1. Tell us little bit about yourself. Where are you from? What are your hobbies?
My name is Kevin LaCoste. I spent most of my childhood growing up in Perth, Western Australia. Hobby wise, I enjoy cycling and reading, especially anything related to history. History is a study of human behaviour that I find fascinating.
2.When/why did you start trading forex? What resources did you use to learn how to trade (websites, books, apps, mentors, etc.)?
I always wanted to be a trader ever since I was a teenager back in the 90s, but for most of my life, I felt it was "out of my league". Thankfully the internet made me realize just how easy it was to start trading the forex market with minimal risk.
I first started trading in late 2011 after a bout of serious depression stemming from my job and career direction. The idea of spending the next 50 years of my life in a cubicle, facing job insecurity, meeting deadlines etc. was soul-crushing. As I recovered from my depression, I realized I had to take charge of my life and resurrected my dream of becoming a trader.
I found Babypips very useful when I first started. I also bought a few online courses. The most relevant one I found was 2nd Skies / Chris Capre. I found him willing to go out of his way for his students. I also use Forex Tester 2 for backtesting.
3. What were your first strategies in forex trading? How are they different from your strategies today?
I first traded live with price action, but I had no strict rules and did no backtesting. It didn't take long to wipe out 25% of my account, at which point I stopped trading and began some serious homework.
Today I still trade price action, but now I have strict rules with signals, entry and exits, position sizing etc. I'm much more mechanical and try to avoid as much discretion as possible.
4. Describe your current daily or weekly trading routine. What do you do before you trade?
I primarily trade the daily and weekly timeframes. The NY close is usually 5AM or 6AM in Perth. When I wake up, I flick on MT4 and cycle through all the charts of the pairs I trade.
I list any setups that interest me. From that list, I strike out any setups that might correlate with each other until I have a short list of setups that I believe are sufficiently non-correlated. Then I punch in pending orders, exit MT4 and try to avoid live charts for the rest of the day.
5. What are some of your most unforgettable trades and trading moments?
Early last year I became impatient and began using the Kelly formula to calculate my position size. The Kelly formula calculates the optimal position size for maximum growth, without any consideration to drawdown or risk of ruin. So quite often you'd come up with position sizes ranging from 10%-25%, which is insane. A handful of losing trades can wipe you out (conversely, a handful of wins will turn you into a millionaire in a short while).
Anyway, I had a trade open that had a position size of 10%, I believe. It was nearing my stop loss during a Friday and I decided to leave it open over the weekend, hoping it would reverse on Monday.
On Monday's opening, the price had gapped in my favour at a nice profit and I closed it. However, I realised that the gap could have gone against me. If price did gap against me with the same magnitude, I could've lost a quarter of my account on a single trade. That would've equalled thousands of dollars and I was thankful that I had dodged a bullet. I now trade with a position size of 1%.
6. Complete the sentence: “If I hadn’t learned about forex trading, I would probably _______.”
Invest in stocks
7. Have you ever used a mechanical trading system? If you have, how was your experience?
I trade mechanically these days. I've been profitable for 1.5 years so I believe it works. It takes the emotion out of trading.
8. Forex trading is not an easy business. What motivates you to continue trading when in a trading slump?
If you've backtested your system properly, then you should have an idea of what sort of drawdown to expect. As long as my drawdown is within my expectations, I try not to worry about it. I keep my risk per trade at 1%. Even if I lose 10 trades in a row, it won't be devastating. I'll be sore, but not to the point of quitting.
9. Do you have any advice for trading newbies out there?
Many newbies start out with unrealistic expectations. Probably the most important lesson for newbies is money management / position sizing.
Trading below 2% risk might be boring, but you won't blow up your account. If a newbie blows their life savings on high-risk trades, then they are out. On the other hand, if you manage your risk, you'll continue to have skin in the game and eventually reach your goal.
10. What do you think of bitcoins and cryptocurrencies in general?
Seems too 'gimicky' to me. It could be a legal way of investing in the black market. Very speculative.