Currency Trading Strategies with a Lonely Trader

TraderInterviews.com: Hello everyone! Thanks for joining us for another show this week at TraderInterviews.com. The idea of course of all of these interviews is to be able to talk to other traders and see how they approach the markets so that you can find something to use in your own trading styles and strategies as well. Our guest today is Jay Schneider. I found his blog, it's called " The Lonely Trader". He's got some great post there that I wanted to talk him about and that's why I reached out to him and see if he would do an interview with us and he's kind enough to agree to come on and do the show. So, Jay thanks very much for joining us on the show.

Jay Schneider: Your welcome, my pleasure Tim.

TraderInterviews.com: All right. So, we'll get your blog in just a minute but I always like to start with where people are coming from in the world and how they got into trading. So, what led you to trade?

Jay Schneider: Long past, actually, and with the lots of misdirection and diversions. I was back in 1989 I was playing a pick-up soccer game in Mill Valley. I was waiting to go to college at the time I just got in a high school. And there was a young guy probably about two years older than me, probably about 20, driving a Maserati up to pick-up soccer games night. I asked him, "How the heck did you, you know, what are you doing to drive a car like?" Because I had a thing for Maserati's back then. And he told me he was a currency trader. I asked him where he trade, he said he's in San Francisco and traded at a firm there and I didn't really understand anything about it but I thought, "Well, anything it must be cool trading, #1, money. Just money, pure, abstract value and driving a Maserati too. So I said, "That's kind of cool job." But then, I was waiting for college. I left for college. College led to Africa. Africa led to the military. It's been a long road. But from 1989, it took me about 11 years to get back to currency trading. It was always in the back of my mind. And then one day in 2000, I got the urge to give it a try. I've seen a commercial or something like that or some kind of an e-mail that could come to me. I can't remember exactly how, but I bought this really cheesy trading manual from someone off the Internet and it was about 40 pages long and it was a mechanical trading method. It wasn't an automated system. And it said on the covered, "Day Trade the Forex". And I thought, "That's cool." So, I brought the manual. Read through it. And of course the method didn't work but it really got me interested in trading. And then, of course, my other interest in world affair, economics and money along with my experiences abroad kind of complimented. I think what it took to understand the movement, the macro movements in currencies and I just kind of clicked with it, and then my desire to prove to myself that I can do it has kept me in it ever since.

TraderInterviews.com: So, you sounds like you're a lot like me before I ever traded a single stock online, I was trading currency because I heard about it from buddy who is in the Police Academy with me. So, it sounds, there's some similarities there, interesting.

Jay Schneider: Yeah. Yeah.

TraderInterviews.com: So, was it always the spot market? I guess probably back then, futures weren't really available.

Jay Schneider: You know, I don't really know. I was completely in the dark about what's this whole online trading craze was. And so I got my trading start like no kidding was in the currency spot markets. And it was extremely accessible, the various entry were really low. And yeah. I mean, I am trying to branch out another instruments right now. I'm studying other instruments, but back then it was all about the spot market. And it really still is today.

TraderInterviews.com: Yeah, back in 2000 that was still really early. I mean, there were a couple of brokers, if I remember doing spot market and the spreads were really wide. So, it must be tougher. I mean, is it easier now than it was back than do you think?

Jay Schneider: Well, I had my first demo account with Refco.

TraderInterviews.com: Hopefully, you got out of there in time before you have...

Jay Schneider: That was only a demo account, fortunately.

TraderInterviews.com: Okay. Well, and we should probably say that Refco back then, it may not have been RefcoFX which is where the problems were.

Jay Schneider: I actually, it was RefcoFX. And it was a few years before the whole scandal broke out.

TraderInterviews.com: Okay.

Jay Schneider: That platform, in particular, was a dinosaur. It had, five tips spreads on the euro-dollar and probably, you know, three to five on the dollar yen and it was very slow. I think, I got a quote every 15 seconds. But then I had Thomson Reuters' Squawkbox on there which really helps me get a feel for flows in the currency markets. And I still use Thomson Reuters to this day. I think back then it was just Thomson. It became Thomson Reuters most recently but--

TraderInterviews.com: Well, I know what a Squawkbox is of course for the pits, but what is it for forex? Is it same the same type of thing?

\ Jay Schneider: Well, it was a euphemism, of course, it was a text-driven sort of news service.

TraderInterviews.com: Oh, I see, so it was an audio then of something...

Jay Schneider: No, no. yeah.

TraderInterviews.com: Okay. All right. So, is that where you first got your ideas was from the Thomson Reuters' Squawkbox?

Jay Schneider: Well, I got a feel for the way that event risks really move the currency markets. Mainly intra day but also over longer cyclical and secular time lines. And that was what really got me smart. I mean, I already had a background in economics and I was familiar with sort of the importance of statistics and and statistical studies, and things like that, kind of the empirical justification of one's ideas. And I really didn't get it until I watched the feeds coming through Thomson and watched the price level. And then of course they call off the trades also, and it was fascinating for me to watch this. Of course, I immediately abandoned the day trading approach at that time and I learn to be a position trader from the fundamental and technical data that came through Thomson news feed.

TraderInterviews.com: Is that still your same trading style today?

Jay Schneider: It is. Well, I trade all different time frames. And I have the three main different approaches that I use. Of course, the position trading approach, the swing trading approach, and then more of a short term trading approach. But it all hinges on sort of what my mental map tells me the market is doing and then get time. And that mental map has developed over, you know, six or seven years of being in the markets and reading about them kind of immersing myself in the flows, and the back and forth between relative strength and between economies like in EU and the United States and Japan and the three main markets that I trade. It's just really a coherent framework that I use which really is in large part determined by what comes through that same news feed ironically, but I also look at other feeds now. I read mainstream meeting media a little bit to get a sort of a view of the conventional sentiment out there, and I look at FX now which is offered by one of my brokers. I had accounts with three different brokers. And I kind of gather information from banks, from research portals that I've linked to on my blog that I found valuable. I looked at the COT report. So I'm more diverse in the sources that I use now. But it's the same basic approach. What of the event risks? What are the major themes playing out? What are the statistical excursions over short, medium, and long term time frames that helped me define my trading ideas? And for now, I just go into the methods and kind of execute.

TraderInterviews.com: That's interesting. I guess from a fundamental basis, it would be tough to day trade off a fundamental news but you say you do have kind of a short term. Now, when you say short term, what does it mean to you?

Jay Schneider: That's a good question. Short term really depends on what the market would bear but it should be no longer for me than a few days. It can be anywhere from like for instance last night. I'll only pull this up here real quick. I've traded in the aussie dollar. I went, let's see, I bought it about 79.91 and I sold it about 80.07. So, I was in that trade for just a little under an hour, about 40 minutes and...

TraderInterviews.com: In what led you to that trade? What made you decide it to take it at that point?

Jay Schneider: Well, in the feeds that I was getting, there were lot of rumors about major bids for the Ag which has a higher yield than US dollar right now. And so, I kind of got the point they were trying to make. There was sort of an updraft for the aussie dollar. And I thought, "Well, just wait for a signal to go along for a few pips." And I have a short term trading method that is very mechanical that when traded in the direction of the prevailing trend or in the direction of the prevailing flows has a fairly high hit rate, not the greatest rewards-risk ratio but possibly 1.5 to 1 to 1, but it has a high hit rate. So, when Heikin-Ashi gives me a signal to go long or short, if it agrees with the overall context and if there are no event risks, they're kind of hovering over me at that time, I'll generally take the trade. That's what this is about too.

TraderInterviews.com: And this mechanical system, is this something you've written yourself or purchased?

Jay Schneider: No. It's something I wrote myself. I don't purchase systems anymore. I learned that once in a long time ago. Other traders may profit from that kind of an approach, but I tend to kind of get my own eclectic homegrown approaches.

TraderInterviews.com: Is it something you write in like Trade Station or what are the other common software mechanical system in writing?

Jay Schneider: Well, I use, right now I'm using Metatrader 4.

TraderInterviews.com: Okay.

Jay Schneider: Which is a free platform with most brokers, and it's pretty robust, actually. I don't really need Trade Station for the kind of trading that I do. I don't do high frequency, sort of high volume trading, and I don't let the platform execute my trades for me. I actually pull the trigger and exit when I get the signal.

TraderInterviews.com: Well, I never expect anybody to outline for a step by step what their system does. I mean, that's their own thing, I understand that. Can you give us some more idea of the kinds of things that looks for maybe?

Jay Schneider: The short term trading system really is it's not properly a system. I just looked at the Heikin-Ashi. I look at support and resistance levels. I get a general feel for the sentiments in the market. The near trend sentiment. And I get that from the flow feeds that I get from Thomson and FX Now and others. And I think FX Now is a service offered by Olsen. I'm not sure who's the underwriter of that services but...

TraderInterviews.com: You said one term in the beginning that you said it kind of quickly, Heiken...? What did you say?

Jay Schneider: Heikin-Ashi.

TraderInterviews.com: Heikin-Ashi. What is that?

Jay Schneider: H-E-I-K-I-N A-S-H-I. It's really a momentum indicator. It kind of gauges when...I'm going to pull up here on the net so I can be--

TraderInterviews.com: Sure.

Jay Schneider: --coherent about this or at least tell you what it really is. It's derived from candlesticks or at least it looks like a candlestick.

TraderInterviews.com: Okay.

Jay Schneider: But it's a momentum indicator. And a lot of people use the tail from the exit. It looks at trends. It tries to protect trends or at least it tries to what you know when a trend is underway. And it's kind of an average bar. It's not really a candlestick that gives you an open-high-low and close. It's more of an average bar over certain periods. So it's a kind of a smooth indicator. Maybe it's a lagging indicator, but I find lagging indicators useful.

TraderInterviews.com: And it's plotted as a single line across like a moving average would look, something like that?

Jay Schneider: Well, it's plotted like a candlestick chart would be plotted. But it smooths out the volatility of candlesticks. So, if Heikin- Ashi to me would turn a certain color, red for short, blue for long, for example. If that Heikin-Ashi turns long and it confirms my view of the near-term market, I'll take the short-term trade. So, Heikin-Ashi really is, it's a set up. It's not necessarily a trigger but it's a set up to maybe take a certain perspective in the market. And the trigger could be a break of support or resistance or a three-bar reversal. One of those kinds of price action triggers that will take in the direction of the trade.

TraderInterviews.com: And when you're using that particular indicator on the shot-term, what kind of time frame charts are you looking at?

Jay Schneider: I'm looking at a combination of 5, 15, one hour and four-hour charts. But I'm specifically focused on the 15-minute chart, and I am particularly attuned to T levels and the currency markets like, I think another market. T levels would be round figures, mid figures, or established support and resistance that's been talked about for a while so that you have a lot of traders watching a certain level and you get more volatility perhaps around those levels, depending on what trading session you're in with the currency markets.

TraderInterviews.com: But the question now is for people that watched multiple time frames, is how many of those do you want looking good before you'll take a signal. I mean, if you see something that looks great on a 15-minute but not on the hour or vice versa, what's the determining factor for you?

Jay Schneider: Well, because I am more attuned to flows and fundamentals, I don't have a hard and fast rule about how many time frame should agree. There is conventional wisdom about that, but if I perceive that a market is moving towards a certain price level that that price level serving as a magnet, for example. This is just with my short term model, not with my other models. Then, I will often just look at maybe two time frames. And if I see, for example, a five-minute trading down to a round figure level. And if I see, ticks kind of getting a radical around that level and maybe a little bit of support of that round figure and yet the 15-minute charts were still giving me a long signal, I'll kind of look at that as a dip buying opportunity. So, I'm looking at a price that is obviously getting support. It's still within the overall trend that I'm looking at but it's almost I guess a value point, I don't know if I should use that term in the currency markets, but I like to think of it as buying a dip in the direction, the prevalent trends for the particular time frame that I'm watching. So, for instance with the 15-minute charts once say the trend is up, but in the 5-minute, the trend is down, the 5-minute takes a support, I'll see that as a dip and I'll go ahead and go along and depending on what I think the price action is going to yield whether it's 15 or 30 or 40 pips, I'll place my profit target just below that. I'll take just about what I think the market can bear without the risk of a reversal, sometimes I right, and sometimes I'm wrong.

TraderInterviews.com: Sure, like any trader your your adherence of predicted that will be the case.

Jay Schneider: Yeah, it stops.

TraderInterviews.com: On those short term trades are there any specific currencies or pairs that you find that you are trading mostly this short term and mostly this on my position or portfolio.

Jay Schneider: There's one factor that I look at when I'm trading short term and it's this, I like currency pairs to be cheap. I like my spreads narrow. I won't trade a currency pair short term if the spread is greater than three pips. Three pips is almost too much for me actually. So I will trade generally the euro-dollar, the dollar-yen, the euro-pounds, the euro-yen, the aussie dollar, occasionally the market wants to give me a dollar-swiss trade at a low spread. So with my short term I said, I really look at trading in pairs that keep my transaction cost extremely low that's my one factor. Honestly, I'll trade anything cheap.

TraderInterviews.com: Okay. How about the number of trades you're doing at a short term basis, are you trading daily in that kind of area?

Jay Schneider: Well, no. Maybe once a day but at very specific periods of time. When I think, volatility is not too low and not too high which is usually in the late Asian, early European session, when a trend is going to be established the previous day and then the current session which tends to be recently, most recently. There has changes overtime with currencies, but recently, we've had some really good priced action prior to the Frankfurt open which is prior to about five a.m. GMT. You'll get some good movement there. So with fairly smooth volatility, so I kind of like to trade in that time period, so like the last trade before the aussie dollar trade was a trade that I took on the 23rd of June which is the day before yesterday in the euro-dollar, and that was only an 11-pip trade. It was short from 47 to 1 down to 40-60. So I want to wait for what I think is a low risk set-up, not necessarily a high reward set-up because again I'm trading short term, but a low risk set-up where I think the probabilities are heavily in my favor that the price will at least hit my exit target.

TraderInterviews.com: Now, on your swing and position types of trading, how do you define those in terms of time?

Jay Schneider: Well, with the position trading, it's generally with the market will bear. I'll trade as long as it takes me to know whether I'm wrong or right and that tends to be anywhere from one week to several months. I'm in three trades right now, I'm short euro-dollar, long dollar-yen and long aussie-yen right now. And those trades will probably play out over several weeks to several months. With the swing trading, I'm looking at anywhere from two days to even a week or two weeks, I don't think you can probably call it a swing trade, but that's what I call it.

TraderInterviews.com: It's interesting in that do you trade each of these strategies in the three different accounts is that why you have three?

Jay Schneider: I do, but occasionally one method leads into another methods account and that's because for instance with my short euro-dollar position, I'm paying a little bit on the rollover. So I've also taken a couple of swing trades and higher yielding pairs to kind of mitigate the cost of the carry of that short euro-dollar trade. Do you see what I'm saying?

TraderInterviews.com: I do. The rollover is something that we don't talk a lot about in the forex, but it's important especially for people that are holding for longer periods of time.

Jay Schneider: Yeah, it's incredibly important over long periods of time and it can be incredibly important both ways. It can turn a winning position into a losing trade when you close it or if you're really dumb enough not to watch the rollover, I don't know anybody that does that, but in theory I suppose it's possible, but it can also really augment your profits on your long term directional trades. I don't actually trade a carry strategy per se. I don't have a basket of carry trades I use, but I really do try to maximize my gains and minimize my cost of carry by looking at the rollover rate.

TraderInterviews.com: Discipline wise, a lot of traders, of course, have one method, they're short term until the trade goes against them and then they're swing traders all of a sudden, how do you keep yourself from keeping into those side lows so that you're not turning one of your short term trades into a swing or position trade?

Jay Schneider: Well, my short term trades never turns to any of the method; however, I've defined a set of rules by which I can turn a swing trade into a position trade. A couple of my blogging friends, Jules and Andrew, they help me find a name for my position model, it's called the Knotty Warhol. And it's just a crazy name for a crazy method. The method is absolutely nuts. At virtually any price level, at least in my experience with the model, I'm sure I'll be proved wrong by the market soon enough. At virtually any price level, I can take a swing trade if I am following the rules of my swing trade and if my analysis is proper and the management of my expectations are aligned with what the market will yield. I can almost turn every swing trade into a Knotty Warhol trade if the trade goes against me. I think of the trades that I've taken all together, the losses that I've taken have all been in my swing trades. And I'll just the swing trade, or I'll just cut my losses on the swing trade if I think it's not going with it. But there have been a couple of instances where I turned a swing trade into a Knotty Warhol trade and it becomes very profitable because I don't have to wait for the exit price to be higher or lower than my entry price to make a profit.

TraderInterviews.com: Why Knotty Warhol? What does that reference?

Jay Schneider: It's a completely counter intuitive name for a completely counter intuitive method. That's the only point of the name.

TraderInterviews.com: So, it's only it "doesn't make sense for something that doesn't make sense" basically.

Jay Schneider: Exactly. That's exactly...I couldn't have put it better myself actually. In fact, I'm going to use t hat in my blog. The Knotty Warhol is a martingale strategy. And I know that everybody, this person is probably in a cringe when I say that, but I enter very, very light and I wait for the market to kind of show me what it's going to do. If the market moves against me, I double down. But I double down at a predetermined excursion range. And whether that's a thousand pips or 500 pips or a support or resistance level, it depends on the study that I've done on that particular currency. I have a couple of different statistical spreadsheets that they kind of measure the ups and downs or the waves of the currency markets. So in any given currency pair, I kind of have an idea of what to expect. I will double down as price moves against me but I don't double down more than four times. At that point...

TraderInterviews.com: More than four times, really?

Jay Schneider: Yeah. Well, like I said, I go in very, very light initially, very light. I will only need about a 30% retracement or 35% retracement after the fourth entry to make a profit. It's a small profit and my risk is really outside to that point. But the statistical excursion in the market makes it extremely improbable that I will incur a loss on that trade because I'm trading over movements of several thousand pips. For instance, if I gone short in the euro at 1.3 back in the early part of this decade, and I traded it all the way up to 1.6, I would still have enough capital to go short at 1.6 and trade that back down. And that's all in retrospect and I know that that has no...I mean, hindsight has no meaning to a trader in the markets. But it will give you an idea of how large the swings are in this model that I can accommodate.

TraderInterviews.com: So when you say statistically, it's improbable that it would continue to go down more than this number, is that for back testing or how are you coming up with those?

Jay Schneider: That is from back testing in some cases back in 1986. In one account with this model, I can sustain two 10,000 pip moves, adverse moves before I have to start hedging or using other mitigating strategy. And that's when I might employ sort of, not a direct counter trade hedge, I won't take a short position in euro-dollar after I've taken a long position, of course, we'll I lose all trade in other currencies that are inversely correlated to the euro-dollar, more or less, and nothing is one to one, right? But I'll sort of use mitigating strategies to freeze the loss. Of course, that will be an unrealized loss and it could mean that I don't trade in that account for a while if they get bad enough, but I won't take loss because cyclical and secular factors tend to change overtime. I'm a firm believer in secular and psychoanalysis and so I use that to kind of gauge where my trade is in that particular cycle or in that particular secular swing.

TraderInterviews.com: Talk about that a little bit more, the secular and psychoanalysis you say you do, what does that mean?

Jay Schneider: OK, I guess the easiest way to put it is the difference between secular and psychoanalysis is that it's a matter of time frames really. Some people consider everything secular to be 10 years or greater. You know, 10-year or 20-year swing in the structural kind of factors that drive markets. Cyclical swing tend to be shorter, 10 years or less or typically five years or less and that's what I'm looking at. But again, this is all just sort of a theory. It's a theoretical concept that people use to kind of explain market behavior or explain economic development and I don't have any proof that this works.

TraderInterviews.com: Well, I guess your trading account proves that it works, right?

Jay Schneider: Well, but then again you look at secular swings and you'd have to be a 400 or 500-year-old man trading once a year to really have a good data sample. I guess that's what I'm saying is, for now you're right, everything is working, and I'm nimble enough that I can devise strategies to kind of mitigate losses and things like that but there may come a time when that account just gets blown up. Like I said, two 10,000 pip swings in a currency is what the account will bear and my thinking is if you've got a 10,000 pip swing in a currency, you got bigger problems than just your trading account, I think, particularly with the economies that I'm looking at. If you had an issue where the US dollar went down to 0.2 relative to the euro, I've got bigger problems than just my trading account.

TraderInterviews.com: Sure.

Jay Schneider: So I'm trading on the volatility over the long term, and on the secular and cyclical swings, but I'm also banking on the fact that there's nothing, I mean completely catastrophic. I'm not talking about this last market meltdown, that was not a catastrophe. I'm talking about nuclear Armageddon. Something that's going to force me to take the dogs and my wife and move to Canada.

TraderInterviews.com: Sure.

Jay Schneider: At that point, I'm not worried about my trading account, so I'm just kind of planning along with these methods as if everything is normal so to speak.

TraderInterviews.com: How many positions do you have opened now at any given time on average?

Jay Schneider: With the long term trading account, I'm probably, I could probably put one more position on before I have to kind of pull it back a little bit. Like I said, I went long on the aussie-yen to kind of balance out the short euro-dollar trade. There's some risk in the euro-dollar trade right now that I'm kind of worried about. I'm worried about a devaluation of the dollar relative to the euro. I have no idea how the euro is to find gravity right now, but it is and I can't argue with that. So I'm long aussie-yen which is kind of a no-brainer. Aussie yen could...The Australian dollar could fall with the respective yen, but the yield is still making sense to me, which is about 2.9% on the differential. It's not what I get in my account, but that's the difference between in and a correlate between Australia and Japan. So I'm conscious with the fact that I want to get a trade that's going with me if the trader is going against me. And if the trader is going against me to a significant degree, let's say two to three percent, and I enter in a trade that I think is interestingly correlating with that pair, I can usually strike a fairly good balance even on still carrying an unrealized loss and that kind of puts me at ease and it allows me to concentrate another trading opportunities. And right now, I'm looking at dollar CAD, I'm looking at the euro-swiss for some other opportunities.

TraderInterviews.com: So, across your three accounts, would you have 10 positions at one time?

Jay Schneider: Not long term. No. I think maybe four position trades at any one time and maybe two to three swing trades only because it gets really kind of unmanageable if I have too many trades on at one time. I do work full time. I'm still in the military. I'm in the Marine Corps, so I'm a comptroller in the Marine Corps and I'll soon be moving on to something else. I do tours like everybody else, so I have to divide my time between my devotion to my Corps and my devotion to my trading and anything beyond four-position trades and two or three swing trades is really just too much.

TraderInterviews.com: Is there anybody in the Marine Corps with you that you can talk to this stuff about and there eyes don't glaze over? I mean are there people that you've talked to that you've got interested in this as well?

Jay Schneider: There's a guy that works with me right now, he trades options and he's pretty darn good at it. He's just starting out, but he's kind of a phenom but he loves to trade about options. He trades equity options, but of course when he talks to me about his equity options, my eyes glaze over. And likewise, when I'm talking about currencies, his eyes kind of glaze over. So it really is just what speaks to me and what speaks to him. There's really no one to talk to though.

TraderInterviews.com: Well, I guess that why your blog is lonely trader?

Jay Schneider: That's exactly right. That's exactly right.

TraderInterviews.com: So what's next? I mean, do you see yourself, you said you're looking outside of currency maybe to find some opportunities there, do you feel like there's still potential here that you've got more research to do, more things to try in forex to get a little bit better at this?

Jay Schneider: Well, yeah. Everything for me is a work in progress. Even the position models are work in progress and I have a lot more to learn, but right now I'm looking at broadly my range over the next two to three years. I really like to learn about currency options and there value and complimenting my directional strategies. And I'd also like to break into crude and bonds and some of the commodities. I think I've got a good, I tend to have a good macro-view of things. And I hope, I mean I hope I have a good macro-view of things. And I think that my tendencies and my passions outside of work of course and outside of trading compliment those instruments more, know about crude, bonds, commodities, the ags, the metals, things like that.

TraderInterviews.com: Do you think some of these models that you've worked with and some of these indicators that you're watching will work in this other, have you back tested one without putting a real money towards it yet?

Jay Schneider: I have and interestingly enough I think I could probably do pretty well in the fixed income market, but I need to be better capitalized obviously for those.

TraderInterviews.com: So going back to the Maserati, have you gotten one yet or are you still working toward that?

Jay Schneider: No. The thing is, my problem is do I re-invest or do I pull out profits? And right now, it's really just about re-investing. I need to build enough capital where one day, God forbid, the day comes when I get tired of the Marine Corps, but one day I may elect just to move on and I want to be sure that financially at least I won't have any pressure when I decides to go alone in my trading and sort of be a self-sustaining trader.

TraderInterviews.com: Right. Well, it sounds like you've done a lot of research into this and really looked into it. There's a lot of newer traders coming now with the $250 mini account, the micro accounts and starting this.

Jay Schneider: It's scary.

TraderInterviews.com: Well, yeah, I guess as my question, I mean, is currency something that you feel that anybody could learn if they started there like united?

Jay Schneider: I think it is. I think it is, but I think that too many people and this is true for any market or any instruments or as a class, too many people they don't understand how much effort this really takes and frankly in my opinion, they're just not capable of putting in the effort. They have other priorities and I'm not judging them for that, I'm just saying they have other priorities, they have families, they have religion, they have social life, I guess what I'm trying to tell you is I'm a complete recluse even though I'm married with two dogs, I'm a complete recluse, I've got no spare time, I'm a mess. But I'm finding a balance finally after so many years, but I would say to them that, yeah, they can do it but they have to trade small, they have to find a broker that allows them to trade appropriate size at the appropriate level which not a lot of online brokers do that these days. They have to learn to be a position trader. And a lot of kids, I say kids, a lot of people, they want to trade, they want to get in and they want the action. They're almost like junkies, but they have to learn how to be a position trader and they have to learn how to be their own sort of fundamental and technical analyst first before they can really start to form their ideas about the markets. Their own ideas and then design their own trading systems, back test their own sort of theories about market behavior. And then finally they have to be unafraid to be unconventional. They don't have to do it like everybody else is doing it. In fact, they already are probably going to lose. So the more unique they, the more unique the approach I think the better odds they have but they also have to have those odds on their side. They have to make sure that the math is on their side. If the math isn't on their side, they're going to lose. And I think a lot of people don't understand that.

TraderInterviews.com: Is that why you talk about the time you have to put in, are you constantly reading, researching, back testing, trying to find tweaking just a little but, I mean is that really what the bulk of the time?

Jay Schneider: Yeah. In a word, yes, that's it, yeah.

TraderInterviews.com: Well, you talked about Forex Now, I think it's what one resource you talked about?

Jay Schneider: FX Now.

TraderInterviews.com: FX Now, sorry. FX Now, we'll link to that. Of course, listeners will link to Jay's blog, The Lonely Trader. Great blog, check that out. Any other tips for somebody listening to this interview maybe and maybe they're stock trader and looking at forex or maybe they're looking at this for the first time, any advice?

Jay Schneider: You give it a try. If it works, do it. Do what makes your money. A lot of people do really well in stocks and on general there's a lot of them, but really no advice, just kind of do what speaks to you and try different things. Be willing to make mistakes. Be willing to lose. Don't get suckered. I recently got suckered. Don't get suckered.

TraderInterviews.com: What do you mean by that?

Jay Schneider: I was hanging out with a guy who was trading an old account, but he was telling everyone else that it was a live account. It was a $14 million account and I was so impressed with this guy that I set up a limited power of attorney and put in $150,000 with a trade account, $150,000 of my families money into a trade account for him to trade.

TraderInterviews.com: Oh, I read about...You talked about this in your blog.

Jay Schneider: Yeah. And of course I can't mention his name because I don't want to create problems for me or you for that matter, but this was a rude awakening for me. You can get conned by anybody. You have to do your due diligence, you can't get greedy and we saw what happened with Madoff and this guy, Stanford, who's going through the ropes right now, hopefully he's put away for a long time. But it's very easy to get taken for a ride in the currency markets by guys, one of the guys that took me, but the good thing is that it's relatively easy to verify who this people are. I'll just leave it at that.

TraderInterviews.com: Okay, well you can read more in your blog if somebody wants to check it out 'cause I know you mentioned and talked about it there.