LFX Trader Interview: with Aaron Fifield of Chat With Traders

Enigma FX’s Christoper Johnston continues in his series of trader interviews. Following on from his interviews with CEO Sam Barry, LFX Analyst James Harte and Shonn Campbell, Chris chats to Aaron Fifield of Chat With Traders

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Introduction from Chris

In the fourth instalment of ‘Trader Interviews’ I talk to Aaron Fifield, host of the Chat With Traders podcast. I was really keen to get Aaron on board as he has had (and continues to have) the unique position of interviewer to some really great traders and investors. He is able to pick their brains and reveal what makes them tick, what makes them successful and uncover their own trading journeys. So when Aaron agreed to do this interview I got the opportunity to pick his brain.

You will find out why Aaron began trading, how he is now an advocate of managing risk properly (after seeing a large loss on his first ever trade), and the origins of the Chat With Traders podcast. As well as this, Aaron provides us with a sneak peek of some of the future podcast guests he has lined up and the three keys points he has picked up on listening to these high calibre individuals.

So with a lot to look forward to, let’s get into it.

  • So I’d like to begin with your trading journey and then move onto the Chat With Traders podcast. Where did it all begin? What sparked your interest in trading? Can you remember your first trade?

I always had a genuine desire to be independent and become wealthy, and I had just bought my first investment property, so I felt as though I had my foot in the door of the ‘property game’. The next obvious move (I felt) was to investigate this thing called the ‘stock market’. From there, it wasn’t long until a little curiosity turned into a mild obsession.

My first trade was going long OZL, a resource stock on the ASX. My reason for entering was purely based on technical factors, which was fine, except the size of my position was far too big in relation to my account size. It turned out to be a losing trade and I lost 10% of my account two days later – not including brokerage, which I was paying an astronomical amount for…

  • Did you undertake any studying and/or courses or did you dive straight in?

Yes, I knew that I knew nothing, absolutely zero, about trading and would have to get some type of (informal) education before even attempting to get involved in the market. It just so happened, the educators who I signed up with taught the methods of W D Gann. I studied his trading methods at length and it certainly gave me a sound knowledge base to build from, but I no longer use his type of analysis, with the odd exception here and there.

  • I understand you trade with a technical bias, but do you use or have ever looked into using fundamentals?

Fundamentals don’t play a role in my trading decisions; I focus only on price and technicals. The way I see it, there are an unlimited amount of factors that a trader can take into consideration when forming a trade idea, but we each need to decide for ourselves what we do and do not take into consideration and be consistent about it

  • Have you blown any accounts? If so what were your thoughts in terms of carrying on and getting past it?

To date, I’ve never blown up a trading account. I’ve always been very conscious of keeping my risk small, especially during this learning phase while it’s about learning a skill and not so much about making huge amounts of money.

  • Are you trading full time at the moment? Or do you still do web developing

I’m not trading full-time as of right now, and I don’t know that I ever will call myself a “full-time trader”. To me that sounds as though trading would be my only source of income, and I prefer to have multiple sources of income. I also think that makes sense considering my style of swing trading, which is predominately ‘swing’ and eventually that will be automated too.

I have completely washed my hands of the design business now, today I am focused 100% on Chat With Traders and my own development as a trader.

  • How do you control your risk? Do you think there is a set formula or do you think its variable depending on the person, market, trade etc?

For now, I play by the good ‘ol 1-2% of capital rule, for calculating the amount of risk on any given trade. But as I move further into quantitative strategies, I aim to adapt more advanced methods for position sizing (and risk management).

Additionally, the second a trade is executed a stop loss order is automatically set in place. This stop loss will never be moved further away from the price to give the trade more “room to move”. If the price hits my stop, then I’m out – plain and simple. I never want to risk more capital on a trade than I initially set out to. I’m okay with taking a loss if the market hasn’t done what I anticipated.

On the other end, it’s also important to know how you will exit a profitable trade, before you even get into a position. Once you’re in a position, your decisions are mostly based upon fear and greed, whereas when you have a neutral position your decisions are much more logical and rational.

  • When you undertake back testing of new strategies, do you do this on a manual or automatic basis?

I use Python (or MultiCharts) for back testing new strategies programmatically. I feel as though there is too much human error involved when you attempt to perform a back test manually, not to mention time intensive.

  • Like any sort of game that involves mental capacity and skill, do you think trading can be taught or do you think you need a natural ability for it?

I certainly think trading can be taught to anyone who has a genuine interest, has the right motivation, and who is willing to persevere for a long period of time. The greatest traders in the world were not born with knowledge and experience; they acquired it.

  • Moving on to the runaway success that is the Chat With Traders podcast. It’s been a little over a year and you’ve managed to rack up over 70 podcasts with some high calibre guests, it kind of exploded since you first started. Are you kind of surprised at how quickly it’s taken off?

In some ways, yes it is surprising to see and hear how well it’s been received. But I’ve had many incredible guests on the podcast and I’ve also put a lot of working into building it up, so in other ways, it’s not so surprising.

  • Where did the idea of doing a podcast first come to you? What motivated you to start it?

Chat With Traders was started out of personal frustration; I was unsatisfied with my progress as a trader and often felt as though I was spinning my wheels. It also occurred to me one day that I had no other traders in my circle of family and friends, let alone other traders who were more advanced than I was. I knew that if I really wanted to make something of myself as a trader this would have to change, because I wasn’t going to make it on my own. The best way to learn anything is by learning from those who are already where you want to be.

I saw podcasting as a platform that would give me a reason to talk to experienced traders, that I may not otherwise have the opportunity to.

  • What was the ambition with CWT in the beginning? Has this changed since its conception?

In short, my goal was to learn how great traders became successful and how they make money in markets, and then share this with everyone listening who is in somewhat of a similar position.

This hasn’t changed too much since day one, the same goal remains; continue providing high-value content and learning on the way.

  • How did you go about getting your first few traders on the podcast? Did you know any of them?

I actually recorded eight interviews before the podcast even went online. I knew it would be bit of a struggle to get traders onto the podcast initially, so I wanted to build bit of a buffer and get a head start. Out of the eight traders who I interviewed initially, I only knew one of them (Tim Walker), the rest I convinced to do an interview using nothing other than cold emails. There were also many others who declined or who just never responded.

  • I can imagine its more word of mouth that pulls new guests in and returning for that matter. Do you get people asking to come on the podcast now and are you inundated with suggestions. How do you keep on top of it?

For the most part I hand-select the guests for the podcast, and reach out to them myself. I do also receive many suggestions from listeners about traders who they’d like to hear on the podcast, which I always take into consideration. And like you mentioned, I sometimes get traders putting their hand up for an interview, but I’m very selective of who I say ‘yes’ and ‘no’ to.

  • After listening to so much advice from some great people, what has stood out for you? Can you give a list of three key things that maybe you keep hearing in your chats?

One thing that’s abundantly clear, is that there are no shortcuts to trading riches. Most of the traders I’ve interviewed have put in years of work before they even begin to see some real consistency in their returns. So if you’re expecting to crush it in your first year of trading, then there’s a good chance you’ll be significantly disappointed. You have to go into trading being prepared to play the long game, with the goal of making a career out of this (or as they say, treating it like a business).

Second I would say, each trader knows exactly who they are and what they trade. They don’t care what someone else is trading, they don’t trade everything (nor do they have to), they have their own way of making money in markets and that’s what they stick to – they focus.

As a third point, each trader places a huge emphasis on risk management. This often takes priority over all other aspects of their trading. Which makes sense, because if you lose all of your capital you’re out of business. So protecting capital is key to all the traders I speak with, and they are not affected by whether a single trade results in a profit or a loss because they size their position appropriately in relation to their account size.

  • Have you found this podcast has helped improve your trading? Did it push you to explore new avenues?

The podcast has certainly improved my overall approach to trading, and I’ve also gained a much deeper understanding of markets as a whole. But I think it’s difficult to quantify all the benefits that have come from starting the podcast; it’s kind of like the ‘Butterfly Effect’.

As a result of starting the podcast, I discovered an attraction for algorithmic trading, which at first seemed well out of my league, but with the help of some of the connections I’ve made I realised it was definitely something I could pursue. So that was one major turning point that came out of this…

  • Have any of your guests offered to mentor you? Do you have a mentor?

Yes, there have been a few who have offered to help out if I get stuck. But I wouldn’t say I have a mentor explicitly, instead I have a small number of traders who I talk to fairly regularly, which works much the same.

  • You’ve recently got into coding, primarily Python, is the aim to create an automated system?

Yes, an automated trading system is the goal. At first I thought I would be able to knock this out in a couple months, even with no programming experience. Well, I was wrong! Currently, none of the systems I’ve coded are worthwhile live trading, it’s still very much a work in progress…

  • Have you taken any educational courses / degrees in finance or economics etc.?

No formal education, I left school at 15 to start working. I have paid for one high-ticket trading course, but besides that nothing too extensive. I have done a fair few online courses for learning how to program though, which have been incredibly helpful.

  • Who were you the most excited about getting on the show?

Tough question! I don’t think I can give just one, so I will share my top 5 in no particular order:

> Peter Brandt
> Haim Bodek
> Eric Hunsader
> Rishi Narang
> Tom Dante

  • Is there anyone you are excited about who is appearing on the podcast in the future? (without giving too much away)

I’m interviewing Manoj Narang in a couple weeks; this is one I’m really looking forward to. Manoj was the Founder and CEO of Tradeworx (a high frequency trading firm), and he has made a name for himself within the industry as someone defending HFT.

I also have second interviews with Peter Brandt and Jack Schwager which will be released in weeks/months moving forward, as well as an interview with Dan Aisen, who is one of the Founders of IEX (a dark pool, currently trying to get exchange status).

  • How do you manage to split your time between trading (learning, honing your skills and actual trading) and organising the podcast? Do you ever think you’ve taken on too much? Or is it all enjoyable?

Basically, I work on Chat With Traders during the day – just as most developing traders are still holding down a job, and during the evening and weekends is when I put work into my own trading. Of course there a times, when my days don’t work out perfectly like that and one or the other may get neglected, but that’s called life.

  • What do you like to do to relax and take your mind off the market?

Watch a good documentary – I’m a huge fan of documentaries, even though my girlfriend thinks that makes me an incredibly boring person.

  • One last question (just curious), who does the intro voiceover to your podcasts? Are they a friend?

Tim Paige recorded the intro and outro, although I choose the music. He’s got a business doing this, besides he’s got a great voice for it! I’ve actually been thinking about getting him to do a new intro and outro, just to keep things fresh…

QUICK FIRE QUESTIONS:

Number of Screens you use to trade
At my desk, I have two screens: a 27” iMac and a 27” Thunderbolt display.

Most unusual place you’ve placed a trade
Placing trades on my laptop while away on holiday is about as crazy as it gets… Nothing too exotic!

Favourite Quote
Get rich or die trying (hah!)

Favourite Financial Themed Movie
I might have to say The Big Short, tough question. Second place would be the original Wall Street film – so many great one-liners.

One book that everyone must read (trading or non-trading related)
“Rich Dad, Poor Dad” by Robert Kiyosaki really changed my way of thinking when I was younger.

One financial / trading themed book that everyone must read
For algorithmic traders, I would suggest Kevin Davey’s book “Building Winning Algorithmic Trading Systems”.

Favourite holiday destination
I haven’t done a lot of travelling, but United States was a lot of fun. And I hope to get back there real soon!

Favourite City
I would have to say Brisbane for now, although I don’t expect to be here for the rest of my life!

Favourite beverage to wind down with
I don’t drink alcohol, but Coke Zero usually does the trick.

Find Aaron on Twitter at @chatwithtraders or head to the Chat With Traders website here

Christoper Johnston is a Littlefish FX course-user and long-time reader. You can keep up to date with his weekly blogs at http://enigmaforex.co.uk or contact him on Twitter at @enigma_fx. If you’re interested in seeing your Forex blogs and content published on LittlefishFX.com, read more here.