UK-based trader and educator Greg Secker believes that anyone can make money from the markets. He spoke to YTE Magazine about his formula for success.

How did you first become interested in the markets?

It was when I was working at Thomas Cook Financial Services as Trading Technologist. I built one of the first real time Foreign Exchange trading systems. This gave me exposure to some of the most amazing traders. It was mind blowing to watch these guys pull hundreds of thousands of pounds out of the market in 15-20 minutes. I wanted to do what they did.

Did you make any mistakes when you first started out?

How many mistakes did I make is probably a better question! Ignoring my stop losses, not sizing my trades correctly, trading too much, trading the news, I’ve made them all and more. The important thing with trading is being able to realise that you’ve made these mistakes and refine what you are doing. This is where having mentors to point out my mistakes was critical.  Sometimes you are so close to something that you don’t see the big picture.

What kind of trader are you?

Personally, I use technical analysis to identify high probability entry and exit points once I’ve ensured there are no relevant news items that could throw out my analysis. To me, it’s about ‘elegant entry’, finding low volatility pull back points, where you have a chance to cover your spread quickly and immediately capitalise the position whilst keeping the risk in check, with a stop outside the volatile range.

Is there any one trade (win or loss) that sticks in your mind that had a profound impact on your development as a trader? What did you learn from this?

Yes, and it was a loss! I learned my biggest lesson. It was when I was first trading under the guys at Thomas Cook. I’d picked up technical analysis pretty quickly and I was coming on in leaps and bounds. I’d identified a great Pivot Trade on the GBPUSD long, and because I was probably a little over confident I didn’t bother to check if there were any news items that day. Sure enough my trade tanked within about 15 minutes of placing it and I was seriously scratching my head. I asked one of the traders if they knew what had happened and he slapped me across the back of the head! The revised GDP figures were released about 10 minutes after I placed the trade, and they were well below expectation. I learnt that you always need to be aware of your environment.

What markets do you trade?

I’ve traded all markets over the years.  I predominantly trade the Foreign Exchange markets, but I also trade the FTSE350, the ASX100, the NYSE, Gold, Oil and some soft commodities. The basic concepts are the same with a few exceptions. The strategies are very different, and the types of opportunities are very different. Forex is the most liquid market in the world. That liquidity provides more opportunities in a shorter time frame, and this is why it’s my primary focus.

What is your number one trading rule?

I never risk more than one per cent of my account on a trade. Some of my trading strategies have had up to a 70 per cent success rate. This is fantastic, but what it means is that out of 100 trades there are still 30 that I’m going to get wrong. Those 30 losers can come at any time there could be 10 in a row. If I’m risking five per cent on a trade and I do have a run of five or six losers that would have a massive impact on my trading bank. Remember this game is about longevity and being able to fight another day!

Can you give an example of a pivot point trade?

GBPUSD had a high-test on the daily on the 11th May. The next day (12th) the low of the 11th was broken to the downside, slipping price underneath the 50ema on the daily. This carried the selling pressure of the daily retracement. On the 13th when the price on the 5min tested the underside of the pivot, it allowed a short entry on the re-test with a nice tight stop. Given the retracement cycle on the daily still had distance to run, the short entry on the GBPUSD 5min to the pivot point underside was perfect – and we took it. The run? 148 pips down to S2 – classic trade, with a fabulous risk to reward.

The Aussie dollar is at record highs, has it reached its peak?

This is an interesting question. Let me start by saying that my system teaches people to trade what we see, rather than try to predict the future. Having said that, common sense would suggest that with the Aussie at record levels risks would have to favour the downside and there may be some sort of pullback. The question is, will the Aussie run to $1.15 before that pullback, or has it already started. That’s really anyone’s guess, but as long as it’s moving and I can see opportunities, I’ll trade it either way.

What is your secret to success?

The key is to change the meaning we attach to market information, so we don’t see it as a negative, which could cause us to react in an emotive way. Anticipation is the mother of all success in this game – i..e. through trading experience we get an understanding of how we expect the market to react and this is often different to how we might naturally expect the market to react, If we have an understanding of, or can anticipate – we can control our automatic responses and decouple our emotions – thus allowing ourselves to do what needs to be done, rather than respond to our feelings that might be centred around momentary pain avoidance.

Once the psychology exercises are in full flow, we must find a trading strategy that suits our personality and, with that, we are ready to start producing.