Anthony Irwin came from a background in IT to pursuing a career as a private retail Forex trader. He shares his journey into the markets and some of the more unique aspects of his trading from his home in Brisbane, Australia, with Huzefa Hamid, DailyForex.com Senior Analyst.
What's your professional background outside of trading?
Before trading, I started off in the IT industry. Straight out of school I did a traineeship – that was building computers but the company I did that with also had the software & development side so I ended up getting into programming. I did a lot of web development work. Recently, I've started working in the security industry because at one point I decided I wanted to get into business for myself but I still needed an income. Security has more flexible working hours so you can try build a business on the side. I found that going out and trying to find customers was very tough. So for me, I decided on trading as a good way of trying to build a business for myself.
[DF] Do you remember how you were first exposed to the markets and thought trading would be an interesting pursuit?
[AI] When I was younger, my Dad got my brother and me some stocks. It was in our own account but he funded it and picked out the stocks. From an early age, I saw that they go up in value and get paid dividends and that sort of stuff. That's what pushed my desire to learn more about it. That was around when I was about 18 or 19 years old.
[DF] I know from your blog, that you're a member of a Live Room with two mentors, Michael Storm & Christopher Head. There are a lot of Forex rooms out there. What made you gravitate towards them?
[AI] When I got into the trade room and I saw them trading I was amazed at what was possible. You see them trading in and out all the time. At the time we were doing lots of short-term trading. I was just amazed at how much they could make. Before I joined the trade room, I was trading on higher timeframes like a daily chart. To see that you could actually trade in and out the same day and make money was very appealing to me. I always thought I'd have to have a really huge account before I could put on enough volume to make a decent amount of money out of it, but when you're placing lots of trades and trading in and out, you can make pretty good money.
[DF] Some people have mixed feelings about Live Rooms and taking signals. What do you think the potential pitfalls are of going down that route?
[AI] I personally don't think you should join a room for trading signals. I think you should join a room to try and learn how to trade. The benefit of a trade room is that you have moderators who have been doing it for a long time and they usually have training videos on the method that they use. So when they make trade calls, you can pull up the chart and you can try and work out why they're buying here or why they're selling there. Using the knowledge you have acquired, you can say they're doing it because it's at that support or resistance or whatever the case may be. After a while, the light bulb goes on and you can see these things for yourself. And the other thing is that if you don't understand you can ask why are you making that trade and they can pull up the chart and show you why they were doing that particular thing. I compare being in a trade room to getting a job at a proprietary trading desk somewhere. You've got experienced traders that can mentor you and you pick up stuff so much faster when you actually can see it happening as the market unfolds.
[DF] You're based in Australia. Is there an advantage to being in that time zone? Did it influence you in choosing Forex as the market to trade?
[AI] Being in Australia didn't influence me. I didn't actually know about Forex until I saw some ads. I was searching for stocks and technical analysis and I started to get Forex ads. When I learned more about it, I jumped on board. Thinking about it now, there are advantages to living in Australia if you're trading Forex part-time because you can work your day job during normal business hours and in the evening it's one of the most active periods of the day. You've got London in full swing so you can day trade. Whereas if you lived elsewhere you'd be at the screen after your day job when the markets are a lot quieter.
[DF] Tell us a little about your physical workspace and screen setup.
[AI] I have six monitors and I have each monitor split in half. I have two copies of MetaTrader running on five of the monitors. On the sixth monitor I have the trade room and the trade manager running. I execute in two different trading accounts but I use a trade copier to copy into the second account. On each copy of MT4, I have 1m, 5m, 15m, 1hr, 4hr and a daily chart up. So I can look at all the different timeframes at a glance. When I'm trading throughout the day, those are the timeframes I look at. If I want to look at the weekly and the monthly I can pop those up when I need them. They don't change so much and are more important when you're doing your top-down analysis at the beginning. My mentors like to have as many monitors as possible. They say in their training that people have a ton of stuff just laying around that they never use. They say that if you have to, sell the stuff you don't use and buy some cheap monitors. Basically if you don't have enough monitors there's really no excuse in their minds.
[DF] What things in life has trading enabled you to do?
[AI] Trading has given me a solid opportunity to build my own source of income rather than relying on an employer.
[DF] What are some of your ambitions going forward?
[AI] To improve my risk and money management. The way that the trade room trades is very unusual: they don't tend to have hard limit stops. I'm changing the way that I trade to actually use stops because I find that I'm not always around the whole time. If you're not there to manage the trades, you can get a lot of drawdown.
[DF] What piece of advice would you give to an individual looking to trade for the first time or make a living from it?
[AI] One of the most important things I think is don't put all of your capital into your trading account. I would personally start small. Say you've saved up $5,000. You might only want to put $1,000 or $2,000 into the trading account. Most people blow up at least one account by doing stupid things when they start out: trade bigger than they should, try to double up and then lose, and then try to double up again and lose. People can do really stupid things. Build a decent track record and don't blow your trading stake learning how to trade. You have to trade for a few months to get your emotions under control. You could also start using a demo account first; a lot of brokers have a demo account that never expires if you have a live account with them. That's another way of proving to yourself that you can do it.
[DF] Do you use any technical tools that are proprietary? Or are your indicators all out-of-the-box tools that you can find in most platforms?
[AI] I use what you can find in any MT4 platform. I have written a few tools to help me visually see the market better like a slide show that changes the market every 20 seconds. And I wrote a little script that if you type in the symbol you want, it will change all the open charts to that symbol.
[DF] What timeframes do you enjoy trading personally?
[AI] I like trading the smaller timeframes but I am starting to try and trade the higher timeframes as well. I quite often trade the 5-minute and the 15-minute charts, but I am starting to look at the hourly and 4-hour a lot more.
[DF] Do you favour any particular pairs?
[AI] I don't really have any favourites. I have quite a lot of pairs – 53 symbols in my list that I look at. At the moment I don't tend to trade gold, silver, oil or the indices much although occasionally I will. I was placing some DAX trades earlier today and earlier in the week but I don't tend to do them as much because the cost of the trades are a lot more and the dollar movements are a lot more. Whereas I can trade a lot smaller size with the currency pairs and have the higher leverage as well.
[DF] What do you focus on when measuring your results – pips, cash made, win rate percentage, or some other metric?
[AI] I look at pips. I try to get a hundred pips a day at least. Sometimes we get considerably more than that but I like to get a hundred pips a day. I'm not trading every day but I'm pretty consistent with that when I'm actively trading. If you can do that, you should be able to double your account every eight weeks or so. It is a lot of work sometimes, like some Mondays if there's no news, it can be very slow so I don't always get the hundred pips but I can get pretty close. But then other days you might make 250 or 300 pips so that makes up for it.
[DF] Do you incorporate any fundamental analysis into your trading beyond avoiding certain news announcements?
[AI] No. Every time I've tried that I've lost money. Last year, for example, when the AUD went below parity , I thought to myself that the US is in bad shape: their government shut down for two weeks because of the debt ceiling and they're trillions of dollars in debt and all that sort of stuff. And with the Australian Dollar, we had very small debt; there was no real reason for it falling below parity other than the RBA deciding they wanted the AUD lower and talking it down. So I kept building positions against the RBA, trying to do a George Soros – like what he did against the Bank of England. As the Australian Dollar fell below parity against the US Dollar, I started taking long positions and every time that it fell a reasonable level I'd keep adding to it. Eventually I just had to kill the trade. It didn't work for me, the market disagreed and I ended up losing a lot of money. I was quite underwater on that trade and that trade was my biggest single loss. I took a significant hit but if I didn't kill it I would have blown the account. That was back in late 2013. That was a learning experience for me – don't fight the market.
[DF] What trading hours do you keep?
[AI] I prefer to trade London and New York because that's the busiest period. For me, that's 5pm local time to around 2am or 3am. I know that the Asian session in comparison is a lot slower.
[DF] One contentious issue amongst traders is whether to add to positions when they're going against you. Your blog mentioned that your mentors are prepared to do that. How do you feel about it?
[AI] I think if you have a reason for it, then you can do it. But if you're totally new and you haven't been exposed to other traders that know what they're doing and you're just adding to it because it's losing, you're probably just going to lose more money. You have to have a reason for doing it. Usually when the live room I'm in does it, they're doing it because they believe in the position. They're going to look at the higher timeframes, the daily, the weekly, and the monthly, and they're going to say, for example, it's overextended in a big way. From their point of view, if the market has moved on a particular timeframe say 9 or 12 sessions in a row straight down or straight up, then it's overextended for that particular timeframe because nothing goes up or down forever. That's their mindset. There's going to be some kind of a pullback or some kind of a rally depending on whether it's long or short. So they're happy to add to it because they believe it's overdone. And sometimes the market can keep going down for several days against them. Sometimes if people are trading bigger than they should they can be in a lot of pain. But they say they're willing to keep adding to it.
Personally, what I'm migrating towards is if let's say the market is going down and I thought it was overextended, and if I saw a hammer pattern or another candle pattern, I would enter at that point. But if that pattern was invalidated, I'll kill the trade because it's not ready to go up. I may still believe it's overextended but my entry signal is invalidated. At the moment I like candle patterns. I've gone through Steve Nison's training and I quite like his mindset on the candles. He basically says that you have to have a reason for the trade and if the reason for the trade is a candle pattern, but the market closes below the pattern, then that pattern is no longer valid and you have no reason to be in the trade. I'm adopting that strategy at the moment. At what point are you wrong? You've got to really have a point at which you know you're wrong. For me, the candle patterns give me a very clear definition of what's wrong. As another example, let's say you're buying something because it's at support or selling something because it's at resistance, but the price breaks that level by a significant amount, then you're wrong and your trade idea is invalidated> And, as Nison would say, you have no business being in the trade. I'm taking that kind of mindset. I still believe in the methodology that the trade room uses but rather than hedging, I'm saying, "?I'm out" and I'll try to re-enter lower or higher . I've been experimenting with it now; yesterday I did 18 trades which isn't a lot compared to what I could have done, and I think 4 of them stopped out. For me, it's been working reasonably well.
For stop-loss placement, I'm of the mindset that I give it room to breathe. If everybody puts the stops in the same place, the market maker will see a 100,000 stops and gun for it and take everyone out. I try to work out where I think the stop out level is and ask myself if everyone else think the same way. Then I will give it a bit extra breathing room and trade lower volume on my trade because of the wider stop level. I haven't been trading with hard stop-losses for very long; I was trading with the hedging method for about two years and it's only recently I've decided to move away from that.
[DF] Any parting words?
[AI] One of the advantages of trading the lower timeframes is that you really learn how to read the charts and the signals. Before I joined the trade room, I was mainly trading the daily charts because that's what everyone says to do. But with trading the daily timeframe it takes so long to see what happens. When you're trading 5-minute, 15-minute charts, you can make lots of trades in a single day. You can watch the charts and the patterns and see what actually happens in real-time. With the smaller timeframes, in a couple of months you can get many years' worth of experience compared to trading the larger timeframes.
And lastly, a lot of people treat trading like a get quick rich scheme. It's not. It takes a lot of work to mainly get your emotions under control. The trading signals aren't that complicated. Actually following it, that's where you have to learn the discipline and the right mindset.