Today, Renee Li had the pleasure of interviewing James Hu, the champion trader in the September Stage 4 trading contest. James’ managed to generate the majority of his 188.23% returns by trading Nasdaq, which was one of the most volatile instruments for the month.
In this interview, James and Renee run through:
· James’ trading background and what first got him interested
· His ability to foresee the big picture and why that is so helpful to him as a trader
· Why technical analysis is perfect for his trading style and timeframe
· How he uses fundamental analysis into the big picture
· Why the short-term works so well for him
· Which indicators he prefers to use with his trading
Click play on the video below to listen to the full interview.
Today, we’re going to run through more about his largest win and biggest loss.
As you can read from his interview below, James does take consistently small positions.
And we count this as one of the top 5 strategies to generate the best results in a trading contest here.
What we found fascinating is that small position sizes don’t always mean small wins and losses.
James’ biggest win was an incredible $455.65, and his biggest loss was $334.54. And this is despite taking relatively small positions on each trade.
Ironically, James’ biggest winning trade was on XAUUSD (Gold), and in line with his preferred timeframe, he only held the short position for two minutes.
James would have been happy with this trade as he only made 34 trades on Gold or 8.2% of his total trades.
James’s biggest losing trade was on the Aussie dollar (AUDUSD), removing $334.54 from his overall equity.
As fate would have it, and which happens all too often to all traders, James closed his position at pretty much the highest point of the session.
The Aussie dollar then fell, which would have nearly halved the loss he took on the position.
But any good trader will tell you, it is much better to close a losing position, so you can free up your mind to focus on other more positive trades.
Please note that trading leveraged instruments is risky, and you can lose more than what you start with.
Let’s jump into the interview with Renee Li and James Hu below.
Renee: Hi, James. Thanks for taking the time to chat with us. First, would you like to introduce yourself?
James: I am from Taiwan. I immigrated to Australia in 1993. I have been trading for almost 20 years.
Renee: What got you interested in forex trading?
James: I am interested in finance overall and also would like to generate some profit from this interest.
Renee: What contributed to your ultimate success?
James: I think the fact that I am good at foreseeing the big picture and predicting the trend really helped me in this trading competition.
Also, particularly, I tend to focus on technical analysis more over fundamental analysis. Other than that, I guess, implementing a good stop loss strategy is very important too.
Renee: What about your trading methods? As you mentioned before, you tend to use technical analysis. Can I conclude that technical analysis is your primary trading method which helped you succeed in the stage 4 trading competition? What about fundamental analysis?
James: Yes, fundamental news also affects my trading method and how I trade for sure, but I guess what I am trying to say is that fundamental analysis is somehow important but could be misleading as well.
For example, if we predict the trends solely based on fundamental news, for example, the current US economy, we might expect the US dollar to go one way, but it actually went the opposite direction.
This might be because the market has been manipulated by some big major players and led to price-in, which technical analysis could help us gain a better understanding of the market.
But if we focus more on technical analysis and still take the fundamentals to some degree, there is a bigger winning chance for us to foresee the big picture and predict the market movements.
Renee: In terms of the forex market specifically, would you like to give some comments in terms of technical or fundamental analysis?
James: Sure. For currency pairs, I like to predict the big picture and try to have a good understanding of the market movement in the long run.
However, when I actually trade, I prefer to trade based on my prediction of the next market movement in the short run.
Also, only taking small positions is something I practice as well. Placing small orders is very important to me.
For example, I would only place 0.01 lot for each order.
And of course, implementing a good risk management strategy via my stop loss rules is very important when it comes to forex trading.
Renee: Could you explain to us why you only take small positions?
James: We all know that the transaction volume is huge for the forex market, which makes the market very volatile.
On top of that, we have high leverage. So, I need to be very cautious about the positions I take, otherwise, it is easy to be wiped out of the market even before realising any upside.
However, some beginner traders trade forex like the way how they trade stocks, which is not a very good technique, in my opinion.
We have to be aware that they are two completely different markets.
Renee: Can you tell us a little more about the size of the positions you take?
James: The way how I traded and the small positions that I took enables me to have a good mindset in the trading competition and have a good risk management.
Renee: What instruments did you trade during the competition period?
James: I traded the Aussie dollar, Gold, and the Nasdaq index. These are the products that I usually trade.
Renee: Did you use any indicators?
James: Yes, I did. I used the Relative Strength Index (RSI).
Renee: Thank you for sharing such valuable information with us. And thank you for having the interview with us, James.
James: Thank you!
Interview conducted by Renee Li, Content Specialist at ACY Securities.
Click the links below to catch up with interviews from our past champions.
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Ashley Jessen is the author of CFDs Made Simple and Chief Operating Officer at ACY Securities. He has been in the financial services industry since the year 2000 and worked for some of the leading companies in the CFD, Forex and Online Trading space.