Member Profile: chronictrader
Wow…so where do I start? Those of you who know me on here know me as ‘chronictrader’. (Don’t ask me where that name came from – I put Chronic in everything!) Those in ‘real life’ know me as Mike. At the grand old age of 24, I am probably one of the younger traders on here and work full time as a Management Consultant. It is a very broad profession, but summed up nicely in this quote: “A consultant is someone who saves his client almost enough to pay his fee and talks enough sensible nonsense to sell on more work”. I am the oldest of 3 boys, love football and love the gym – I always have a protein shake… or two with some green tea besides me whilst trading – always helps to feed those brain muscles! And the arms too. From that rambling introduction, you can probably guess I’m a part time trader... well sort of.
Trading - the early years
How I got into trading is quite a simple story. I took 2 years out after university and started predominantly investing in shares – taking advantage of the raft of IPOs and holding a company or two. A friend then introduced me to the wonderful world of spread betting. If memory serves me correctly, I started at the end of January 2015, so I’ve been trading a little over 10 months. Luckily, my first trade(s) was round about the time Mr. Draghi announced the first bout of QE inEurope(talk about being late to the party Mario!) – I remember losing £150 in about an hour. I nearly …. my pants (you get the drift) and closed out for a loss. Whilst that trade was a loss, I was still pretty confident Mario was going to announce QE, so I went in with another long… just before the announcement (don’t trade into news unless you’re well into profit)… and kabooooommm… Mario Draghi announced more ‘free money’ for everyone. Closed out for my first profit – I was ecstatic.
Fast forward 3 months, I was up quite a bit on my initial deposit and kept buying the dips because markets always go up (at least that’s what I thought at the time)…until a guy called Alexis Tsipras a.k.a. the main protagonist in the Greek Debt drama messed things up for me… I had to close one position I had on the FTSE at a hefty loss (I bought near the top) – thanks Alexis!
Those first few months is where I learnt some very harsh, but valuable lessons which have served me well in my trading ever since… Luckily, I’ve never blown an account (I’ve learnt from the mistake of others). Despite having had that big loss, one of the most common misconceptions is that a retail trader cannot successfully and profitably day trade – I can tell you now that’s a load of tosh and don’t believe those naysayers. (I’ll give tips at the end of this article). This belief normally comes from people who have royally failed and so try and take others down with them.
Over the past 7 months, I have refined my trading a lot. My style is in, out, and to not hang around. In other words, I’m a day trader and sometimes a swing trader (on very small positions). When I plan my setup for the next trading day, I normally start with the 4 hour chart to identify areas of potential support and resistance. These areas will be marked going into the next day – this allows me to start with a clear mind and possible entry points. This gets refined as the day goes along – the market will decide where resistance / support is (I normally use the 60 minute time frame whilst I’m day trading, making sure I have that trading plan I mapped out the day before). When trying to look for breakouts, I use either the 1 min chart or the 5 min chart – both work a treat. This style of trading has worked incredibly well over the past few months.
One of the first bits of advice I would give to a new trader comes from our lovely friend at comparethemarket.com – ‘keep it simples’. The best traders / investors in the world follow that principle and systematically apply it to their trading day in day out.
At the moment, I still work full time, but by the age of 30 I’d like to retire and take on trading full time. In my opinion, life is too short to be working for someone – particularly in this day and age where there are multiple ways to make money online. My style of looking for breakouts and identifying support and resistance areas is unlikely to change – it’s been successful for me for a long time (well, over the past 5 months), so it doesn’t make any sense for me to change it.
Tips to pass on
Building on the ‘keep it simples’ advice I gave earlier, my second bit of advice would be to trade one market and master it – really try and understand how it moves and trades. The principle I take is that generalists are good but not excellent at one thing... generally. But, mastering one or a few markets enables you to understand that market inside out (you will never know more than the market by the way). For me, I trade only the Dax and nothing else. Choose a market you want, and before you put ANY money down or, rather more cynically, before you start giving the market some of your hard-earned cash every day, spend 3-4 months analyzing and watching the market. You then begin to get a ‘feel’ for the market. I can’t quite articulate this into words, but I do hope you get what I mean. Fundamentally, trading is an odds game. Anything you can do to put the odds in your favor – do it, so making sure you understand how a particular asset class / market trades is vital for that.