Will your current goals actually allow you to make a living out of forex trading? Here’s what Krugman25 has to say!
After a break from the forums, he’s back with even more knowledge and experience to share!
He gives very insightful responses to numerous threads and he has also created some interesting topics of his own. These include: Trade Ideas (Using Price- Action & Patterns) and Quantitative Analysis on the effects of over-risking and under-risking.
To this day, he continues to be one of our most helpful and highly-engaging contributors. Apart from being a trader, he takes pride in being an inventor, software developer, and technical manager by profession. With the 80-100 hours he puts in every week, we forgot to ask him if he even sleeps!
We’ve done an interview with him almost 5 years ago. (Krugman25: The Programmer). Hopefully, this feature will give us another look at the interesting life of our awesome tech guy, family man and trader!
Without further ado, this is Krugman25!
1. It's great to have you back! What kept you busy this past year?
Software development has kept me super busy. I work for a company that I help start and primarily design and develop Industrial Internet-of-Things applications. I also work as a contractor doing development work on the side. During the times I am doing contracted work I am generally working 80-100 hours a week.
2.During our past interview, you shared that you've always traded support and resistance levels, price and volumes. It's been 5 years since. How is your strategy then different from your strategy today?
I still trade the exact same way that I use to and use the exact same types of technical analysis. The only difference now is that with more experience and chart reading hours under my belt I understand all of it better and have more of an intuition when reading charts.
3. What was your biggest trading challenge in the past year and how did you deal with it?
My biggest challenge has been trading a larger sized account. Before, my risk on a single trade may have been equal to about 1 days worth of my salary, and now it may be 1 weeks worth. I know that this will eventually grow into much larger sums where I may be risking a month or more worth of what I make at my job in a single trade. At the end of the day it is the percentage PnL that matters, but it has become more psychologically tough to watch the number in terms of dollars grow.
4. On a scale of 1 to 10 with 10 being the most important, how important is it to practice flexibility and adaptability in your trades?
For me, it is a 10. My trading is partially mechanical, in that many of the patterns I trade have well defined rules. Beyond that almost everything else is up to interpretation. I.e. what is considered a major/minor support zone? What is the quality of the pattern I want to trade? Is price ranging, trending, or somewhere in between? And so on. Those are subjective considerations before entering a trend. Once the trade has been taken I then dynamically manage the trade. I may have a price target in mind but if there is a strong signal counter to my original bias then I may exit the trade, hedge, or employ some other type of trading tactic.
This goes hand-in-hand with the intuition I talked about earlier. I am now much more aware of price behavior and when I think it may turn against my position, just due to reading thousands of charts and getting an idea of what constitutes a real risk to my trade. Statically set profit and stop levels were important when I was just starting out, but as I have gained experience I am more successful when I have the right balance of mechanical rules with dynamic trade management.
5. You started a Trading Competition Thread recently (Sounds fun and exciting btw!) How did you come up with that idea? What inspired you?
I thought it would be fun for everyone on babypips watch me blow up a $10,000 account, haha. Actually the main reason was to do something fun for us traders who have been doing this for a while. I thought it would also be a way to engage the overall babypips community and get conversations going between the spectators and those trading.
After watching so many people come and go throughout the years and very few traders that stick with it in the long term, it can get a bit lonely and difficult to forge new friendships when you know it's highly likely those new friends will eventually give up trading and move on. So it was a way to bring to veteran traders together and maybe generate new friendships and conversations.
6. What advice would you give to a newbie who wants to make a living out of forex trading?
I would simply say that making a living in Forex is the last and ultimate goal and there are many goals that must be reached between that and where you begin.
The first goal is to not blow up your account.
The second goal is to trade all year long and at least break even.
The third goal is to trade all year long and outperform the stock market indices average long term growth. Once you reach that third goal it now makes more sense for you to trade than it does to do a long term buy-and-hold strategy in the stock market.
A fourth goal may be to reach a certain (but reasonable) annual profit goals, maybe 20-30% in a year. Once you know what you are likely to make in the long term then you can achieve full-time trading by trying to consistently achieve those annual profit goals and increasing your account size.
In my opinion, and I am not yet there myself, is that trading full time and doing it for life requires a large account balance. For myself, I have set a goal of 2 million before I would go full time. For my personal goals I would like to reach 1 million by the time I am 35 and 2 million by the time I am 40. Those goals are based on me both being profitable in trading and adding money to my accounts from my salary income. The "full time, self sustaining" number is going to be vastly different with each individual person.
7. What do you think of bitcoins and cryptocurrencies in general?
In terms of trading I think they are great trading vehicles due to their volatility. Personally, I am not a fan of most crypto-coins as they currently exist, but I think some of their technologies could survive and find a place in the future, such as blockchain.
Ultimately I think crypto's could be at stage 3 of Gartner's Hype Cycle, which is called the "Trough of Disillusionment". Once this cycle completes it course is when we may see some of these technologies go mainstream as innovators discover the best and right way to use them.
8. What do you think is the one thing about you that everyone (in the forums) should know by now?
1) First that I have an awesome family. What may not be so known is that my family and I will be traveling to South Korea at the end of this year to bring home our adopted daughter.
2) I only trade price behavior (also know as "price action")
3) I get frustrated by how many trading sales people there are. Every time I turn around someone is selling information that I can find for free on google. Not all of it is bad though in the cases where someone is offering something personal, unique and based on many years of experience.
9. Non-forex related question! What is your pet peeve?
I get really annoyed with last minute plans. If my wife tells me on Friday that we have some sort of get-together that we need to go to on Saturday, that just really gets me. I need time to mentally prepare for these sorts of things, haha.
10. What was the biggest non-trading-related risk that you've taken in your life?
One of the riskiest things I have ever done not related to trading was when I bought a house when I first got married and my wife and I were both making near minimum wage. There were many months where all we could afford to eat was Ramen noodles and cheap boxes of macaroni.
I remember for a couple years we lived so much on the razor’s edge that the slightest unexpected expense was enough to break our budget. We even contemplated bankruptcy for a while. Fast forward to today and my wife has been a stay at home mom for around 5 years and I make much more than I used to, but that difficult time in our life is still very real and raw to us.
We actually still live in our first house(which we can barely all fit in anymore), I drive a minivan that cost me $50, and we live on a pretty small budget. But what most people don't realize is that we are putting away 50-75% of our income and I may be able to retire by the time i'm 40.