Being a Spike trader!

I received an email from a blog reader yesterday who is a manual day trader and is considering becoming a news spike trader and is looking for some advice….

Here’s my reply ……..

I have done both manual day trading and been a news trader, I gave up manual trading a while back… I wasn’t very successful at it, the main issue being that I spent hours in front of my laptop waiting for a perfect setup, and it was sods law that the perfect setup always presented itself 5 mins before I had to pick my daughter up from school, or I would get into a trade and then it wouldn’t go anywhere so I had to sit up all night to watch it. I had some successes and if I persevered with it I do believe I could have made a success of it. But I would never have made nearly as much money as I do from news trading.
One of the things that I love and hate equally about news trading is the times of the trades…. I am on GMT +0 My daughter goes to school so I am left in the house in peace and quiet, so any trades that happen between 9.00 and 3.30pm are perfect for me, the problem comes when we have Australian news that hits at 00.30 or even 04.30 its nasty business when you have 3-4 of them in a week. I am definitely sleep sensitive, and without a decent 8 hours sleep I am a Zombie! So at times its hard. I think its ageing me prematurely….. in the last few years I reckon I have aged about 50 years!

 On the other hand it’s very convenient to know when a trade is coming and be able to arrange your life around it.
Being a news spike trader has its ups and downs… the main positives being, when I trade,  I trade to win…we very rarely take a loss.
How many trades do I do in a year?….. well probably only 20-30… When I win, I win big, as you can see from my videos, I don’t know any other trading methods where you can win €17-18k in a few mins! This is due to the huge risk reward ratio that news trading offers.
The move, and the win,  is almost guaranteed in some trades.  This in itself brings a problem ….and that problem is “Brokers”! I have personally traded with many brokers, in fact I am on 50+ brokers now, and I know people who have done even more…..

Brokers hate us….
Brokers hate traders who win… well most brokers do.  The problem is that 99% of brokers are the counterparty to your trade, even so called ECN brokers, they give you all the flannel about ECN this and STP that, and the reality is that they are the counterparty…at least while they think you will be a losing trader.
Then when they realise that…actually, you do have a trading systems that works, they will put your execution out to the open market, so that they don’t take the other side of your trade and don’t take on any risk. The problem with that is, when you’re entering an order in a “real” market, as news hits, and liquidity dries up, the only place you will be filled is at the end of the spike. After all what idiot is going to be the counterparty to your trade in the middle of a spike? …. No one is…. so you are destined for a bad fill.

Realities of news trading…..
So for that reason, I hop from one broker to another. To begin with I get filled, and make money… then they notice what kind of trader I am,  and subsequently  I  don’t get filled at all… I receive the message “off Quotes” or “trade disabled”  or I get filled at the end of the spike… this is normally the signal for me to find a new broker.  It’s fair to say that I spend probably 75% of my day finding brokers and filling out forms. I hate this, but at the end of the day it’s a necessary evil.

Scam Brokers….
The other reality of being a spike trader is that you WILL be scammed at some point. You will make a  killing on a trade, and go to withdraw and you either get an email telling you that you traded “off Quotes” or some other ridiculous excuse like “the moon was in the wrong position” or it was “too windy”. The bottom line is if a broker says that they accept news traders (like they nearly all do) … if you trade news and you win, then they should cough up. Sadly this isn’t the case…. many brokers are complete SCAM artists… who only want you to lose.
And don’t think that trading with “regulated” brokers will help you…. It won’t, most of the time regulatory bodies don’t care at all about the fact that you were scammed, even though it’s clearly fraud! The only exception here is the NFA…as they have real teeth. The rest are useless, and do not factor in my broker choosing decisions one bit.

 Other people’s perception of what you do …
One thing that bugs me is other people (friends and family) think you are a professional gambler… this is ridiculous… I put it to them that if they have  a “real Job” they are taking a bigger gamble, if their boss has the hump one day, they may get fired, if they run their own business, they may be hit by a recession, or the business may fail and they lose all their money.  Every profession has risks, ours are limited, theirs are not. If I had a terrible day,  I could only ever lose the contents of my trading account, they could lose their home! So who’s the bigger gambler?
Before becoming a spike trader I spent 12 years running my own business in the UK… I would never do this again! I am naturally an entrepreneur, and I’m wired that way, I look for opportunities in everything I do. However,  running my own business taught me that it’s too much of a gamble, I had nothing but staff problems, UK employment law was soooo biased towards the employee, it was ridiculous, the employer worked for the employees, as an employer I spent most of my life trying to find ways to avoid having to employ more people. Customers needed to be kept happy, and the tax man was always looking to see what else he could steal from me. I would never return to that world, it’s a mugs game….. it’s too risky!

Hard work…
So being a spike trader has its ups and downs. But I love it and can’t imagine doing anything else.  Like anything in life, nothing worth having is ever gained without hard work and commitment. I have spent zillions of hours of my life looking at charts, the shapes of spikes, how they retrace, when and how they make new highs/lows. It’s not an easy profession to be in, sometimes we go weeks without a spike,  but there’s nothing better than  getting filled at 35 lots on a 50 pip spike…. It’s very exciting, and will pay the mortgage for months!!!! I wouldn’t recommend people get into spike trading full time, that’s something you will have to decide for yourself. Do you need a regular predictable income… if so forget it! It’s a constant battle to get filled by my brokers….the battle continues…….