Tim Musomba is a trader, Live Room moderator and this year launched his managed accounts career. He has spent several years building his own unique self-developed method for trading the markets.
Tim sat down with the DailyForex.com Senior Analyst, Huzefa Hamid, to have a chat about the markets"¦
[DF] How did your journey into trading begin?
I've been a computer enthused since I was 13; I built my first computer and started a small computer repair business with a friend of mine when I was 15. My father had always been a businessman. When I was around 16 years old, I remember having conversations with him about various import/export business, as well as currency & commodities exchange. At 18, he gave me a Forex CD. It sat on my desk for a couple of years, and when I went into college I took a serious interest in it. I would say the combination of my love for computer technology and my father's business focus found its connection in the financial markets as I entered university. In college, I met a good friend of mine, Jamal, whose father had worked with my father and who had also expressed an interest in the markets. We started to explore trading ideas together and the rest is history.
[DF] This year you've been a moderator for TheForexRoom.com. Tell us a little about that.
I love it. It's been a blast working with Colin & Greg and the clients. It's a group where everyone has a passion to trade together. And the people are from all over the world – Europe, Canada, the US, Australia...it's humbling to have people from all around the world hear what I have to say and ask me for my opinion. And Greg's got the best sense of humour I have to add!
[DF] One of the backbones of your trading is using tick charts over regular time based charts. In simple terms, what are tick charts and why is it effective?
I started using Tick Charts in futures because it calculates the number of trades per bar; after a specific number of trades, the bar is completed. It makes the charts cleaner because it's based on activity. It gauges the flow of the market versus an arbitrary timeframe. It's almost like a hybrid of a larger timeframe chart with a short-term view. What we're doing is trading price action and Tick Charts looks at that more precisely than time based charts.
[DF] You also use a MACD and a Moving Average. How do you use it?
Firstly, the MACD tends to be my Holy Grail of where the overall market is heading. It's considered a very traditional tool amongst traders for very good reason – everyone wants to trade in the direction the market is going and MACD gives a great indication of that. So it gives me the bias I want to trade in – Long or Short. Secondly, the Moving Average – I use a Simply Moving Average just use for Pullbacks. Once the MACD gives me the direction, I look for pullbacks to my Simply Moving Average to help me pin my entries.
[DF] Typically how long are you in a trade?
Most of my trades are between 45 and 90 minutes. Sometimes they can go on longer, but 80% of my trades fall within that timeframe.
[DF] Tell us a little about the trading education you've received – books or courses – and what you've found effective.
The internet has been very effective for me; I believe it's the most effective tool in this day & age; I've spent hours searching for what I need and developing my knowledge base from what's already available online. I'd definitely recommend Investopedia and Wikipedia. Especially in my early days when I needed to learn the terms used in trading Forex and trading, those sites brought me the logic behind the indicators, acronyms and general concepts.
[DF] Over the years, have the markets changed in terms of how you can apply your methods?
One thing that stays true is volatility and price action. My view point hasn't changed in terms of how I look at the market technically. Of course, the markets change in terms of fundamentals and how price responds to fundamentals. But overall technically, my views have remained the same.
[DF] Are there any market conditions when your strategy does not perform well?
During the holiday season, there's always a decrease in volatility. I adjust my trading to take that into account – price action very often won't break a range and I'll trade the highs and lows of that range but still applying my system rules to the trades. Often, I'll be taking profits earlier than normal just to account for the tighter trading.
[DF] How does news & fundamentals effect affect your trading?
Not so much. I'd say the markets will always do what they're going to do; you as a trader have to stick to what you know. Sticking to my game plan is where I've seen profit during news and fundamentals.
[DF] What trading hours do you keep?
Ideally the London Open to London Close. That way when the London market closes at 10am CST, the New York Open has completed as well. I trade four days a week – Monday to Thursday.
[DF] What platform do you favour for executing your trades?
Nowadays I use MT4; I've used different platforms as I've experimented with different brokers but as long as the spreads are good, any platform is viable.
[DF] What mistakes do you see other traders make?
Patience. It's a virtue I practice on a daily basis. As I've gotten older, I've seen how patience pays dividends. I've seen traders adjust a strategy in the middle of a trade out of impatience and I think it's a huge mistake when they adjust their game plan without proper reason. Without patience, you're forcing trades. And then they tolerate losing trades getting out of hand – the complete opposite of what you're supposed to do! If you're able to eliminate the emotion and remain strategic, then you're able to change your entire outlook to the market.
[DF] What advice would you give new traders entering Forex?
Discover a way to look and interpret the market in a way that you're comfortable. I've noticed that a lot of beginners test everything that they read books and forums but without really understanding what's going on underneath. When you know your strategy comfortably, you'll trade it well and you'll be in a good place mentally as well. And you'll know how to adjust that strategy and refine it to get the best out of it. It definitely doesn't happen overnight and many people get discouraged at the beginning. If you can get past that initial phase, you'll find success.