Pipwhip: The High Frequency Trader

pipwhip

1. Tell us little bit about yourself. Where are you from? What are your hobbies?

Who am I? Well there’s a question for a rainy Sunday afternoon. I would like to think I am a walking contradiction. I’m English but I like the French, I’m a statistician but can hold a conversation, I am an ex-investment banker but a decent human being.

Over the last 10 years I have worked for various banks and hedge funds in the high frequency trading space. HFT is a very different game to retail trading but it was pretty good training.

Extreme sports are a big part of my life. If there is a board involved and a reasonable expectation that I could die then it’s for me.

In my travels I have met two very different camps of people, those that say things like “what if you get hurt” and those that say “what if you land it”. I am firmly in the second camp.

2. When/why did you start trading forex? What resources did you use to learn how to trade (websites, books, apps, mentors, etc.)?

The main reason I started trading forex was market accessibility. My previous experience means that it’s difficult to make money if you’re not on exchange with a hardcore technology set up. This is expensive if you want to trade for yourself. The best thing by far about forex is anyone can get easy access and you can trade with as little at 100 USD.

In regards to learning, I am pretty lucky as I have professional experience. The websites I look at regularly are babypips and forexfactory. I read a lot of trading books and try to have an open mind about other people’s ideas. I think there is a lot of useful information on babypips in regards to price action trading helped me to clarify some of my ideas.

Trading partners are also a really important part of my day to day. Trading full time can be quite an isolating place and it’s really helpful to have people to bounce ideas off and talk about the markets.

3. What were your first strategies in forex trading? How are they different from your strategies today?

My background means that my focus has always been more towards fully automated mechanical systems. The first systems I started using were indicator based and didn’t really have a whole lot of luck with them. Since then I trade a lot more using discretionary strategies.

I don’t think the strategies themselves have changed that much, I think the main difference between strategies is effectively the order management and better methods to get the most out of each trade.

It is worth spending time discretionary trading before venturing into mechanical systems as it’s much easier to work out some of the nuances in regards to how to make money when you are doing it by eye.

4. Describe your current daily or weekly trading routine. What do you do before you trade?

I have a pretty solid routine. At the beginning of the week I print out the week’s economic calendar and see what is planned. I am normally at my screens about 15 mins from London open to see what was happening over the Asian session. I only trade for about 4-5 hours a day but coding wise it really varies. Yesterday for instance I was on a roll and by the time i was finished i’d done about 15 hour day.

The scalping I do is fairly hands off. When I wake up I look through all my charts and set up alerts for various different points of interest. I can then work on other things while I wait for anything interesting to happen. Other than that I just spend time doing research testing ideas and talking to people.

5. What are some of your most unforgettable trades and trading moments?

One relatively recent memorable event was ECB cutting rates unexpectedly. The EURUSD was, or at least I thought was, looking for longs after a multi-day sell off and was around a decent S&R line. All morning it sold off and I just couldn’t find a place to get in.

I remember going for lunch and coming back about 30 minutes later to what I thought was the chart being broken. It was something like a 250 pip 15 min bar in EURUSD. It’s just a reminder that you are only moments from disaster and that stop losses are very important.

6. Complete the sentence: “If I hadn’t learned about forex trading, I would probably _______.”

Not trade forex

7. Have you ever used a mechanical trading system? If you have, how was your experience?

A lot of my trading is done via mechanical strategies. They are however a bit of a double edged sword. When you have a set of ideas that works they are great but they take a lot of work.

For me I prefer this work compared with sitting just watching screens all day but I don’t think the amount of work they take shouldn’t be underestimated. The good thing that I have found with mechanical systems is that once you have a few ideas that work you can start to distill the elements out of that and then finding other strategies that work are much much easier.

There are a lot of subtle things to testing mechanical strategies that I do not think are immediately obvious. You have to be very careful with data and backtests to make sure they give reliable results.
I have seen people spend months working on a strategy, be dead certain it will make a killing only to find the entirety of their trading edge during the backtest was down to data errors.

8. Forex trading is not an easy business. What motivates you to continue trading when in a trading slump?

The best thing you can do is trade with as realistic a set of expectations as possible. You can make the game as easy or hard for yourself with this simple fact alone.

I actually don’t have to make a particularly large return to break even on costs so starting from this foundation means that it’s much easier for me to endure a slump.

When things are not going great I just take time off and kite surf and wakeboard. I am lucky that trading is a means to facilitate other parts of my life rather than the other way around. This is the same if you’re a very research oriented trader. You have good weeks where you have a lot of good ideas that make pnl and then I get writers block. I have been lucky to do this for long enough that I know given enough time I will make it through the other side.

9. Do you have any advice for trading newbies out there?

My advice to newbies is just try to find something in trading that goes beyond just money. Trading is one of the most interesting and challenging professions. You are playing a game with some of the smartest people in the world and understanding the game is in my opinion more fulfilling than most other endeavours.

Just understand it will take time to get a good feel for how things work, each pair’s dynamics, trading sessions, economic events, who the players are, general patterns, money management etc.
I think at the beginning demo trade and trade small, make it a game and try to make it fun. If you do that, put the time in, you’ll eventually work it out.

There are a couple of different view points in regards to mechanical systems. I would personally advise at the start, to try avoid them. They can be a total time vampire if you don’t know what you’re doing. It’s very easy to waste a lot of time testing strategies, get frustrated and giving up. You’re better off learning PA and good RR set ups and then use the tricks from these to make mechanical systems work. I have personally had more successes automating discretionary trading ideas rather than simple indicator combination strategies.

Also try to be realistic about expected returns. If you go in with the attitude of doubling an account every week for the rest of time you’re more likely to get frustrated and stop. I think a huge part of being successful is about finding ways to stay in the game.

10. What do you think of bitcoins and cryptocurrencies in general?

This is a topic I find particularly interesting at the moment as it opens some much bigger points about the economy as a whole.I think the technologies associated with bitcoin has some way to go and it’s not clear of all of the many different cryptocurrencies which one will win out.

There are wider topics that the emergence of cryptocurrencies has helped to highlight. If you have assets of any type then you’re effectively making some form of currency play. Let’s not forget, if you have assets and real interest rates are negative, what is actually happening is the government is taking your money by stealth to reduce the real value of its own debts.

This is logically no different than them stealing money directly from your bank account. I have to say, it’s very, very clever mainly because very few people even realise it’s happening, it is also very, very wrong.

I have come to realise is that governments are not designed to help the people they are meant to serve.
The little that is done is simply designed to try to prevent people from rioting. Ukraine is an extreme example of this, but last year in the UK there was an 11% pay rise for MP when nurses can’t get raises even in line with inflation. No one cares about you unless you start to stand up for yourself and the last thing governments want to do is help enable rebellion.

Cryptocurrencies are in their infancy, but the success of decentralised currencies is important for a truly global economy to provide people freedom beyond the control of individual governments.

2 Likes

i dont know why i get redirected to this post every single time for more times than i care to remember, i got nothing to say

these things go up and down

Hi Pipwhip

I have now been trading for about 12 months using a demo account and a micro account.

I absolutely love FX and I am so determined to achieve success.

My goal is to be able to trade full time but that is a long way away.

I have done several courses and have purchased what I thing is great charting software so my investment so far is substantial.

There is so much to learn and I wanted to know what you think is a realistic time frame to become reasonably successful? I feel I know a lot but lack the experience to put it all together.

At present I am losing money but only very small amounts and I have gone no where near blowing my account.

Any suggestions on reading material?

Thanks for the incite.

Cheers

Black Duck

i would like you to not diminish me
there is no advice for a newbie
forex is unpredictable and its not a game either

a lottery has 1 in a billion forex has a 24/7 aware of everything thats going on
you will not make money while sleeping
ever, unless you put it there while waking

It is a nice interview but it would have been great to learn about the secrecy of HFT. How is it like working in such an environment? How is career debuted in that space. How are HFT systems built and maintained? What was the track record? Why quitting HFT? Etc

Thanks, i would have covered it a bit more but it was not really the theme of the interview. I think one of the tricky things about the main HFT shops is that the expectation around background is fairly similar. You have to be very numerate and normally need a computing/maths background from a top university. The quant funds are pretty fun places to work. You have to work really long hours but the people i have had the pleasure of working with have always been really really smart but also pretty humble and always very pragmatic. I cant talk about strategies or how people make money for legal reasons but I can say its very varied. I regards to why I quit, I hated London, NYC and Chicago. I’m done with city life and just wanted to live simply again.

Time is a bit of a tricky thing as it also depends on how deeply you can immerse yourself into it. I am a believer in the 10,000 hour rule and that can be a long long time even if you are trading 8 -10 hours a day.

It depends also a little on luck. It took me a long time as I was side tracked by a lot of things. If you find the right mentor/trading style then you will probably find that you can achieve success in about a year. Have you looked at the price action trading threads on babypips? I would recommend them a great deal.

Hi IXS

I found you post confusing to read. My guess is that english is not your first language and maybe what you were trying to say was lost in translation.

I don’t know how I was diminishing you. The post was not levelled at you.

Secondly at no stage did I say that FX was a game and I certainly do not treat it asa game.

Your post sounded a little hostile. Like you were angry. Perhaps you could be a little more positive and tell us a little of yourself. How long have you been trading, how successful are you, how did you get into FX etc??

Cheers

Black Duck

Hi Pipwhip

Thanks for the reply.

The advice about the 10,000 hours is good as my golf coach says I need to hit about 10,000 balls to get it right.

Finding a mentor is hard. Those that are good keep there cards close to their chest and I can understand. I have just got involve with an online trading education site and they have several mentors who appear to be fairly genuine. Fingers crossed.

Still I will keep working hard and studying and hopefully I will make my own luck.

Many thanks for the reply.

Cheers

Black Duck

Great thread and interview, pipwhip… I greatly enjoyed reading about you… Thanks to Ananais for bringing us your story… Happy trading!

Neat Interview PW.

'Best

Hi Black Duck

I would have to agree with you there finding a mentor can be hard especially if they are a really good mentor(the ones that may cost thousands of dollars to talk to). However, I have not given up! I have been trading for quite some time now, and what I learned is that you never stop learning LOL!

thanks, good information