I have, over the years, been involved in, and traded, all different time frames, and think this is actually the most important question any trader needs to ask themselves.

I originally come from a Futures Floor background, so understand short term “scalping” very well, and this was my first foray into trading. This is very time consuming, requires extreme concentration, and lighting quick reflexes. This didn’t really suit me as I was analysing the markets as well on a daily basis, so needed time out to do that. So I moved my time frame to longer term; swing trading if you like. But I was in a room full of scalpers. So if I got 20 points on side in a FTSE trade everyone was trying to persuade me to cover it, even though I thought there was another 20 points in the trade. This is when I learnt to trust my own advice, that one needed to finds one’s own way with this trading game; have a system, your system.   

I now don’t trade as I enjoy analysing the markets more, and have carved out a successful career running a growing business to provide analysis to traders (from novices to old timers!), rather than worrying myself with the pressures of trading each day.

Could your trading methodology be programmed into a computer?

I have managed to teach several people the nuts and bolts of the way I analyse the markets, and I equate this to being able to automate it. I’d say that 70-75% of what I do on a daily basis is “mechanical” and therefore could be reproduced/quantified for trading purposes, but that still leaves a good percentage that requires intuition and or a “nose” for the price action, only really borne by experience, and this bit CANNOT be automated.

What data services do you use? What does this cost a year?

I use CQG for my charting service, and it is at the high end for cost, especially for the number of markets that we need to cover (exchange fees for live trading making up a large chunk of my monthly outlay). But it is, without doubt, the best charting system out there. It’s one of those cases of getting what you pay for. One of the things I’ve always been impressed with about CQG is the quality of the data, and when the reliability of the data is key to the job you do (as it is for me) this is worth its weight in gold.

Describe your computer set up

I have a Dual Core PC with loads of RAM and run 4 screens. I write on one screen, have my e-mail on another, and have CQG on the other 2. One CQG page is a summary page with a big quote board, a few charts and CNBC and/or Sky News running all day as well. The other CQG screen scrolls to a different page for each contract we cover in the FuturesTechs reports, so we can view all sorts of different charts for each instrument. In analysing a market we will look at 10 minute, 60 minute, (several) Daily and Weekly Candlestick charts, Market Profile, Pivot Points, and sometimes Point and Figure Charts.

How many hours per week do you dedicate to trading?

I guess I’ll replace “trading” with “analysing” for this question. We get in at 5.30am each morning as we need to have 7 pages of analysis prepared and out there by 7am. We then have a little more time to write the rest of the reports; another 18 in all. We are usually done by 11.30am, after which we catch up with all the usual stuff like e-mails and the like. A couple of times a week I’m in London to see clients or to do seminars/training courses, but if I’m not (the office is in Southend-on-sea) I am lucky enough to be able to pick my kids up from school at 3.30pm, and spend the rest of the afternoon with them.  

What sort of annualised return should a trader reasonably expect?

The best fund mangers in the country will have had a good year if they return 10%. Newbie traders forget this. They think you can start with £2000 in a spread betting account and turn it into £50,000 in six months. It aint that easy. When a trader first starts out they shouldn’t expect to make money for 6-12 months.

Describe a trading strategy that you used to use (and, if you don’t use it anymore, why not?)

I think I kind of answered this in the first question!  - Trading in general! Most people’s answer to this question will have something to do with timeframes, I’d say!

How do you go about creating a trading strategy? Do you back test?

I always suggest to people that they test a trading strategy with the real world in mind. Unfortunately most don’t. I have seen so many “systems” that show a return of 10% a month “before costs”. Why bother testing something before costs? Costs are an inevitable part of trading. You can’t ignore them! I also think you should use “worse case scenario” prices when testing a trading strategy. In other words if you get a buy signal on a 30 minute chart then make your entry the high of the next 30 minute candlestick. After all, you may not be able to get in at the open of the next candle let alone the lowest price of the next candle! If you back-test with the odds stacked against you, and you make money, then you may well be on to something. It’s kind of the reverse of kidding yourself. Reality is so important for a trader!

If your trading strategy was a car, what model would it be?

I’ve always compared analysis services with newspapers, actually! FuturesTechs is not the Sun, but it’s not the FT either. We don’t just make up a load of crap for good effect, and make promises that can’t be kept, on the other hand we don’t go into every detail of the markets until even the insomniacs are sorted!  We try and give it to people straight, without any crap, giving traders a useful, concise read each morning.  So what newspaper does that make us?!

Do you like volatile markets?

I love volatility. We have a real tough job writing something interesting about tight, rangy markets. You end up saying the same thing for days upon end, until in the end you just say “look, there’s nothing happening, find another market to trade!”

If you had to recommend one book on trading, what would it be?

My book (Candlestick Charts, by Harriman House)!! I’m not sure that’s allowed, is it?!  

I am a big fan of Reminiscences of a Stock Operator, by Edwin Leferve. This book really does live up to the hype, and makes you realise just how tough this game is. It’s a cracking yarn with a few gems in it; a few things that will really get you thinking about the business of trading, which hasn’t changed since Jesse Livermore’s days!

If you had to make just one recommendation to spread bettors, what would it be?

Read books. As many as you can. Books on trading, books on Technical Analysis. Read, read, read.

Do you agree with the saying: trading is a hard way to make an easy living?

Totally. To the point where I’ve decided it’s not for me. But I can still see why people want to have a go. It’s a real journey. I’m glad I’ve made the journey, because I wouldn’t be where I am now without discovering about myself through trading. And I’m happy where I am - happy not to be trading.

Do you offer any services to traders?

FuturesTechs writes 25 pages of analysis a day covering Bond, Equity and Commodity Futures, as well as Forex crosses. We have been adding content to our website since it’s inception a year ago (we’d been running an e-mailled service for 8 years prior to that), and this affordable solution is proving popular, adding “retail” customers to our well established “professional” client base. Anyone can try it out, by going to http://www.futurestechs.co.uk/free_trial/

Any other thoughts on spread betting or trading?

Don’t use a spread betting account to “prove” what you think about a particular instrument or market. I’ve seen so many people with passionate views about, say, Gold going to $2000, and they get a spread betting account to buy some Gold, then lose money on a short term move, get stopped out because they run out of money, just in time for Gold to rally strongly. Trading something and having a long term view are two very different things. Treat trading as a business, not a way to try and prove a point about something.

And use technical analysis – it’s the only thing that will get close to giving you an edge.