Monday, January 08, 2007

Slow markets=Research

I just began reading Inside the House of Money by Steven Drobny. This is certainly my type of book. It is non fiction and deals with a subject that I live and breathe Trading. In the book the author interviews a diverse group of traders on the subject of Macro Investing. While reading each chapter I began to realize that the way most of the money managers trade is exactly how I structure my portfolio at the bank. I was examining my positions today. I have a few spot positions, positive carry with a medium term view. I have a yield basket (dollar neutral) and I have two main interest rate plays, a Mexican yield curve play and a Brazilian rate cut trade. For any regular readers of this Blog this comes as know surprise. I have had these similar trades on for many months to varying size (lesser size currently). To fill my day, rather then over trade, I “mine “for new trades. Presently I have a dollar yield curve trade on my radar (I am looking for the curve to steepen), as well as the now often repeated Iceland and Turkish currency/interest rate play.

This is not how I started my career out trading. When I first entered the market I was what was called a “jobber” in and out of the market hundred’s of times a day for a few pips at a time. I then began “market making”, which is providing liquidity to corporations, bank and investment houses. Now I am essentially a proprietary trader (I market make to a small select customer base, although I wish I didn’t have to), in the same style as some of the big hedge funds. Of course my position size is a fraction of the “big boys” but the mythology is exactly the same (based on my readings in Inside the House of Money and Market Wizards). I am much happier in my current trading style. The point to this post is you must continue to evolve or the markets will eat you up. If you get a chance read Inside the House of Money by Steve Drobny and Market Wizards by Jack Schwager (the original not The New Market Wizards). These are two of my favorites, and have provided a confidence boost to my trading. Basically there is no holy grail, I am doing what these men are doing (ok on a smaller scale). Have confidence in your abilities and have a plan (so don't lose the rent money!), then execute it.

Good Luck and Good Forex Trading.



Blogger John Russell said...

This is a really good post. I find that certain parts of my style evolve every six months. I am always taking an analysis of my trading and making small improvements. The markets definately change styles on a regular basis and its up to us as traders to get a feel for that and roll with the punches. Good advice!

5:22 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home