Article

Member Profile: Rhody Trader

My Background
Let’s see. Where to begin…
Well, to start, I’m from the States. Grew up and lived the vast majority of my life in the Northeast – Rhode Island and Massachusetts specifically. As a teenager I was heavily into computers, and had originally planned on earning a college degree in computer science. My secondary interest in the markets ended up taking over somewhere along the way, though, and I ended up studying finance instead. That saw me take a job as a junior analyst coming out of school.

My career path since then has been quite convoluted. I wrapped three periods in the employment of Thomson Reuters (originally Thomson Financial) around grad school and a 7 year stint as a full-time volleyball coach. While in the industry I mainly covered forex and the Treasury market, but at times also handled stock and commodities.

Yes, I did say I was a full-time volleyball coach for a while – specifically at the Division I level on the women’s side. It was actually during those years that I joined Trade2Win, eventually working as the site’s Content Editor for a while. That’s also when I wrote The Essentials of Trading. The book came out of work I was doing on a trading class with a professor friend of mine. I looked for a book I could use as supporting material, but couldn’t find one, so I wrote it. I hadn’t really thought about broad publishing, but Brett Steenbarger connected me with his editor and the rest is history.

Coaching just wasn’t paying the bills, though, so I ended up back in the real working world again. Despite some serious changes to the industry, I was in a good position with long-term prospects. After a few years, though, I was feeling the need for a new intellectual challenge.

Most recently I’ve been living in England while working on a PhD. My research focus has been on the performance of retail forex traders. It’s been interesting stuff. Funnily enough, I ended up getting back into coaching volleyball during my time at school. I’d been away from it for about six years at that point, so it came as something of a surprise at how quickly I jumped back in.

Pretty soon I’ll be on to the next challenge. What that will be is unclear at this point.

Trading – the early years
It was the Crash of ’87 that was the trigger for me to actually get into trading, if you can believe that! The big market moves convinced me there was definitely something interesting going on there, especially in the way the stocks of quality companies were crushed for essentially no good fundamental reason. I was still only 17 at the time, but a couple months later when I hit 18 I opened my first trading account. Actually, I still have it!

Like most new “investors” I was all over the place with no real plan or sense of direction. Name a silly new trader mistake or decision and I probably made it. Fortunately, I didn’t really do too much in the way of harm to my account during this time. I wasn’t particularly active as commissions were still at painful levels for the small player back in those days – even for discount brokers. Also, it was generally a bull market period, and I was playing strictly from the long side.

Things changed for me in when I read How to Make Money in Stocks by William J. O’Neil – the original edition. That introduced me to two concepts. The first was having a systematic way of looking at the market rather than being driven by whatever I read or heard about. The second was technical analysis, which not only did that heavily influence my trading from that point on, it also was directly responsible for me landing my first professional market analysis job.

I remember the first trade I made strictly based on technical analysis. I went long NIKKEI put warrants in 1990, which was basically a bet against the Japanese stock market. I bought them somewhere in the $5 range. I think a couple months later the price was up to $9. I took the money and ran. It was a big return, after all! At some point later I checked the price again and saw it had reached $25. Ouch! Early lesson in holding your winners.

During the 1990s I remained primarily focused on trading stocks. I wasn’t super active, but kept my hand in the markets. If I remember correctly, my first real effort at trading something else came after grad school. I don’t remember all that much of the specifics, but there was one day that will forever make me wince.

I decided to trade yen futures using one of the very early web-based platforms, which was really little more than an online version of the telephone order process. I was really nervous. I put in a market order to I think go short. I didn’t get a response (there were long lags in those days) and decided to cancel the order. A short while later I calmed down a bit and tried it again. Do you see the huge mistake I made? Can’t cancel a market order once entered, so I ended up short two contracts without realizing it. The market went against me and basically blew up my $5000 account. I was sick. It was so traumatic I stayed away from futures after that for years.

I eventually got over that, but by about 2000 I was becoming active in the forex market just as retail trading was developing. The years I was coaching ended up being my most active period, in part because I didn’t have to worry about compliance issues. Also, I had noticed that my day-to-day market analysis work tended to mess with my own trading as I was just looking at the market too constantly. Although I traded just about everything at one point or another over those years, my three focus areas were individual stocks, mini S&P 500 futures, and forex. Actually, in the case of stocks I shifted to mainly working in options.

When I first went back to Thomson Reuters in 2007, I was working on an equity market product, so I had to curb my stock trading due to compliance considerations. That saw me increase my focus on forex once more.

Trading now
Honestly, I haven’t traded all that actively the last couple of years. I’ve been working on my PhD – which focuses on trader performance – and living abroad with all kinds of new things in my life claiming my attention. I didn’t want to trade actively while being so distracted and lacking a meaningful income source beyond just what I need to cover living expenses, I took a very conservative approach to my finances. As a result, the small amount of trading I’ve done the last few years has been longer-term, mainly in my retirement account, and focused on the equity markets.

Future plans
Now that my PhD research is drawing to its conclusion, and I’m likely once more to have a regular source of income, I will almost certainly get back into more regular trading. I expect to maintain a focus on individual stocks if for no other reason than to manage my retirement account. Beyond that, though, forex retains a big interest for me. What else I trade beyond those two, if anything, will probably depend on changing market conditions.

I also plan to develop a new book based on my work researching trader performance. I want to at least start providing answers to a lot of long-time questions about how well traders really do from an impartial perspective.

Tips to pass on
If I were to offer one single tip it would be to find an approach to trading and the markets that suits you. It took me a few years to learn that lesson. Don’t just latch on to something other people have success with. We’re all different, with our own best ways of looking at things, trading time frame, etc. It is important for you to develop a plan incorporating all that stuff for yourself. Anything else puts your trading on a shaky foundation.

Finally . . .
One of the findings of my PhD research is that inexperienced traders can be negatively influenced by social interaction with other traders. The suspicion is that there’s a kind of confirmation bias at work that gives them more confidence in their own views – a confidence that can come back to bite them in the tail. If you are an inexperienced trader, make sure in your discussion of markets and trades in the Trade2Win forums and elsewhere to not just look for opinions and information which support your own views. Seeking out alternative views instead could be very beneficial.

John Forman is a Professional Forex Analyst and is currently working for Thomson Reuters and was previously Managing Analyst and Chief Trader for Anduril. He is a near 20-year veteran of trading and investing across a wide array of markets and instruments, and a former professional analyst with experience covering forex, fixed income, equities, and commodities. His analysis and market comments have been found in the financial news media across the world and he has published dozens of articles on trading methodology and analysis technique and he was also a former Content Editor for Trade2Win
John is the author of the book The Essentials of Trading: From the Basics to Building a Winning Strategy (Wiley, April 2006). He has spoken on trading and market related topics to numerous student groups and been a guest lecturer on several occasions. In cooperation with a professor, he helped design and present a university level trading course.

NVP

Well-known member
Jun 21, 2004
35,586
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fxcorrelator.com
#2
hey John !

Hey john

Great to read about another regular T2win contributer .........jees never realised you were working on a phd - and on trader performance !
Sounds to me that you could combine those coaching talents and Trading skills into coaching high performance trading ?.............................Steve Ward openly admits he is ok at trading but his real skills were around coaching others to be the best of the best .........and has also published at T2W
anyway good to read about you ...........and you are 100% right about finding your own path ............and also i agree that newbie traders can get distracted in the early years by too much interaction with other traders ..especially if you have somewhat contrarian approaches
regards
Neil
NVP
 

Rhody Trader

Well-known member
Dec 11, 2004
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www.TheEssentialsOfTrading.com
#3
Great to read about another regular T2win contributer
Not anywhere near as "regular" as you!

.........jees never realised you were working on a phd - and on trader performance !
So basically you admit to completely ignoring my threads Forex trader success rates - some real data and What are your questions about trader performance? :p

I'm so looking forward to finishing up the PhD thesis so I can actually work on turning the research - and more like it - into something useful for traders rather than the academic discourse I've had to do up to this point.

Sounds to me that you could combine those coaching talents and Trading skills into coaching high performance trading ?.............................Steve Ward openly admits he is ok at trading but his real skills were around coaching others to be the best of the best .........and has also published at T2W
But wouldn't that make me vendor (gasp!)? :-0

I definitely have a strong teaching/coaching/educating tendency. I just always seem to be pulled in that direction.
 
#4
Hey john

Great to read about another regular T2win contributer .........jees never realised you were working on a phd - and on trader performance !
Sounds to me that you could combine those coaching talents and Trading skills into coaching high performance trading ?.............................Steve Ward openly admits he is ok at trading but his real skills were around coaching others to be the best of the best .........and has also published at T2W
anyway good to read about you ...........and you are 100% right about finding your own path ............and also i agree that newbie traders can get distracted in the early years by too much interaction with other traders ..especially if you have somewhat contrarian approaches
regards
Neil
NVP
 

NVP

Well-known member
Jun 21, 2004
35,586
1,709
223
fxcorrelator.com
#5
Not anywhere near as "regular" as you!



So basically you admit to completely ignoring my threads Forex trader success rates - some real data and What are your questions about trader performance? :p

I'm so looking forward to finishing up the PhD thesis so I can actually work on turning the research - and more like it - into something useful for traders rather than the academic discourse I've had to do up to this point.



But wouldn't that make me vendor (gasp!)? :-0

I definitely have a strong teaching/coaching/educating tendency. I just always seem to be pulled in that direction.

I will rectify that omission when I get more time dude - sorry ! :cool:

................and regarding the Vendor thing...........I'm in the same boat ............I would probably like to share a few ideas one day but clearly at present that would mean sacrificing my presence at T2win so I will focus still on my finance career whilst trading P/T

N
 

NVP

Well-known member
Jun 21, 2004
35,586
1,709
223
fxcorrelator.com
#6
Hey john

Great to read about another regular T2win contributer .........jees never realised you were working on a phd - and on trader performance !
Sounds to me that you could combine those coaching talents and Trading skills into coaching high performance trading ?.............................Steve Ward openly admits he is ok at trading but his real skills were around coaching others to be the best of the best .........and has also published at T2W
anyway good to read about you ...........and you are 100% right about finding your own path ............and also i agree that newbie traders can get distracted in the early years by too much interaction with other traders ..especially if you have somewhat contrarian approaches
regards
Neil
NVP
why was this repeated on the thread by another member ? :eek: