BOOKER Rob - Wiley Adventures of a Currency Trader 230p

230 Pages·2007·1.84 MB·English

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Adventures
of a
Currency
Trader
A Fable about Trading,
Courage, and
Doing the Right Thing
ROB BOOKER
John Wiley & Sons, Inc.
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Copyright © 2007 by Rob Booker. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
Wiley Bicentennial logo: Richard J. Pacifico.
Financial charts throughout this book created using TradeStation software. Copyright ©
TradeStation Technologies, Inc., 1992–2006.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in
any form or by any means, electronic, mechanical, photocopying, recording, scanning, or
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Library of Congress Cataloging-in-Publication Data:
Booker, Rob, 1971–
Adventures of a currency trader : a fable about trading, courage,
and doing the right thing / Rob Booker.
p. cm.— (Wiley trading series)
Includes index.
ISBN-13 978-0-470-04948-8 (cloth)
1. Foreign exchange market. 2. Foreign exchange futures.
3. Speculation. I. Title.
HG3851.B62 2007
332.4'5--dc22
2006029332
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
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Contents
Foreword ix
Preface xi
Acknowledgments xiii
About the Author xv
Introduction 1
Chapter 1 In Search of Amazing Profits 3
Chapter 2 The Future Looks Bright 11
Chapter 3 A Trip to the Thirty-First Floor 16
Chapter 4 Two Promising Conversations 28
Chapter 5 Lessons Learned 33
Chapter 6 A Turn for the Worse 45
Chapter 7 Trying to Awake from the Nightmare 57
Chapter 8 Charlie Flank Goes to U.S. National Bank 63
Chapter 9 Mapping Out a New Career 73
vii
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viii CONTENTS
Chapter 10 Charlie Flank Meets His Match 79
Chapter 11 Coming Clean 94
Chapter 12 Looks Can Be Deceiving 104
Chapter 13 The Story of George Sisler 114
Chapter 14 Back to Square One 122
Chapter 15 Breakfast with Harvey 133
Chapter 16 Back to Where It All Began 149
Chapter 17 Testing 164
Chapter 18 Homework 175
Chapter 19 Team Banes Begins Anew 183
Chapter 20 Presenting Our Findings 189
Chapter 21 Back in the Game 194
Chapter 22 Return to the Thirty-First Floor 197
Chapter 23 Settling My Tab 200
Epilogue 203
Appendix A: The Retail Carry Trade 207
Appendix B: How I Got Six Hundred Pips 211
Index 215
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Foreword
T
rading technology has made exponential advances over the past
decade. It is no longer necessary to work at a bank to trade cur-
rency, nor is it necessary to have a broker talk your ear off about
why Pfizer should be taking off, when all you wanted to do was buy some
Intel. These days you can do it all from home on your computer. It is this
idea of independence and freedom that is attracting so many of us to the
trading marketplace.
That old statistic about 90 percent of traders going belly-up within
the first year...yeah that still applies, give or take a few percent. But
Rob Booker has made it a personal mission to prove that it needn’t al-
ways be the case. He has built a network of trading students all over the
world and helped them to realize that focus and discipline are all that
make a successful trader. Systems are a dime a dozen (or sometimes
$3,000 each), but only the disciplined trader who denies distraction will
make any money from them.
The market is overrun with books, courses, lectures, seminars, and
webinars designed to teach us all how to trade for a living and perhaps ac-
quire a sense of freedom by doing so. The problem is that each expert who
presents such an offering is out to prove that it is the best and maybe the
only good trading system out there. Rob will tell you that the system is not
the most important piece of the trading puzzle. It is the ability to know ex-
actly what you are looking for, wait patiently (or frantically, as long as you
really wait) for it to happen, and then jump on it. And repeat. And repeat.
Trading can become boring and redundant. But it is about making
money, not about excitement. It is about making money, not about being
right or smart. And well...trading isn’t even about the act of trading; it is
just about making money, to afford the freedom that we all desire. This
freedom is where the excitement really comes in. Freedom is the end. Hard
work, discipline, and focus are the means. It sounds lame, played out, and
cliché, but it is still true. When we lose sight of that truth and start feeling
like genius traders, we start screwing up. Many people give up along the
ix
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x FOREWORD
way, perhaps like the fabled gold miner who gives up digging just one inch
away from the vein of gold.
One of the top five most important things Rob ever helped me with,
was to not give up when I was losing and my financial situation was nearly
demanding that I focus elsewhere. He helped me dust myself off, reassess
my commitment to becoming a successful trader, and start over with a
proper foundation for success over the long haul. (Thanks Dude.)
In Adventures of a Currency Trader,Rob explores—through the story
of Harry Banes—the ups and downs of being a trader, the struggles many
of us must face to obtain the freedom that we are reaching for, and the lib-
erating sense of finally making it.
This book, which is unique in its format, gives traders deep ideas to
think about: It presents a foundation to trade by and an example we can re-
late to.
MAXWELLFOX,currency trader
South Pacific
August 2006
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Preface
T
rading can bring you independence. Trading currency has brought
that to me, and I hope that it can do the same for you.
It’s not easy. It takes time and discipline.
It’s an adventure. But you can do it.
I will show you how, with the help of my friend Harry Banes.
The story you are holding in your hands is told through his eyes—he is
Every Trader. There’s a little bit of each one of us in Harry. And as you read,
you’ll follow Harry as he learns from some of the best traders in the world,
alongside his friend and mentor.
As you get to know Harry, I think you will like him. He doesn’t start
trading with a huge sum of money, and his ambition is larger than his abil-
ity. Knowing where Harry came from can help us appreciate how we all
begin our trading careers: nervous, excited, unskilled, and unproven. His
financial situation, his day job, his life as a new trader, and his relation-
ships with those around him, are much like mine were, or maybe yours are
right now. His challenges and obstacles might remind you of the struggles
you are facing right now. But he is determined to become a trader no mat-
ter what gets in the way.
Even the humblest among us can go on to become great traders. Even
the chump traders can become champions. Even the indebted can become
financially independent.
Harry admits early on that he’s a rookie trader, which doesn’t ade-
quately prepare you for how bad he is. He’s the worst trader I’ve ever
known. But we’ll stand next to Harry as he picks himself up from the side-
walk on Wall Street and begins to implement the wise counsel of an expe-
rienced trader who agrees to mentor him. From Harry’s experiences, you’ll
learn how to recover from disastrous losses, how to set yourself up as a
full-time trader, how to talk to your loved ones about what you’re doing.
But that’s not all.
You’ll learn with Harry how some of his mentor’s best and worst for-
mer students set up their charts, do their analysis, and take their trades.
xi
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xii PREFACE
What is more important, you’ll learn how Harry eventually uses similar
techniques to become a profitable trader and reach financial freedom. And
most important of all, you’ll learn not only how he made those profits, but
how he was able to keep them.
I need to stress two more things: Every character in this book is fic-
tional, although you might see a bit of yourself in some of them. For more
details about Harry, his mentor, their friends, and everything else about the
book, check out Harry’s web site at www.HarryBanes.com.
I now invite you to go on an adventure with Harry.
Read on.
ROBBOOKER
Wheeling, West Virginia
December 2006
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Acknowledgments
T
his book took me 20 years to write. Well, not this specific book. But
just the act of finishing a book and getting it to a publisher. While I
trade for a living, I have dreamed of being a writer since I was 10
years old and sat in the back of Mrs. Holmes’s fifth-grade class in La Verne,
California. But just because I had the dream didn’t mean that I made it easy
for myself. In the past two decades, I have allowed some people and expe-
riences to get in the way of my dreams.
Other people have helped me clear away those obstacles. I want to
thank them.
Mrs. Holmes was my first and greatest inspiration. I would never have
put pencil to paper in my small yellow notebook if not for her. She encour-
aged me and started me on the path to writing; without her, I could never
have believed in myself. Many times during the writing of this book, I
thought of the faith that she had in me when I was still so young, and I was
able to write another sentence or page. I owe more to her than I have ever
repaid.
I met Maxwell Fox in Fort Lauderdale, Florida, at the first seminar I
ever did. He is the best trading friend I have ever had; he has helped me
overcome plot difficulties and name characters (including Harry); and he
was the first person to read the entire manuscript. I am a better person
for knowing Max. He leaves people better than he found them. He is also
the single greatest trader I’ve ever taught, hands down. He is disciplined,
he is dedicated to the science of backtesting, and he wrote the funniest
ebook on chart patterns you’ve ever seen. You can get that ebook at
http://www.HarryBanes.com.
Eric Beutler helped in a moment of need. At just the right moment, in
fact. And then he helped again and again and again.
I could have dedicated this book to David Murphy. He has been by my
side for more than 20 years, to help me at every major point in my life. He
has endured my ego, my mistakes, my weaknesses, far more than I could
ever repay.
xiii
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xiv ACKNOWLEDGMENTS
Emilie Herman and Kevin Commins at Wiley were patient with me and
helped me every step of the way. Kathy Lien and Boris Schlossberg intro-
duced me to Kevin and generally cheered me on when they didn’t even
know that I needed it. Jesse Torres introduced me to Betsy from Deutsche
Bank, who kindly showed me a trading floor.
I have been honored to work with some of the finest currency traders
in the world. I would stand any of these people up to any other traders on
the planet: I can’t name all of them, but here are some from the past few
years: Craig Taylor, David Elliott, Scott Kush, Derek McGuire, Roman
Jakubas, Beth McNabb, Nina Hernandez, Louis Cooper, Angela Nitkin, Ben
McDonald, Andy Eastabrook, Dan Ziembienski, John Law, Gary Young,
Chris Ennico, Thomas Gibbs, Marie-Sophie Blanchet, Todd Bryant, Nona
Bates, Nader, Alex Semaan, Elaine Sequeira, Jonathan Warr, Jeff Politis,
Irene Beregszaszi, Stephen Nieri, Chuck Smalley, Joseph Burgos, Johnny
Ream, Darin Carlyle, Matt Forsyth, George Roy, Damodar Patlolla, Greg
Walker, Guita Al-Boudoor, Napaporn Nozawa, Darryl Martins, Chris Pyor,
Carlos Angel, Steve and Dave Trehan, the Pip Brothers Szymon and Jerry,
Gene Miller, Craig Brinton, Wasyl Szeremeta, Phranq, Paul Kurtz ...
I could go on for a long time. But these are among the best people I
know. I am lucky to know them. They all helped me to write this book.
Any success I have in life is possible because I married my best friend.
Kris is the best example of courage in the face of opposition and trial that I
know. And she has supported me more than I have ever been able to sup-
port her. Thank you for putting me through law school, and for helping me
quit a legal career and follow my dreams.
And last of all, I want to thank my son Isaac. You found me at the brink
of emotional disaster and you reached out and saved me. You came to us in
the very moment when we needed you most. I wrote this book for you, too,
even though you are too young to read.
R. B.