Imagine if you could live the life of a forex god. Your desk containing every tool a trader could want and an army of anonymous internet weirdo’s to worship your every decision, paying tens of thousands of dollars a month to ride your coat tails.
That’s what happened to Jeff, the trader behind FX Viper and the subject of my two documentaries on the life of a professional forex trader. It was well shot (if I do say so myself) and portrayed an exciting life of trading and money.
Well… I’m here to burst your bubble.
The reality of being a professional trader is quite different. Most of my trading with him was spending hours, days and weeks staring at charts, waiting for the market to move in his favour. 98% of the time it wasn’t exciting, it was mind numbingly boring.
What made it a little more interesting was that he doesn’t use a stop loss or profit target, so even when we were out grabbing breakfast, he’d be constantly checking his phone. As much as 30x during a 45min meal.
After spending so many years watching his trading, I figure it’d be valuable to share some of the ingredients that make up Jeff and his FX Viper strategy.
How does his trading strategy work?
It’s very simple. Pick a direction, then trade in that direction based off technical levels. Enter positions at possible points of reversal like daily pivots, swing highs/lows and areas of congestion. Once you’ve identified your point of entry, trade very low leverage. This is important because it will enable you to withstand huge moves against the position and eventually the market should move into profit.
Sounds a bit too easy right?
It’s the kinda thing that sounds easy in theory, however in practice, it becomes incredibly difficult to manage the swings. Could you hold 20 trades for 6 months that were 500 pips out of the money and maintain your cool?
However, maintaining your cool is only one ingredient in an FX Viper sandwich. You also need money and a lot of it. How will you manage your finances if you’re trading for 6 months without making any income? Who’s going to pay the bills?
Next, never doubt yourself. Now… I admit this is contrary to the status quo of trading/investing, “be willing to admit when you’re wrong”, but that just doesn’t fly if you’re going to trade like FX Viper. If your account is big enough and your trade sizes are small enough, then you’ll be able to withstand almost anything.
It’s not my cup of tea because the risk and stress aren’t worth the gains. But he’s done incredibly well over the past 4 years trading this way, so there must be something to it.
My 5 tips to help you trade like FX Viper:
- Learn how to read the fundamental drivers of the market and can take a view on the long term future direction of a currency pair. Important! Because if you’re wrong, the consequences will likely be disastrous.
- Don’t get greedy. If the market moves against you, start trading smaller position sizes. When your trades move into profit, close them as soon as possible. 5-10 pips is plenty.
- Get a large account and another form of income. Sorry… I know this isn’t what you want to hear, but if you’re going to hold trades for months in a negative position, you need to be able to pay the bills while you wait for the market to turn around.
- Find a trading mentor/partner. Jeff spends most of his waking moments in contact with a mentor, a supposed former hedge fund guru that trades a near identical style of small, frequent profits and long term losing trades. They bounce off each other regularly which seems to help them stay relatively sane. It’s pretty lonely in Jeff’s office, and without someone to talk I can imagine one would go quite crazy.
- Find a wife that lets you do whatever you want. Courtney, his wife, let’s him get away with murder. During market hours he’s completely disconnected from everything aside from the market. If I lived that way I’d have been divorced seven times over… But it seems to work for them, so whatever floats your boat!
The one big takeaway from my years trading with Jeff is: To be successful, you do need to immerse yourself in the art of trading and current market drivers.
However, please also realise holding trades for a very long period, in the expectation that they will eventually move into profit is stressful, most of us aren’t wired to deal with it for long periods. That’s when mistakes happen, and we lose money. Jeff can do it, but I don’t know anyone else that can and certainly don’t recommend it as a strategy to adopt when you’re deciding how you want to live your life as a professional trader.
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