading. The more you trade and the longer you trade for the better

chance you give yourself of becoming profitable.

Tip from the Chairman: Do not fall into the trap of having resting orders. I t is

vital to let your onside positions run and approach these with conviction rather

than cutting your profits quickly.

Q: What is your opinion on goal setting?

Paolo Rossi: It is extremely important to have goals, to write them down and read literature on goal-

setting. You should have goals in life and goals in trading. The profit-split structure at Futex is designed

to give our traders clear goals so that they can strive to achieve a 90%-10% level of profit split in their

favour. Goals provide direction to your personal development and demand improvement; this is vital

Q: What would be your one piece of advice about the markets for a Trader starting out?

Paolo Rossi: The markets are impersonal; they are neither working for nor against you. The markets

consist of thousands of people with their own agenda. It is not always in your interest to understand

what the other side of the market is doing, it is just important to make the market work for you. The

market demands explanation and it is your job to understand this; every participant wants something

different from the market as each participant has different goals to achieve. In terms of understanding

the market you must know that the market is not rational or intelligent. It will ignore the obvious and it

is not down to you being right - it is down to understanding how the market is going to act. Always bear

in mind the obvious market behavior and develop your own opinions on it. Often, when the obvious

behavior does sink into the market, this is when the quick moves appear.

Traders make their money when a crisis takes place in the markets. Therefore, as an intraday trader you

Armageddon Obama was shot or

if a tsunami hit the coast of New York? In these situations you must know exactly how to react and

combine your trading instincts built over time with experience and knowledge to capitalize and make

your money.


FUTEX

Mark Rossi

The next elite trader interviewed is Futex Managing Director Mark Rossi who discusses the industry and how to succeed in trading. Mark Rossi has been a futures trader since 1993. He has been Managing Director of Futex since 1995 and is a partner in Futex Investment and Trading Academy.

When and where did you start trading?

I began my trading career back in 1990 at S. G. Warburg as a market maker on their Japanese Equity Warrant Desk. From there I moved into Broking before becoming a local in the Bund pit on the LIFFE floor in 1993.

Tell me about your personal approach to the markets and what you trade today.

For me there is no substitute for enthusiasm and preparation. Unless you have a genuine, unwavering passion for the financial markets, you should not embark upon a trading career. You also have to eto deal with it, get over it and trade. With regards to my personal trading I focus almost exclusively on the Euro Stoxx and CAC.

How has proprietary futures trading changed since you first became involved in the industry?

It is like comparing two different worlds! I never used a chart on the LIFFE floor, whereas they are absolutely essential to trading today. The volatility is much higher and rather than competing against a couple of hundred other guys you are now competing against thousands of highly competent participants. You used to be able to relax in the pit and discuss the markets, maybe even the football from the previous night! Nowadays, it is essential to be watching your screens at all times and to be the ultimate professional if you want to beat the rest.

What kind of misconceptions do people have about trading as a career?

Many people believe that trading is easy. They think that you can compete with the other participants around the globe by turning up 5 minutes before the markets open, buy or sell, and be home in time for lunch! ALL of our best traders over the years have been the ones that put in the hours, even on quiet days, and they are always the last to leave the office

Many people also believe that all traders make a fortune. Without doubt you can make a lot of money in this business but what is the definition of a fortune? The reality is very mixed. Some tradeit, some generate an income and some make very good money.


FUTEX

Why did you become involved with Futex Academy?

A professional trading education can make the difference between success and failure. From a personal point of view I have seen many nice people fail, both here and at other Proprietary Trading Houses,

prepare and what they should be doing. I know of companies that allege to train you but I they do. This has really disappointed me about the industry and has given futures trading a bad name. We decided to change this and to do it right by offering a formalised, professional futures trading education that we are proud of. Futex Academy was set up so that people can be comfortable knowing that they are getting training from a professional company. There are no guarantees of success but with Futex Academy, you will be given a proper chance.

What, in your experience, makes a successful trader?

For me there are four essential traits that I have witnessed in the elite traders at Futex: enthusiasm, discipline, strength of character and intelligence. If you have these then you have a fantastic chance of making it as a professional trader.


FUTEX

Daniel Goldberg

Welcome to Futex Masters, a elite traders. This interview was conducted with Futex Director Daniel Goldberg and reveals the secrets behind the longevity of his futures trading success. Daniel, 33, has been a futures trader since 1997 and is also a partner in Futex Investment & Trading Academy.

How did you become involved with trading?

I always wanted to be a trader! I think my earliest memories of wanting to trade must be from the age of 13 or 14. I vividly remember seeing scenes of trading pits on TV and feeling a desire to be part of the buzz. It was then that I knew that this was what I wanted to do; to be a trader. I flooded the City with my CV and got a series of interviews. I chose a job on the floor at LIFFE.

Tell me about your early trading experiences.

To be honest those early days were pretty bad! I arrived on the floor without any idea of what to do. e of sink

or swim; and I very nearly sank. The pit was a testosterone fuelled, phenomenally aggressive

However, when trading migrated onto the electronic scrsense of it and eventually, after a lot of hard work, I flourished.

What products have you traded in the past, what are you trading now and why?

I have traded Bund, BTP, Gilts, Bobl, FX, FTSE and Notionel in my career to date. I currently focus exclusively on the Bund and have done for a while now. I feel very comfortable with this product; it is very familiar to me, it suits my personality, my character and also my timeframes of trading.

On what basis do you make your trading decisions?

I use a combination of fundamental and technical analysis. Significant news will always drive the markets faster and harder, and usually in the right direction! It is absolutely imperative that you remain informed and up-to-date witechnical analysis is invaluable. I lean on the charts to assist me in identifying both profit targets and stops. I always keep it simple by using only support & resistance, trend lines and Market Profile. Any more than this is overkill and, from experience, leads to confusion. Trading in an environment like

and reacting effectively.


FUTEX

Why did you become involved with Futex Academy?

People should be under no illusion that trading is tough and making a career out of this does not come easily. I believe that training can help people progress faster than if they are thrown in at the deep end

of Futex Academy is to make that expertise available to as many people as possible. Futex currently receives around 100 applications each week for its in-house trading positions. Of these we select, sponsor and back between 20 30 each year. Futex Academy has been created to fulfill this extra demand. It is for those people who are prepared to invest in their future and want to demonstrate to us their ability to trade. If people can do that then we will back them financially to trade, as simple as that.


one trait that guarantees success in the markets. However, from my experience intelligence, self-discipline, hard work and a general savvy are all major factors. For those guys at the outset of their trading careers the most important trait to have is resilience to knocks. Unless you can take a battering from the markets


FUTEX

Gabriele Gandini

In this interview Senior Futex Trader Gabriele Gandini lifts the lid on his personal approach to trading. Gabriele has been a trader at Futex since 2007 and currently trades Dax and Crude Oil.

What made you decide to get into trading?

A passion for the markets, a willingness to compete and a desire to prove myself. On top of that I think trading is one of the few completely meritocratic jobs and there is no shortcut to success. Only the best succeed

I think that trading is one of the few careers in which, even if financially you start from zero, you can still

job in the world that can give so much money in so small a time-frame.

Had you traded before joining Futex Academy?

Before joining Futex I was trading Italian equities part-time from home. I survived for the first two years before getting completely destroyed in a single trade. That was probably the moment when I decided I

wanted to make my money back! I think this kind of motivation is essential to be a trader. Whilst trading per infrastructure I needed to trade effectively, so I decided to move to the

UK where trading is a professional career and join Futex! I thought that if I failed in UK, at least I had given it everything and then I would have been able to return to Italy with no regrets.


I have a very short trading time frame and I try to open and close positions in a few seconds. I think that the more you stay in the market, the more you are exposed to risky events and that a small price movement is easier to predict than a big one. I think it is very frustrating to be onside a few ticks and then be forced to take a loser on that trade so I prefer to take my profits quickly, and try to get back in again at the appropriate time.

case there is a chance stops might be triggered. In the past I used technical analysis as a way to justify my losses.

I strongly believe that the more you go around talking about the market instead of watching it, the less money you make.

After a couple of years trading EuroStoxx 50 I moved to Oil and DAX in 2009. I believe it is easier to be


FUTEX

What has been your most successful trading period?

2008, with the financial crisis, was the busiest for me for sure. It was an exceptional year with significant news coming out almost every day. There was a lot of volatility and this is what intraday traders look for because with volatility comes opportunity.

Has the financial crisis affected your trading?

I think that any time you spend in front of the computer watching the market affects your future trading so of course the financial crisis affected mine. I think we have all seen the market during a period of extreme volatility that itrading to the new market conditions. Very often I employ a trading style that used to be effective, but that no longer performs, just because I was used to make money with itflexible and adjust to the market as soon as you realize that a strategy is not working anymore.

What has been your secret to consistent success in the market?

I think that the road to success in the market is very long and hard. To be honest, I only consider myself to be at the first step of a tall staircase. I do not really know if there is any secret to success, I just believe that there is a lot of time to spend in front of the market trying to understand the price action and I believe that you need to put more than 100% into the job if you want to have even a small chance of success. When I think that there are thousands of people every day around the world watching the

For sure I have a passion for trading that has allowed me to overcome many difficult moments in my trading career so far. It has enabled me to find the extra motivation to move on and become a better trader and person whilst trying to avoid the same mistakes that unfortunately are made more often

of the job and move on.


Some people think that you can sit in front of the market and from day one make a lot of money, just

challenge to compete with all the clever people around the world and try to profit from them. Its hard work in terms of time (watching the market), energy (trying to stay focused all the time, day after day), psychology (coping with good moments, without getting too excited as well as bad moments, without

market and we need to be able to absorb that information as fast as we can if we want to succeed the following day.

If you could have your time again, would you do anything differently?

has been important in making me into the trader I am at the moment. So, if an awful day can help me to be


FUTEX

market, it means that at that time it was the right thing to do for me, so I would probably do it again.


Again, if one day I could call myself a successful trader, then I could probably answer this question better. At the moment, from what I have experienced, I think that the main traits I feel I need to become a successful trader are: method, discipline, self-control and patience. I also think a big passion for the job, respect for the market, humility, determination and a willingness to succeed are essential traits. Then, I think it is very important to be able to free yourself from th

losing in one trade, I end up losing even more.

But, specifically in the intraday trading, I believe that there are three main qualities needed to perform well: the ability to read the market, good money management, and continual discipline. Unfortunately, in trading, a small weakness is not forgiven by the market and it can more than destroy all the positive effects of the strengths. That is why I feel I need to be prepared mentally, technically, physically and psychologically.


FUTEX

Adam Percy Whiting

This following interview is with Senior Futex Trader, Adam Percy Whiting, who took time out from his trading and watching his beloved Manchester City to bemoan the rise of computers and discuss what he thinks makes a successful trader. Adam has been trading at Futex since 2006 and currently trades FTSE and DAX.


I have always been interested in business and the financial markets, an interest I pursued at University. Having graduated in 2006 and following a chance meeting with the

Within my first week on the Trading Floor I knew I wanted to stay. The atmosphere is always exciting and the markets constantly changing. There is always something new in the markets to comprehend and exploit to your advantage.


I predominantly trade short- e occasional long-term trade. Employing a short-term trading style really works for me by preventing me

past few years but currently focus on European Equity Indices. The opportunities within these markets for locals like us are excellent.

Were you successful right from the beginning?

Not at all! It took me a long time to employ different strategies in a wide variety of different markets before I found something that I felt comfortable with. I firmly believe that you need to be aware of your personal strengths and (hopefully few) weaknesses and only then can you find your niche in a suitable market. One of the benefits of trading at Futex is being given the time and support to experiment and uncover your true potential.

What has been your secret to consistent success in the markets?

There are a few things that I believe are integral to trading consistency. Firstly, you have to be incredibly focused during the trading day and continually researching the news and views that are relevant to your market. There is no excuse for not being prepared and for not having a view on the markets you trade. Secondly, you have to review on an ongoing basis what is working for you and what is not; this takes great self-awareness and honesty. Finally, you need to know when to push yourself aggressively and also when to stop.


FUTEX


There is definitely a perception that it is easy and an underestimation of the amount of hard work that is required to succeed. You need to be dedicated to your trading all day, every day, with a constant focus on what the global financial markets are doing around you, why they are doing it, and an instinctive understanding of the implications of any such developments for your trading. Being able to do this and make trading decisions quickly, under intense pressure, takes huge dedication.

How have the markets changed since you began trading?

Enormously! Even though I have only been trading since 2006 I have witnessed a dramatic rise in automated computer trading. Not only do you compete daily against traditional participants such as other locals, but more and more you are interacting with black boxes! They are able to react more

knowing that they represent an ever increasing proportion of the market.

What in your experience makes a successful trader?

you need to be able to make effective decisions quickly, when under extreme pressure, and on the basis of multiple information sources. You must also be prepared to work hard and establish and maintain discipline every day. Finally, you have to learn from your mistakes. We all make mistakes but what separates the elite traders is the ability not to repeat them.


FUTEX

Waqqas Ahmed

a Senior Trader. Waqqas has a depth of both knowledge and experience and is thus a great trader to whom we can put the following questions.


Since I was a child I have had a fascination with systems involving complex interactions. Initially I was interested in those observed in nature but as a result of my University degree I developed a deep interest in the interactions between participants in financial markets. The competitive nature in me constantly wants to find ways of beating other financial market participants by figuring out what is going on faster than anyone else.

What style of trading do you implement these days?

I take longer term views rather than very short-term scalps. I have a wide variety of strategies ranging from taking views on any one particular day to running positions over a number of weeks. I trade most asset classes using both outright positions and also relative value trades. At the end of the day I look for any strategy or opportunity that can make me money!

Have you always traded in this manner?

No. I learnt the painful way that scalping and jobbing on an intra-day basis would not work for me and as a result I was very inconsistent. I found that my strong big picture views hindered such a short-term trading style. More recently I have found a way of exploiting my macro-opinions that suits my personality. It goes without saying that the short-term trading experience I gained has proved invaluable in my current longer-term trading but I am a much more effective trader now. Every trader must be aware of his/her strengths and weaknesses and constantly look to improve every day. One of the great benefits of being at Futex is that the company is very patient with their traders.

What has been your secret to success?

be incredibly focused and you have to love trading. You also have to be completely honest with yourself and review your strengths and weaknesses on an ongoing basis. The ability to take onboard criticism is also very important.


s easy! You hear on the news about traders at banks making millions and people then think that all trading is easy. At Futex we are proprietary speculators not market makers for clients. The rewards for this style of trading are unlimited and you also enjoy the freedom to trade how you want. However, without dedication, failure is inevitable.


FUTEX

Have the markets altered since you began trading?

Enormously. Markets are so much more volatile that the potential for reward is great. However, also with volatility comes strong market correlation. A good trader should be able to use these to gain an edge.

What do you think is the key to being a successful trader?

Firstly, you have to have a genuine love for the markets. Secondly, you have to be disciplined. Finally, you have to back your convictions. One of the difficult things to do is to trust yourself; this really is the difference between the guy who consistently makes money trading 2 lots and the one who can push himself to trade 100 lots or more.


FUTEX

Olly Thomas

For the following interview we had to drag Olly Thomas kicking and screaming away from his screens and the Sovereign debt crisis to talk to us about his trading. Olly joined Futex in 2007 and currently trades the Bund.

How did you get into futures trading?

I have always had an interest in trading and finance as a career but was drawn specifically to futures trading because of the freedom it offered. I wanted the opportunity to sidestep the office politics that

nform!

Tell me about your early trading experiences.

Prior to joining Futex I had a mixed experience of trading. I did a small amount of spread betting, like a lot of people who join us, but with limited success. My first experience in the futures market at Futex was during the Credit Crunch so it really was a baptism of fire that enforced very fast learning. I think that period helped me a lot.

What products have you traded in the past, what are you trading now and why?

It is vitally important to be flexible in trading and to follow the best opportunities as they will not always be in the same market. However, every trader at Futex has a base market they fully understand which provides the consistent profits they seek. My base market is the Bund but I have also traded S&P, DAX, Euro Stoxx, FTSE and T-Notes. Trading more than one market at a time takes a lot of skill and experience but can reap massive rewards.

Do you use technical and fundamental information to make your trading decisions?

Both of these are important to understand otherwise you leave yourself exposed to failing to understand what is currently driving the market; a potentially expensive mistake. I lean more on the technical information when the markets are quieter but find it very hard to separate the two. Without the ability to understand price behavior, your chances of making consistent money are limited.

How do you see your trading evolving over the next 12 months?

It is important to keep pushing yourself beyond what feels immediately comfortable. Over the next 12 months I will continue to do this by pushing my trading size to allow me to achieve my goals. As I have developed as a trader I have noted that my discipline has improved. It is a skill that is often talked about but is very difficult to master, requiring repeated practice. I hope to master this over the next 12 months.


FUTEX


Like most other traders I would say a good work ethic (particularly at the beginning of your career), masses of self-belief, discipline and a passion for the markets are essential. However, for me, the most important trait is an ability to push yourself beyond the natural fear that you experience; something that holds back so many from making it as a futures trader.


FUTEX

John O Sullivan

In this interview we managed to sit down with Futex

successful in both the Trading and Training business.

When and how did you get involved with Futex?

My involvement with Futex goes back some 10 years. I was

people and the opportunity. Having come from a successful career in a non-financial related industry I was excited by the huge scope for personal development that a successful career in trading allows.

Why did you start Futex Investment & Trading Academy?

We started the Academy because of the enormous demand from people wanting to get into trading. After extensive research it was evident that Futex had a clear, unique and excellent process in place for ensuring every trainee had the best opportunity possible to succeed as a trader; it does not over promise or under deliver. Since I became involved I have witnessed a lot of trading companies come and go. In my opinion they over promised and under delivered.

How has proprietary futures trading changed since you first became involved in the industry?

Some people say that the Algorithms/Black Boxes have taken over and tmarkets as a result. What I do see is those traders that were successful continue to be successful. That is no accident; talent, dedication and hard work pay-off in the long run.


to dedicate significant time (not part-time or evenings). This is a serious business and to succeed you need to pay it that respect.


There are certain traits common to all of our successful traders: being at your desk all day every day,

Successful traders have focus, dedication, drive, determination and self-belief. They are active participants in the markets.


FUTEX

What next for Futex Investment & Trading Academy?

The future for the Academy is one of huge promise. We have many exciting opportunities to offer future trainees with regards to becoming successful in the financial markets. One of our primary current objectives is to offer our in-house Trading Floor Training programme from our soon-to-be-opened City of London Trading Floor so WATCH THIS SPACE!


FUTEX

The Big Interview

The next panel interview involved three of our seasoned professional traders and our current Trading Floor Training clients. A series of questions were put to the pros in an effort to uncover what exactly they did to make it as a professional trader.

What markets do you trade and why?

Oli: My primary market is the Bund (10-year German Government bond). Whatever you trade, whether -Note or Eurostoxx, some of the time conditions are good and at other times the

markets are frustrating and harder to read. Markets seem to go in and out of fashion over time and, as it happens, people are looking closely at the Bund right now. This is different from a couple of years ago when people turned to the equity markets and in particular the FTSE. After you learn the core skills of trading you will be able to trade any market, but you should always have a single market which you can rely on even if trading conditions are difficult. We call this our bread and butter market; one in which you have the ability to grind out prices every day.

Adam: I changed from the Eurostoxx to the Bund and then to the FTSE. For me it is about which market

though it suited me. In contrast, the FTSE has provided me with much more success and this is the pathway I have chosen to follow.

Artur: way in which I liked to trade. I now trade the Bund and find this easier to read which has helped me increase my trading size dramatically and also my profits.

You all use scalping as one of your key tactics in the market, what is this?

Oli: For me scalping is the term used for when a trader looks to get in and out of the market quickly, looking for relatively small profits. When trading in this manner it is essential to ensure you manage

more than you set out to, particularly if your profit target is a few ticks.

Adam: Scalping is a tactic I use to extract 10/15 prices a day from the market. It is an approach that encourages you to trade consistently which over time will allow you to increase your trading size meaning you can earn more money in the markets without excessive swings in your P&L. As Oli says though you must show discipline in knowing when to exit a trade.

Artur: You must know when you are in a bad trade and when to cut your losses. You must be able to judge when the market is going against you. When you make a losing trade you must reassess the market, identify why the trade was a loser and look to evaluate what is going on in front of you before re-entering the market.


FUTEX

What did you look for when starting as a trader?

Oli: When I started to trade I mainly looked at charts. I used them to identify support and resistance levels which I then used as guidelines. Now, with more experience, I am able to rely on the price action/behavior to make more effective decisions. I look to identify exhaustion points in the markets i.e. when a big move in the market is coming to an end and when it becomes clear to you a change in direction of the price is imminent.

Artur: involvement. Also, I recommend looking at general price action to confirm fundamental data. Therefore, after an economic figure, you must look at the price action to determine whether the changes in price are valid and your thought processes correct, before jumping into the market.

Adam: The only way to learn all these things is to actually trade in the market. You pay much more attention to the markets when you are actively in a trade rather than watching. You should trade small size initially for extended periods and look to identify characteristics of price movement. This will help to boost your ability to preempt changes in price in the future.

What time of day do you trade and does the time matter?

Oli: Sometimes mornings are easier to trade as the market has more structure. Afternoons can often be more erratic due to the presence of US participants and particularly at the cash open. However, you must ensure that even if you are making more money in the afternoon that you continue to trade in the mornings. Market conditions can change overnight and if you have eliminated your trading activity in the mornings, this will inhibit your ability to generate consistent profits.

Artur: It is vital that you never panic when it comes to making money and let the opportunities come to you. Times of the day to watch out for are the economic figure releases, bond auctions and the opening/closing of the underlying cash maryour trend lines and technical levels, and the market can often jump violently. You must be cautious. It is also vital that you do not change your trading style whether you are up or down. For example, do not

activity (over-trade) just because you are chasing losses or through overconfidence. For me this is gambling and not trading according to a concrete plan. This will only result in even greater losses or giving back money that you have made.

Adam: You are an insignificant fragment of the market. The market is still the market if you are up or down and therefore you should treat it in exactly the same way no matter what the time of day. It is not against you at a particular time of the day but you must demonstrate discipline throughout the day

effectiveness of your approach. If you stick to your rules and you are consistently losing, then you can look to change your rules in order to become profitable. If you deviate from your rules and trade in many different styles, then how can you identify the mistakes you are making, eradicate them and progress to become a consistently profitable trader?


FUTEX

How do you control your own mindset when trading?

Oli: A trader must be mentally in the right position to make a trade. If you are angry or frustrated due to a previous trade, and do not have the right temperament, this will only result in losing trades. You may make an error causing you to lose money on the original trade but the more serious error is continuing to trade with an ineffective mindset leading to further losses. This is why it is important to take five minutes away from the screen, to settle your emotions and recreate the correct mindset to enable you to get back to your winning beahviour.

Adam: When the market goes against you it is important to not take it personally. The market is the market and it is your own decision making and ill-judgment that causes errors from which you must learn to ensure they are not repeated.

Paolo: When I trade and I lose 3 times in a row I walk away from the markets for a period of time or I go home. The time it takes you to walk around the block and gather your thoughts will save you money.

Artur: Trading is all about the ability to know when you are in a losing trade, your ability to take a loss and then move onto the next trade without it having a negative effect on the manner in which you trade.

How did you change from trading inconsistently to being a consistently profitable trader?

Paolo: become consistently profitable in the long run and give themselves the chance to earn large figures. On this path many traders go through a variety of lessons.

Artur: It is vital to learn plenty about the markets, the overall economy and to learn from the people around you in order to get your own knowledge to a level where you grow in confidence and are able to make consistent profits. It is important to learn about yourself, what suits you and to maintain a long-term vision such that if you work hard and develop your trading, whilst learning from your mistakes, you will eventually reach your destination. The discipline must be there and you must come to work prepared every day both psychologically and physiologically.

Adam: It is your primary responsibility to know the markets, the economy, what is going on and how these factors impact the price in front of your eyes. Eventually you will grow in confidence and be able to forecast market movements and confidently trade using these to give you the opportunity to make

changing the way in which you trade. Over time you will develop the resources you need to be successful and you must remain patient. You must not blindly copy others as how they make money is unique to them. Share ideas but develop a style that suits you. Wait for your opportunities in the market as they will come to you. Do not over trade but trade with good reason.

Paolo: Developing as a trader involves increasing your trading size. It is difficult to increase your size to begin with because an increase from 2 lots to 3 is a 50% increase. You must look to increase your size

with which you trade due to fear; you must remain comfortable and confident. Also, look to change


FUTEX

your size by different amounts; for example from 15 to 17 instead of to 20 so that psychologically it

as you did with the previous size.

Oli: The key driver for me in becoming profitable was confidence and this only comes through long periods of hard work. You must read plenty and research/review your trading constantly. You must analyze every aspect of the markets and the economy, understand every economic figure and bond auction, and know exactly the impact they have on the market. Look at both the charts and these figures to identify patterns of movement so that you can identify what the market does. When you can do this you can trade confidently and quickly take ticks from the market. You must spend every day glued to your screen till the late hours of the evening so you know how the market behaves at all times

had a bad

understanding the markets and what is taking place. Look back at your day at the errors you made and identify why you made them. Make a commitment to eradicate them from your strategy; this is essential to your development as a trader. There is no shortcut to becoming consistently profitable;

smart you are but you can change the amount you know about the markets through consistent hard work and dedication.

Prop Trader Interviews

Documents

Transcript of Prop Trader Interviews