How Does a Fulltime Forex Trader Look Like ?

Name: James Kirst Location: USA Trading Since: 2002 James Kirst took a rather circuitous route on his way to becoming a full-time forex trader. He started off as a student of music technology at the California Institute of the Arts with the goal of opening a recording studio. Realizing he needed a stronger foundation in […]

Name: James Kirst
Location: USA
Trading Since: 2002

James Kirst took a rather circuitous route on his way to becoming a full-time forex trader. He started off as a student of music technology at the California Institute of the Arts with the goal of opening a recording studio. Realizing he needed a stronger foundation in business, he headed to Lugano, Switzerland to study international economics at Franklin College. While there, he discovered forex trading and has made it his full-time vocation since 2005. James divides his time between the United States and Switzerland, where he is in the process of setting up a money management office.

The Interview

How did you get started in forex?

James: I studied music technology at the California Institute of the Arts for three years. I wanted to make music my profession and open up a recording studio. At some point I realized I needed to get a more business-oriented education to do that, so I attended Golden West College in Westminster California where they have an excellent International Trade program. After seeing how immense the world of international business was, I realized I wanted to study abroad, so I went to Switzerland to study international economics at an American college there, Franklin College.

While studying, I discovered OANDA and foreign exchange trading. It was something that was incredibly interesting to me, to see how the markets interact and study how news events affect this massive market and the flow of not only money but information around the world. That was quite appealing to me.

I was amazed at how massive the FX market is—trillions of dollars a day in volume. It really astounded me how it is necessary for global commerce to have a functioning forex market, an easy and available way to convert the world’s currencies to each other. The fact that it actually works is still amazing to me. I began trading full time in 2005, and have been doing it full time ever since.

[cs_quote column_size=”1/1″ quote_cite=”JAMES KIRST” quote_text_color=”#000000″ quote_align=”left”]It is hard to decide when to just sit and watch. You can drive yourself nuts.[/cs_quote]

Did you start with Demo Practice?

James: I played demo for a couple of months. It helps to get a feeling for FX trading and to understand the trading platform. But I discovered that having real money involved makes you think about your trading decisions a little bit differently. If you are trading with the game, you can just reset and start over if you make a mistake.

Describe a typical day in your trading life.

James: I mostly trade EUR/USD (and usually hedge that with a carry trade of USD/CHF), so I need to follow the European markets. I get up at about 7A.M. European time.

When I get up, I usually check out the OANDA FXNews and the calendar of market events. I look at data releases to figure out what is happening. I watch the ECB press conferences religiously—I haven’t missed one. Whether there’s a news surprise or not, it’s always fun to watch the European Central Bank head spar with the reporters. Depending on what’s going on and the type of news coming out, I’ll either sit and watch the news, watch the market, or trade.

If you’re trading EUR/USD, it must be a 24-hour job.

James: Almost. Being permanently sleep deprived is definitely an occupational hazard.

You seem extremely mobile. Do you trade on holidays or on your vacation?

James: Wherever I go I make sure I have Internet access; if not, I carry a laptop with me that has mobile Internet access. It is nice to have a platform that is mobile. That’s what I like about the boom in the retail FX market—there’s some nice robust software that’s easy to take around. I’ve traded in some pretty strange places.

It would be nice to see an even more mobile solution. Right now, I have to drag around a laptop. I’ve tried a couple of the miniaturized computers but they are not quite there yet. The ability to access my fxTrade account from my mobile phone would be amazing—very liberating.

Would you call yourself a technical or a fundamental trader?

James: I don’t know if it’s easy to break it down that way. I never really thought of myself as a technical or fundamental trader. I am interested in volatility in general, and the news and market events that sometimes cause it. Different events or different conditions interact with each other to create a scaled volatility—that is interesting to me. I am also interested in how fast the market reacts to a piece of information and how it interprets that information. And undeniably my gut reaction comes in handy much of the time.

[cs_quote column_size=”1/1″ quote_cite=”JAMES KIRST” quote_cite_url=”#” quote_text_color=”#000000″ quote_align=”left”]The weekend is one of the great things about the FX market. So far, the markets stops over the weekend.[/cs_quote]

What do you base your gut reaction on?

James: I guess mostly it depends on what’s happened experientially. I talked to a trader who was working in the FX trading room at a big regional Swiss bank and he made an interesting observation that 90% of his trading and even his colleagues’ trading is based on gut reaction, and only 10% is based on the information people actually see. I get in trouble when I ignore my gut reaction. Lately I’ve been trying to follow my gut more often. I don’t know why, seems it just works.

How long do you stick with your trades?

James: I’ll let trades run for an arbitrary period of time, especially if it seems that the market is trending in some direction. Maybe there is a valuation reason why the currency should continue to go up or down. Or maybe there is a piece of news coming out sometime in the future that I want to wait for. Some of my trades will last for just a few minutes, even seconds, others days.

When do you decide to exit?

James: A lot of times it’s easy to know when to exit—the take profit has been met, and if that happens, it’s great. I sometimes close losing trades to maintain the margin. It’s not necessarily a stop loss strategy, except when it becomes a problem with the margin. Sometimes the market moves too quickly to take a profit or close a winning trade. It becomes a psychological game where you watch your trade become profitable one moment, then not profitable seconds later. It is hard to decide when to just sit and watch. You can drive yourself nuts.

It’s a conscious decision for me to let a trade run or close it. My decision depends on my current strategy and how it relates to current market conditions. Trading strategies, at least in my opinion, should change on a regular basis. At this point the market itself seems to be changing on a daily basis, so it’s been a little difficult to decide what might happen next.

[cs_quote column_size=”1/1″ quote_cite=”JAMES KIRST” quote_cite_url=”#” quote_text_color=”#000000″ quote_align=”left”]I think about FX as improvised Jazz music.[/cs_quote]

How do you handle the uncertainty?

James: I try not to let it bother me personally. Uncertainty is a significant part of the market. I think much of the uncertainty comes from misinterpreted information, so the challenge is to find the correct interpretation, the real meaning of the information the market is being presented with.

It’s a learning experience. You learn what went wrong, or what went right in some cases, and move on. Some days you win big, and some days you lose big. After a loss, it’s better to just go and find the next trade. If I let it get to me psychologically this wouldn’t be the job for me.

How do you relax?

James: Music! I have a recording studio where I make music for myself and also work with other musicians. I have a lot of fun on the weekends helping bands and performers create their music. The weekend is one of the great things about the FX market: so far, the market stops over the weekend. There’s a clearly defined period of time when I don’t have to think about it. I can turn off the computer and go pick up the guitar or play the drums and jam with my friends.

[cs_quote column_size=”1/1″ quote_cite=”JAMES KIRST” quote_cite_url=”#” quote_text_color=”#000000″ quote_align=”left”]The world has became much smaller for me since I started trading.[/cs_quote]

What do your musician colleagues think about your forex trading?

James: Not everybody understands it. Some people get it and are very interested in it. They check it out, and say, “Wow, how do you do that?” Then they keep going about what they were doing. Most people are blown away by how much the markets move when they see it represented graphically. It’s no longer just a set exchange rate like you get from Thomas Cook. A friend of mine is a great pianist and musician; he also just earned an economics degree, so it is certainly possible for both worlds to co-exist. I just recently found out that Alan Greenspan is also an accomplished musician. May I be so bold to suggest that part of his musical experience had a positive effect on the world economy?

I think about FX as improvised jazz music. When you are improvising in music, you can do almost anything, but it’s within a very strict set of rules. By moving within the structure you can create something amazing and novel and seemingly totally random at times. When you get more than one musician interacting—a large jam session—then it becomes an analogy for the market. There are different agents receiving information and reacting to that information within a framework and doing it over and over. In a musical context, it happens in real time, it becomes anticipatory. Improvisational musicians can eventually learn to predict the next notes and rhythms the other players are going to play. In many ways the FX market has some very musical elements to it.

What have you learned from forex?

James: I’ve learned to never give up. The past few years of trading have been an amazing ride. You never know what to expect. It’s given me quite a bit of discipline. I’ve learned quite a lot of discipline to just stick with it and pay attention to the world around me. There’s all this information that floats around on the Internet, in the newspapers and on the financial television channels. The Jim Cramers of the world. This information and how it is interpreted is moving the market and affecting livelihoods on a minute-by-minute basis. The world has become much smaller for me since I started trading.

How do you define success in forex trading?

James: For sure, making a profit is a good measure of success. But to me the good traders continually learn something about the market and use what they learned to create more profit. I doubt an individual is capable of comprehending a model for the entire market. But at least you can build your own personal model of the market, piece by piece, and make it successful.

Do you think people are born traders, or is it something they can learn?

James: I think it’s something they can learn, but some types of traders are born that way. There is a certain mentality required for high-volume trading, floor trading or other open outcry exchanges. There are some people who are born to take on such high pressure, high stress jobs.

To take an example from music, there are some people born with perfect pitch, which is a huge talent and skill to have. But there are certainly a lot of musicians without perfect pitch who have picked up an instrument and learned it and with practice become quite good. Likewise people can learn to trade, and if they follow the basic economic realities and learn about them and understand how the central banking system works, they could be pretty successful traders. If you can program a computer to trade, you can teach a human being to do the same thing.

What do you think is the biggest pitfall for traders?

James: I think after the first few successes, traders start to believe it’s too easy. Once they get past that delusion, they can survive. They need a few failures to learn from.

What do you think about OANDA?

James: I’ve been with OANDA since 2002. I’m really impressed with the constant state of improvement. It’s hard to complain about a platform where something gets fixed or changed or improved somehow every other month or so. It’s nice to see the software is being well cared for. I’ve never had any serious problems with OANDA or the platform.

It would be hard to find something bad to say. I have no intention to change. I’d like to see further improvement in the platform—mobile trading would be great. I’d also like to further automate my trading without having to take on the additional task of learning to program in Java or C++ in order to access the OANDA API. I’d love to be able to load my trading history into an algorithm designed to teach my system how to learn through Artificial Intelligence, and then go sit on the beach. Finally, a more robust security and/or user authentication process would be nice.

Have you tried any other platforms?

James: I checked out a couple of the banks’ online platforms, but they seemed inferior. It would be too difficult for me to learn a new platform and continue trading efficiently. I don’t have time to bother. fxTrade works really well, I don’t have a reason to change.

Where do you see the forex retail market going over the next few years? James: You could see the whole retail FX market blow wide open and get really, really big. As long as the potential clients are sophisticated enough to handle FX trading, why not open up that market for everybody?

Leave a Reply

Your email address will not be published.