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TRADERS´ December 2004
people
TRADERS´ Interview
Jeff Hughes
As seen in TRADERS´ Magazine, December 2004, German and English language issues.
TRADERS´ 75
www.traders-mag.com
also known asMr. Mom
When Canadian Jeff Hughes got his foot in the door with one of Canada’s five major banks, he believed that he had found the job he was looking
for. However, that turned out to be only partially correct. His interest in the markets was sparked later when he became licensed to sell mutual funds for the bank. That started Hughes on his path to becoming a full-time forex trader. Initially, in 1997, Hughes first started buying stock through a couple of accounts via the bank’s discount brokerage. He started to lightly buy and sell stock with a longterm time horizon. However, by 1999, when some of his technology stock picks churned out great returns, Hughes began to consider trading as a full-time career. Today, he trades full-time, while simultaneously caring for his 16-month old daughter. TRADERS´: What did you think of trading before you started
in the business? HUGHES: I always thought that trading was something I wanted to know more about. Words that would come to mind about
trading and traders would include gutsy, exciting, rewarding, entrepreneurial, and challenging. That is what I find it to be today,
so my hunch was right.
TRADERS´: What enticed you to start trading?
HUGHES: By mid-1999 I was making more money per day on
the stock market than at my job, and I found it very difficult to
spend my non-work time on bank courses like I was supposed
to. Instead, I was devoting every available free moment to
studying my newfound success in trading stocks. In early April
of 2000, I left the bank and began trading technology stocks
full-time. In fact, I began trading full-time just weeks after what
turned out to be the top of the Nasdaq’s amazing bull market run.
TRADERS´: Did you find immediate success?
HUGHES: Success at the beginning? Not really. I, of course,
had made some incredible gains leading up to my decision to go
full-time. But in the eight months that followed my move to fulltime
trading, the Nasdaq fell around 2,500 points in about nine
months, and I had made all my money in an upward trending
market.
TRADERS´: What was your account balance when you started
trading?
HUGHES: I commenced trading stocks back in 2000 with what
I believed was a smaller account size than typical. A lot of people
had large account sizes in 1999-2000 though. With regard to my
forex trading, my beginning account size was small by any scale
imaginable.
TRADERS´: We’re curious about the details. How much money
did you have in the account?
HUGHES: This is laughable, but I actually opened my mini-forex
account with $500. I traded the account to over $5,000 within four
months, still a laughable figure of money. But I find I’ve been able
to trade this and another small account I was able to build upon,
and make regular withdrawals, as a partial sum of my income, on
a monthly basis.
I actually won the second account of $1,000 funded by
Forex.com as one of the twelve finalists in their ‘Win a Mini
contest.’ I have continued to trade this account along with my
original. I, of course, still trade stock options at times.
TRADERS´: Why did you start trading forex? What is so
attractive about this market?
HUGHES: I was intrigued by a number of things I was reading
in trading magazines and websites about forex trading and the
availability of forex trading accounts with minimal funds.
A number of things were attractive, but I think reflecting now,
that two main things enticed me to look closer. Firstly, the 24/7
market hour structure, and secondly the amazing 200:1 or 100:1
(depending on account type) margin available. I was also interested
76 TRADERS´ December 2004
F1) Trading platform
FOREX.com’s trading platform, which features an integrated
charting tool. Hughes uses a 5-minute chart with Fibonacci
retracement and a 10-period and 40-period Exponential
Moving Average (EMA) to identify entry/exit points.
Source: www.forex.com
in the ‘no commissions’ idea, and the fact that technical traders
were finding that forex markets seemed to adhere more closely to
technical indicators. My success on their demo bridged into success,
(percent-wise, trading my mini account) and then of course
Forex.com had their “Win a Mini” trading contest to win a Mini
Cooper car. The next Forex.com “Win a MINI Trading Contest”
starts in February 2005. Visit www.forex.com for more details.
I qualified for that in February, the first of the four months
the finalists were decided, and then was blown away when I won
the car in June.
I think traders around the world should welcome the 24-hour
trading from Sunday evening to Friday evening. It allows me to
be flexible with my schedule. And, of course, there is no extra
calculation of varying commissions, only the spread. I don’t think
the average equity investor realizes the potential return on
investment power of the 100:1 or 200:1 margin available in the
standard or mini-forex accounts. For instance, a mini account
holder can buy or sell $100,000 of a currency with a mere $500.
This position would only need to move 50 pips to earn a 100%
return (but of course, the leverage works both ways).
TRADERS´: Many traders who start with small accounts are
blown out of the market in a few weeks or months. You started
with a very small account and trade full-time now. Do you think
that’s a feat that many traders can duplicate?
HUGHES: I admit that my difficult experiences trading stocks
and options had prepared me quite appropriately for the trading
I do now. I don’t believe that trading a small account means failure
in the forex markets by any means. The mini account can be
opened with minimal funds and offers 200:1 margin. This really
is an amazing combination of opportunities. After all, one of the
main criteria for successfully making money is to use as little
money or someone else’s money to make money. You just have
to be willing to go to school.
In other words, you need to learn the basics of trading. Try
out your ideas on paper; try out a forex dealer/broker demo; open
a mini account with minimal funds; trade small amounts, as little
as 10,000 (one lot) per trade. Increase size slowly while size of
capital increases. I think other traders can duplicate this. I have
people asking me ‘how I do it,’ and it’s not something I can
explain to someone over dinner, but what I do is something any
trader can do.
TRADERS´: What kind of trader are you?
HUGHES: I consider myself to be a technical trader. Here’s why
I think that. I trade mainly off of support and resistance levels,
and trendlines. I buy and sell based on Moving Averages, Slow
Stochastic, and Average Directional Index. I make my decisions
based on candlestick charting patterns like inside days, doji, and
shooting stars.
That said, I think it’s prudent to be well aware of the
fundamentals, where the broader trend is concerned anyway. I
say this, because the forex markets focus so intently on a relatively
small amount of economic data and interest rate decisions.
Assessing changes in sentiment is just that much easier when
you are at least aware of the data in addition to the chart patterns
and indicators.
TRADERS´: What is your most important technical tool and why?
HUGHES: You are going to make me choose just one? I find
that different time horizons can drastically affect how one might
rank the importance of different technical indicators. On longerterm
charts I have two have trend lines; I could not live without
these.
A long-term trendline that either holds or breaks can tend to
indicate a dramatic shift in sentiment. On medium-term charts I
cannot live without my support and resistance levels, my
Fibonacci retracements, and my spikes high and low. Within the
confines of the long- and short-term, the strength or weakness of
support and resistance levels will decide the movements within
the longer-term trend. On short-term charts I have to have my
Moving Averages, as they have always been the best indicator
for me where position entry or exit is concerned.
TRADERS´: What are some of your concepts or trading ideas?
HUGHES: I like to have three charts of the same currency up
on my screens. I’ll have a daily chart up to ensure I am trading
within the longer-term trend. I’ll have an hourly chart up which
I’ll primarily use to make my trading decision and I’ll have a
5-minute chart up to choose an entry/exit point. You have to be
able to envision the trade unfolding beforehand. I glance up and
instantly see:
1. The price is above the 200-, 100-, and 50-period moving
average on my daily chart and I know the longer-term
trend.
2. I look at my hourly chart and see the slow stochastic is in
oversold territory, and that we are approaching a 50%
Fibonacci retracement support level. I believe that FiboTRADERS
´ 77
nacci retracements are very relevant in forex trading.
3. I look at my 5-minute chart and see that my 10-period
Exponential Moving Average has crossed above my
40-period Smoothed Moving Average.
I have tried all kinds of combinations and these are the ones
that work for my eyes. I see what I want to see or not, in a matter
of about 15 seconds.
TRADERS´: Why do you think, that Fibonacci retracements
are especially important?
HUGHES: They are important because traders think they are
important. It is absolutely amazing to me to watch traders
worldwide buying and selling based on these Fibonacci
retracement levels. But because they are respected and honoured
by traders around the world, they are a self-fulfilling prophecy.
They work because everyone is using them. I’m not a
mathematician, but they are a remarkable appraisal of human
nature built into a mathematical equation. It is human nature,
after all, that after a move of selling and buying abates, that some
will feel that it went too far.
TRADERS´: How long are your typical trades?
HUGHES: Typically my trades last one to three days. Of course
this is contingent on whether they go my way or get stopped out. I’ll
make a large number of 20-minute trades on a range-trading day,
and I’ve held a trade in a trend for three to four weeks.
TRADERS´: Are you a systematic trader?
HUGHES: The term systematic implies that I follow a step-bystep
procedure or make all my trades the same way, and I wouldn’t
say that that is the case. What I would say is that my preparation
is systematic. Due to my lifestyle I do a fairly large amount of
preparation for my trades the night before or whenever I can. I
flip through the charts, looking for charts at or heading towards
a potential set up I like. I take note of all the Fibonacci retracement
numbers. I take note of the tight ranges or inside days, which
inevitably lead to a break out one way or the other. I always
know when the economic data or decisions are coming out and
will actually plan trades surrounding them at times.
TRADERS´: How many hours do you work per day?
HUGHES: It varies day-to-day, depending on how I appraise
the markets that day and whether or not there is consolidation or
movement. I try not to spend too much time trading if I don’t
need to; because at the moment, this time could be spent with
my daughter, teaching her, playing with her, encouraging her,
etc. That said, she has to sleep sometime. I tend to trade a solid
three to four hours in the daytime through her naps and at other
times. Then I’ll trade another four hours or so after my wife gets
home in the afternoon and before I go to bed. This is my routine
from Sunday evening to Friday afternoon.
TRADERS´: Where does discretion come in?
HUGHES: Sometimes you have to be able to stand back and
see that what’s going on is outside the bounds of normal. Whether
it’s a breakout from a trading range or a fundamental shift in
sentiment; this is where discretion comes into play. The bulk
of your profits in any given month can be the result of how
well you are able to let the winners run. Let’s face it; a lot of
the time, we’re plucking profits out of a fairly small range-bound
currency pair. Getting a nice entry and then managing that profit
through a major move of 500-750 pips is like 15 to 20 nice
range trades.
TRADERS´: Is there something like the perfect system?
HUGHES: I don’t think so, but who knows? Can a computer
fully comprehend the emotions going on in the heads of millions
of traders worldwide? Because I think a perfect system would
have to be able to do this. The market is ever changing and
evolving, so you’re constantly changing your own trading as you
go along in order to adapt. It’s interesting to realize how much
trading is like trying to survive. It’s really those who can adapt
to varying market conditions who will be able to make a
dependable living for any decent amount of time. I think traders
go through periods where their systems work close to perfectly;
and of course, you can start to think that nothing could go wrong
and then, oops. The successful traders are the ones who adapt
during the times their system is failing.
TRADERS´: Do you mix timeframes?
HUGHES: Yes, in fact I think this is really the best way to see
the whole picture clearly.
TRADERS´: Do you work more with indicators or patterns?
HUGHES: I tend to gravitate to the chart patterns, but I seem to
have more success with the indicators at times, and I find
combining both to be the best of all. As long as you understand
what you’re looking at, then why not use every tool you possess
to tilt the risk in your favour.
TRADERS´: Does volume play a role in your trading approach?
HUGHES: That’s an interesting question where forex is
concerned because there is no direct contract volume associated
with forex. But generally I believe volume is a very important
aspect of trading. You should really know the following about
volume: increasing volume with an increasing price translates to
potential for a move higher; increasing volume with a decreasing
price translates to potential for a move lower; decreasing volume
with an increasing price translates into a potential slowing of the
trend, and a possible reversal or retracement. Decreasing volume
with a decreasing price translates into a potential slowing of the
trend, and a possible reversal or retracement. There is a way to
monitor volume in forex using certain charting programs, a
volume histogram, but I don’t use it.
However, in the evenings when I’m able to watch the markets
closely, I can see the volume actually pick up in the movement
of a chart and this is something I use.
TRADERS´: How do you test your trading ideas?
HUGHES: I test trading ideas all the time using smaller lots.
Sometimes something will come along that works and it will be
78 TRADERS´ December 2004
F2) Hughes’ charts
Two additional charts often used by Jeff Hughes, a
60-minute chart with a slow stochastic that he uses to make
his trading decisions, and a daily chart showing a 200-,
100-, and 50-period EMA. Hughes refers to the daily chart to
make sure his trades are in line with the longer-term trend.
successful right away. But it will keep me awake at night, so I try
to tweak it so I can live with it. It’s an interesting question and a
dilemma that traders deal with. You have to be willing to learn,
because there is no such thing as a perfect trader. We all know
that in any given trading day, numerous opportunities exist that
we miss.
TRADERS´: Are you still looking for new set-ups?
HUGHES: Yes, I am always looking for new set-ups. The market
is an ever-evolving creature that requires you to be versatile and
adaptable.
TRADERS´: How do you find them?
HUGHES: You have to be willing to take the time and observe.
I have pages and pages of notes, if something happens I write it
down. If I miss a trade, I write down what happened. If a trade
gets stopped out, I write down my best approximation of why it
did so. If a trade does better than I thought it would, or better
than it deserved to, I make notes of the circumstances. At the end
of a day, I could have 10 pages of scribbled notes, which I try to
decipher during my evening of preparation for the next day.
Ironically, what really works for me is the fact that I don’t have
the luxury of an uninterrupted day to trade, and that I must prepare
much more than most would need to.
TRADERS´: How many different set-ups do you use for your
trading?
HUGHES: I use any number of set-ups or combinations of them.
I love to play reversals; I’ve always been a devil’s advocate. I’ll
make note of a bullish engulfing pattern on my candlestick charts,
and the potential for the pattern to be confirmed. I’ll have
noted the nearby support and resistance levels (whether they are
Fibonacci retracement levels, trendlines, or previous reaction
lows/highs). I’ll watch for oversold/overbought readings on Relative
Strength Index or Slow Stochastic and look for positive
divergences.
I’ll see signs of buying pressure coming in. That is the volume
I was speaking of. We’re talking about a pretty compelling signal
for a reversal, and the thing is, you can see these set-ups all the
time, sometimes just a very short-term reversal on a 5-minute
chart, and sometimes a major change in trend on the daily chart.
I take my profits however I can get them.
I rather like to make a trade on a 50% retracement of a large
move if the 200-day moving average is providing support or
resistance in that area. I find that the 20- and the 80-pip levels
seem to act as support and resistance levels more often and seem
to be good places to initiate trades or take profits.
TRADERS´: How do you manage your risk?
HUGHES: Of course, I manage my risk by using stops, but it’s
really all about the work I do the night before. There are potential
trade set-ups that are just less risky. You have to do everything
in your power to tilt the odds in your favour. My lifestyle of
being a Dad/trader requires that I do the trading work the night
before, and that I be aware of what each day may present to
me. As I already mentioned, I make notes of support and
resistance levels. My charts are a kaleidoscope of lines that I’ve
put in the night before showing trendlines, Fibonacci retracement
levels, previous lows, etc.
I’m aware of what data is coming out the next day and when,
and will program reminders on my Ipaq pocket PC, or even just
write them down on my next day’s worksheet. I adjust my various
computers to the charts I expect to follow closely the next day;
some of my charts are smaller than others, based on what currency
pairs are doing interesting things. These are all things that reduce
the risk I take in every trade. Being prepared and the careful
usage of hard and trailing stops makes my day as a trader and a
Dad possible.
TRADERS´: So, your stops are based more on technical issues
than on money management, correct?
HUGHES: Perhaps, but I would say they are based on both. My
stops will usually be set up on technical support and resistance
levels, rather than say a set number of pips. The set number of
pips just doesn’t make sense to me, and so I believe that basing
stops on technical support and resistance levels is just smart
money management. Setting up a stop for a set number of pips
is ignoring the fact that there is no basis for your trade to work.
The pair may just be cycling up and down a little more than
usual, and you’ve stopped yourself out for no technical or
fundamental reason.
TRADERS´: How do you determine when you are wrong in a
trade?
HUGHES: Wrong trades are usually determined on their own.
Proper use of stops takes this decision off of your shoulders.
There are times when I will remove a stop if I feel that I’ve missed
something in my preparation.
TRADERS´ 79
However, I just want to go on to something else, because I
trust my preparation, and I know that there is another trade setting
up somewhere else. Sometimes you have to step in if you can
see it’s not acting right, and if that’s the case, then I will pull the
plug before we even get to the stop.
TRADERS´: Is money management an independent topic?
HUGHES: Money management is an integral part of trading. You
need to know one thing if you are beginning to trade or thinking
about it: all traders lose money; it’s part of the business of trading.
Approximately 95% of traders lose money during their first year
in the markets. It is the management of losses that determines
whether you can make a living at it. It is absolutely vital to protect
your capital. It’s like a gunfight, and you just want to live to fight
another day.
Until you have at least a few years under your belt, and you
can read a chart in a 5- to 10-second glance, you should be leaning
towards the conservative side of things and getting out of trades if
there is any technical or fundamental reason to do so.
TRADERS´: How much of your equity do you risk per trade?
HUGHES: I risk about 5% per trade. This can vary in the 2.5%-
7.5% range. I will adjust the percentage based on how the trade
suits my risk criteria and where we are within the short-, medium-,
or longer-term trend.
TRADERS´: How do you manage your open trades?
HUGHES: I peel in and out of trades. I raise or lower stops
to breakeven if they go my way. I take half the profits at pivotal
support/resistance points in the move and let the other half run
with a trailing stop. I ease into or out of a position with one-fourth
of that position and then another one-fourth as I see a trade set
up potentially beginning or ending. I trade two separate
accounts, and try to let a nice entry ride within a larger trend,
while I trade the same pairing up and down as it cycles within
the longer-term trend.
This is another simple way I can keep things straight in my
mind. Some of my ideas are quite simplistic, but they are this
way for a reason. All I do as a trader and all I aspire to achieve in
any given trading day really have to come second after my
daughter.
This is the right question to answer with an explanation of
my computer set-up, because I use the latest technology to
effectively manage my open trades. I have a pair of monitors on
a P4 computer on the main floor of my home, and the same on
the lower level of my home. I have a wireless-G network that
basically makes my home a high-speed wifi hotspot. That allows
me to use my Ipaq pocket PC to trade or check rate
quotes anywhere in the house. If I feel that I cannot properly
interact or care for my daughter, I put my Ipaq into its holster
case attached to my belt and keep tabs on things from wherever
we need to be around the house. I can see my monitors from
about 70% of the house. When my daughter and I go out, I tend
to lighten up positions; and I carry my Ipaq with me and switch
to my Wireless GPRS modem.
It’s a juggling act, and obviously I’m a Dad first and
foremost, so sometimes I close up shop and I’m just a Dad. But
it’s remarkable how I find that I can be a high calibre Dad and
a high calibre trader through the use of these tools I have at my
disposal.
TRADERS´: What kind of stops and/or profit targets do you
use?
HUGHES: I use hard stops and trailing stops on trades. The
difference between successful and unsuccessful trading is the
usage of stops. Enter a hard stop as your trade is initiated. Run a
real or mental trailing stop when they go your way. Keep a tighter
trailing stop in a range and try to give more space for the trending
stop.
I tend to use a flexible profit target. I have a target in mind
but I also know that it’s how well you let the winner’s run that
will determine your overall profitability. I won’t have an order
entered to close the trade, except under odd circumstances. I
monitor with alerts and make a judgement call on whether I think
the move will take a rest before it resumes or reverses. When
setting a trailing stop, it has to be a compromised distance between
how much you are willing to give back and how much wiggle
room you can live with, so that it will keep you in a trending
trade.
TRADERS´: In terms of executing trades, is that a subjective
process or do you do that mechanically?
HUGHES: Interesting question, and at first I believed myself to
be executing trades subjectively. My preparation is mechanical.
This can vary in my trading as much as my days can vary in how
they play out. My lifestyle requires that I be prepared. I need to
know where a currency becomes interesting to me, and then I
examine how or why we got to this place in order to make a final
decision; but perhaps as many as half of my trades are purely
mechanical in nature, due to the very nature of my lifestyle. I’ve
done the work; I can see at a glance the price action and the
chart, so I make the trade.
TRADERS´: What is the relation between your winning and
losing trades?
HUGHES: They all start the same way, right? They are either
going to go up or down eventually, and that’s all they should
have in common. If it doesn’t go your way, get out. Your time
and capital are better spent on the next set-up. In fact, the trade
that went against you can set up into a great trade revisited
minutes, hours, or days later.
TRADERS´: What was your worst drawdown?
HUGHES: I had some tough knocks right off the bat. I began
trading full-time just weeks after what turned out to be the 5,000
top of the Nasdaq. Before forex, I traded primarily options and
once, early on, I really piled into a call with only a few days until
expiration and lost most of my investment. I had a number of
bad trades right away in April of 2000, as I thought stocks only
went up.
Just kidding, but you know what? Psychologically, I sent all
80 TRADERS´ December 2004
those memories packing, otherwise I wouldn’t have made it to
this point. I have not really had any terrible drawdowns in my
forex trading, but then again, I learned enough valuable lessons
before I got here to actually avoid those pitfalls.
TRADERS´: What do you find most frustrating about trading?
HUGHES: The most frustrating aspect of trading for me is
preparing for the possibility of a set-up the night before and then
watch the set-up evolve, but then miss it. The work of finding
the possibility of the great trading set-up the night before is most
of the trade for me. So not being there right at the optimal entry
can be frustrating. That said, my daughter comes first, and she is
an amazing little girl who inspires me to keep going even on the
toughest days.
TRADERS´: When did you realise that trading wasn’t going to
be just an attempt in the markets, but was going to be a full-time
career for you? Or did you sense that from the beginning?
HUGHES: When I first started, I thought, ‘this is what I am
going to do.’ Then, when it became difficult right away and
what I’d been doing before the bear market didn’t work
anymore, I had to do some soul searching. I had to step back,
try different things, and reduce my trading size drastically. When
I started to make fairly consistent profits in the middle of the
worst of bear markets, that’s when I began to feel it was
something I could do. However, my recent trading success in
the forex markets has brought my confidence and determination
to a whole new level, where it is not a matter of knowing that I
can do it, but rather how can I do it better. Trading is dramatically
about confidence; and it will be shaken from time to time.
However, if you hold on through the tough times, you will reap
the rewards. Write it all down and learn from it.
TRADERS´: Where does the psychological element come into
play?
HUGHES: It’s all about the battle with yourself. Really knowing
this is one of the big steps in becoming successful at trading.
Once you realise this, I mean really realise this, then you learn to
step back and not to make those hasty, emotional, unplanned
trades that inevitably turn to losses.
TRADERS´: Any words about fear, greed and self-esteem?
HUGHES: Every trader must deal with fear and greed. You have
to know that trading is not a get-rich-quick scheme. It’s a business,
and you are all levels of the company in one: manufacturing,
accounting, information and technology systems, CEO, etc. Losses
are the expenses of the business. The markets move on fear and
greed: fear of missing a run, or fear of missing out on a possible
trade, or fear of losing money. Greed can be worse, as it will not
only get you into the markets ill-advised, it will cause you to
turn a profitable trade into a hard-to-digest loss.
TRADERS´: What do think is the difference between you and
so many other traders who tried and failed?
HUGHES: Persistence. I kept trying new set-ups and new
markets until I found my niche. I stayed conservative with the
size of my trades until I could see a trend of positive results. The
most important element of all is a rock solid support system. My
wife, Claire, has been patient and believing when there were
shadows of doubt and misgivings from most of those around
me. That is a necessity in this tough, challenging business.
TRADERS´: Aside from zipping around in your new Mini, how
do you enjoy your free time?
HUGHES: Trading is a lifestyle that can suck you in, so I try to
balance that by gravitating to challenging leisure time activities
(both mental and physical), like regular work-outs or playing
the guitar; things that require concentration. But mostly I just like to get away for a day of fun with my wife and daughter.




Странное интервью конечно... Кто то может перевести и про коментировать?

[Кислотный]

Интервью для тех, кто надеется, что на форексе можно стать богачем , подкрепленное строгими профессиональными выкладками, да еще разбавленной деталями быта, домашними откровениями, идиллической заботой о дочери. Замануха для для тех западных граждан, кто еще не охвачен заботой ДЦ.