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Will has been a trader and investor for 16 years, focusing on commodities, FX and crypto. He runs a coaching program for beginner traders at www.wmd4x.com
Will Hunting is @WMD4X on Twitter
What attracted you to trading?
Initially, it was for the money, but then I began to relish the challenge, and finally, my focus returned to growing my capital.
How did you get into trading?
When I started trading, I had no idea what I was doing. But my account was growing, and there’s no way to explain my success at the time other than blind luck.
The difference between luck and doing something deliberately is being able to repeat the effect. If it wasn't luck, you could do it again.
The difference between luck and doing something deliberately is being able to repeat the effect.
What were the market conditions when you started?
Going back to 2005/6, I was buying gold. It was the only instrument I was trading. Gold was breaking out through $500/600, and it was up only. It climbed to $1030 before any kind of major crash. I started with a small amount of money and turned it into something significant. I had the absolute time of my life.
How did you handle the sudden wealth?
I was financially stable before I came to trading so it wasn't a massive change except in the type of effort required.
How did you find the switch to trading as a career?
My background is in engineering/ plastics/machinery which can be a mucky way to earn a living, so when trading started paying out I remember wondering what I had been up to when I could have just done this. I’d been rolling around in the mud for a decade putting pennies together when pounds were sitting here the whole time.
I’d been rolling around in the mud for a decade putting pennies together when pounds were sitting here the whole time.
Tell us about the ‘challenge’ period of that journey.
After Bear Stearns, the Fed cut rates deeper than expected. Gold crashed from $1030 down to $900 within a couple of days; most of it happened almost instantly. I was fully margined from the top and buying on the way down as the price collapsed. By the time the weekend came, I had blown two and half years of growth in two and a half days. That was the beginning of the journey, where my primary motivation became the challenge rather than the money.
I had blown two and half years of growth in two and a half days.
What was going through your mind when you suffered that loss?
I said to myself, “I've got ten grand left on my account, and I'm going to try and figure this out”. I felt a little bit intellectually humiliated. The intellectual scar was deeper than the loss of the money. How could I have gotten that so wrong? Why did I let that happen? Why did I allow that to happen? You know, things like that.
I decided to trade the remaining funds and said if I lost it, I’d step away from trading. I think the next six months were the most painful in my career as that account withered from 10,000 to 5,000.
I felt the loss of that 5,000 more than the loss of the £170,000 because I was actually fucking trying to make money now, and I couldn't.
I felt the loss of that £5,000 more than the loss of the £170,000 because I was actually fucking trying to make money now, and I couldn't.
I was down 50% in six months, but continued to make observations, picking things up from other people and eventually, reached a point where I understood what I was looking for, even though I was losing money. Nine months to a year after that loss, I felt like I had turned the corner, and that £5,000 was now £5,100. I remember thinking, “I'm back!”.
I doubled in three months, and then I doubled again in another three months, and it felt like magic again. This time I had in the back of my mind: “I've been here before, I need to take some money out”.
Sounds like an important lesson
We all have our scars, right? On Twitter, we joke about people having mental disorders and trauma, but you do get these flashbacks of mistakes you've made in the past - things you didn't do in a certain situation. They impact the way you manage your position and manage your account in the future.
You seem to have carved out a niche as a trader, who did you learn from?
I was influenced by a lot of people, not one single person. When I was learning to trade, it was the Golden Era of forums. Forex factory, FX Fishermen, Forex TSD, and Onyx. That was where you went to learn. But in reality, what you had were losers teaching people how to lose. It took me a little while to realise that, almost none of these guys had a clue. They posted selective setups, in hindsight, a lot of that happens on Twitter too.
I slowly started to piece together things that made sense in line with my observations of the consistent behaviour of the market, and here I am. There were influences, just dozens of them. Everyone I came across seemed to only have one piece of the jigsaw.
Everyone I came across seemed to only have one piece of the jigsaw
Are you satisfied with the way you trade? Are you tweaking your system?
If it ain’t broke, why fix it? I'm doing something successfully. I've been doing it for a long time, and it works. It's not that my methodology has stopped evolving. It continues to evolve with every data point. It's part of the process, but I'm not trying to figure anything out. I'm simply looking for the conditions in which my entry techniques work. If I see that the market is in a condition where my strategy will work, I apply it. If not, I step away.
Is stepping away crucial for traders?
I think the difference between what I've just described and what most traders do, is that most traders have a strategy, but they've never thought about the conditions in which the strategy works. You give someone a hammer, and suddenly everything looks like a nail. They just start banging away at the market, taking trade after trade, regardless of whether the market conditions suit the strategy.
most traders have a strategy, but they've never thought about the conditions in which the strategy works.
Is it just a question of expanding their toolkit?
If you want to make it in trading, you need to learn to do one thing and then do it really well. The problem that people have is that people want results in a hurry. You wouldnt watch a YouTube tutorial on how to fly a helicopter, sit your family in a helicopter and say, let's go! Yet people take their entire life savings and commit it to the market.
Do you think scaling is an issue for most traders?
I think that one of the biggest reasons that traders fail is because, at some point, the money starts mattering to them, and when the money starts mattering, they start making bad decisions. They’re no longer reacting to the chart but to their PNL. It's the attachment to money that ruins everything for them.
Do you think traders should set weekly profit targets?
No. What happens is that someone will have a successful trading strategy, risking $100 a trade, and thinks they need $500.00 a month to make a living. They’re then going to do one of two things. Either start taking five times the number of trades or try and hold that trade for five times as long. And both of those paths lead to going broke. What they should do is take the same trade and just bigger.
The traders who don’t make it are the ones who weren't prepared to change their relationship with risk. Instead of going bigger, they try to do it more often or hold longer.
The traders who don’t make it are the ones who weren't prepared to change their relationship with risk.
How do you get your students to be more disciplined in their approach?
One exercise that I ask people to do is take something like the H4 timeframe. Zoom right out and take one year. Count the number of swings on that chart. Most people will come back with a number somewhere between 20 and 30. So based on their count, they’d have two or three opportunities every month to catch a swing trade. The problem is that most people are trying to take two or three swing trades a day. Once you’ve done that exercise, there’s no excuse to do that. Either you change the way you behave, or the market changes what it does, and that’s not about to happen in any meaningful way. You have to be in sync with what the market's doing. The market doesn't even know you exist.
It seems charts hinge on policy and news more than they have done in a while. Do you follow these narratives or are you a pure chartist?
I would describe myself more as a pure chartist, but I stay abreast of themes in the market. I'm not fussed about specific data, but I want to know when the next CPI release is and when the Fed meeting is. I want to know because I can expect volatility at those times. I couldn't care less what the actual numbers are.
I think most macro is rearview mirror analysis. It's telling you what's already happened. It's not predictive. I think you can find correlations between rainfall in Peru and the number of movies that have been released by Nicolas Cage, but whether that correlation is going to be valuable to you and applying it in any kind of space is meaningless. Knowing that there are correlations is different from being able to trade them, and actually, what you need is a correlation where there's a lead and a lag relationship.
If you could give someone starting trading tomorrow one piece of advice, what would it be?
Spend a lot of time watching price, doing nothing. It's the best way to learn. It's helpful to have something at risk, but when you're learning, you want to know that you're reading the market and not your PNL. Most traders are likely risking too much while they're still learning to trade, so there’s always doubt about whether they are doing the right thing or if they are doing it because they’re seeing positive or negative PNL.
If you're learning to ride a motorbike, you'd be crazy to just sit on a superbike and go for it. It's an accident waiting to happen. You learn on a 100CC and then, once you're competent, progress.
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