Rafael Rosa
1. How long have you been trading and how did you get into forex trading?
First, thank you BabyPips.com for opening up this space for me. I’m honored to be featured in this newsletter and congratulate all the great work the website has been doing.
I’ve been trading currencies for over two years. While I’ve always been fascinated by how markets work, I started trading during my junior year in college.
I believe my introduction to foreign exchange was quite unusual. I was taking an international finance class and my professor wanted everyone to trade currencies in a demo account. I started doing so and just got hooked.
2. What’s your most memorable trading experience?
The comeback from my first large account drawdown. After doing well for a while in 2009, my account went south in the middle of the year. It reached a point where I cut down all my type of trading to scalping intraday only. My goal was to build up little by little again. Pip by Pip, I retraced my losses and went on to really build my FX skills and account. Those two or three comeback trading weeks were my hardest to date. I also feel like that was the period where I became a real trader, having seen the darkness and returned to light ;).
3. Was there ever a time when you suffered a huge drawdown and thought of giving up? How did you get through that phase?
It’s true that every time I make a bunch of bad trades, I feel like an idiot and ask myself whether I should really be trading. However, when I’m on a good streak, I feel like a cassette player reading the market tape.
When I’m deep in the hole, I try to remind myself of how I was “the man” a few days ago, sometimes just a few hours ago ;). Staying positive is the biggest factor for success after drawdowns.
You also have to accept personal failure. Victimizing yourself by blaming the market or creating some manipulation-related conspiracy theory is not the answer. Recognizing your mistake, and believing that you will make a good trade in the future when the same situation repeats itself is the right mindset. And you also need to recognize your mistake in order to avoid doing them again.
Overall, remember that anything that happens in your account is always your fault. You pick the time and size you want to be in the market. You also big your entry and exits (stop losses and exits). If the market is acting “weird” or is being “manipulated” in your opinion, just get out fast and wait for another time.
4. What’s the most challenging part of trading for you?
Beating myself. Contrary to popular belief, I think beating the markets is easy. Being disciplined, doing proper risk-management, and making the right trading decisions are the hard part.
I believe most unsuccessful traders do at least one of the following:
Have no trade plan (i.e. entry, exit, stop losses, etc.), get bad entries on trades because they’re afraid they will lose the move, use too much leverage, overtrade, get into trades without knowing what they’re doing (blindly following other people’s trades), don’t study markets, think they can trade by dedicating just a few hours a week, don’t analyze historical price action of assets, and many more.
All of the above is what destroys most new traders. And as you might have noticed, none of the things mentioned have anything to do with the markets.
In regard to currency trading, pairs such as the Euro-Dollar respect technical levels very well. Learning them is not the hard part. Learning to control your actions is usually the problem.
5. When would you say you feel you are successful as a trader?
When you have a plan that is derived from analysis and you execute it consistently, time and time again. No emotion or bias, just disciplined well-thought out trading.
Every time you get into a trade without a plan, you are failing.
6. Do you think anyone can become a successful trader? Why or why not?
Yes. Like I’ve said earlier, it’s more about beating yourself than beating the market. If you can develop trading discipline and be consistent, you’ll probably become a successful trader.
The second key factor is to put in the time. Some of the top minds in the world are in finance and trading. To think that putting in just two hours a week is going to make you a successful trader is just very imaginable.
7. How does your personality match your trading style?
I’ve always been a big risk-taker. In trading, this translates into me being an aggressive trader. I make many trades and use sizeable leverage at times when I find it suitable.
8. If you could give just one piece of advice to newbie traders, what would it be?
Write out your trading system. Whether on a word document or excel sheet, write out your rules, trade requirements, goals, and details of your specific trades. Additionally, have this document open at all times.
You need to have a plan and follow it consistently. I believe that having it in your face the whole time helps you not sneak in that “different” trade.
9. Describe your typical day as a forex trader.
I usually wake up at 6 30 AM. First, I review charts and then look to update myself on the day’s “narrative” (i.e. the assumed reasoning for market moves and what the day’s expectations are). Besides reading my RSS feeds, I always scroll through my “Friends” stream on StockTwits and look for valuable information.
I then usually trade throughout the day until 2 or 3 PM. I don’t like trading after those times. Throughout the day, I usually share videos, charts, personal blog posts, and overall links on StockTwits/Twitter.
10. Who’s your favorite Forex character?
Ashraf Laidi is my favorite follow on StockTwits. If you can use the information he shares for free wisely, you can definitely improve your trading. Sometimes, people forget that Ashraf’s comments come from an analyst point of view. He shares longer term direction and reasoning and not specific intraday (usually) scalp trades. It’s your responsibility to make your trade and setup your own stop losses and targets.
I see often on StockTwits people asking him for specific entries, stops, and targets. However, that’s your responsibility because he’s not managing an account for you.
Nevertheless, I’ve learned a lot from Ashraf in the last year and have adapted some of his trading techniques. I recommend that anyone on StockTwits follow Ashraf.
11. What were the most significant events that affected your trading in 2010?
Graduating from college was the big shift in my life this year. In general, my schedule and the amount of time I dedicate to trading changed dramatically.
Rafael Rosa is the author of Analysis of Currrency Trading, Financial Markets, and Economic Policy
