The life and thoughts of a full-time trader who has reached XX hundred million, and the disclosure of numerous trading techniques 1

In the previous article, while peering into the daily life of the full-time trader, his methods werewe learned about trading on “Goto days,” but this time, as we write about the relationship between the full-time trader and the financial institutions that are his counterparties—such as securities firms and FX companies—and at the end we touch on his trading methods.

I wrote that the current main battleground for the full-time trader is FX and CFDs, and already about one-third of Japanese FX firms have frozen accounts.

He said that he encountered account freezes at times when he was winning with scalping or day trading that does not cross days. However, even when winning with trades that cross days and hold overnight, there are no warnings at all.

There is a reason for this.

Recently it's a well-known story, but when FX companies receive currency orders from customers,they place orders with banks that perform interbank settlements called Liquidity Providers (LPs). Generally, FX companies look at rates quoted by multiple LPs and then place orders.

This act of routing orders to LPs is called A-BOOK.

Among FX companies, there are departments that conduct “dealing” themselves without routing orders to LPs, acting as the counterpart to their clients; this is called B-BOOK.

Some FX companies use both A-BOOK and B-BOOK, while others are mostly B-BOOK or completely A-BOOK.

It is often argued that because B-BOOK makes the FX company the counterparty to the customer, the customer's losses would directly become the broker's profits, which is questionable.

However, regulators do not view it as a problem since the outcome is the same whether you route to LPs or not.

Now, somewhat digressing, when a B-BOOK FX company is the trader's counterparty and the trader engages in many trades through fast turnover such as scalping or rapid day trading, the broker's dealing desk and systems cannot cope, and the FX company's revenue is squeezed.

The FX company’s terms of use also state that such customers will be expelled, and as a result the full-time trader’s account was frozen.

As trading gets better and one can win, one still faces account freezes, but the ease or difficulty of winning can also depend on how much money you have.

In his sense, when capital amounts are in the tens of millions of yen and the lot sizes are still small, he can win relatively as expected.

However, once the capital exceeds hundreds of millions and the lot sizes increase, hedge funds and others come to try to wipe out his positions. Being targeted begins and he stops winning, apparently.

From that point of view, he thinks the amount one can realistically amass with FX is around 2 hundred million yen, and before reaching that amount he plans to completely shift to stock investments.

In terms of stock investment, the sense is that now, mainly in developed countries, money has been printed to push up corporate stock prices, making cash plentiful, but we don’t know how many months or years remain; nonetheless, he believes a crash is certain.

As the saying goes, after a crash the strongest are those who hold cash; accordingly, by moving funds between cash, FX trades, and CFD trades and gradually increasing them, he waits for that moment.

I felt like I glimpsed a truly ideal investment method that only someone who knows how to grow capital through trading could have.

Now, this time as well, he explained two trading methods.

One is indicator-based trading.

The key tools are information from Bloomberg and Reuters.

For example, in the case of employment statistics, if you learn the numbers quickly from the news and the U.S. economy is positive, the USD/JPY rises.Take a long USD/JPY and a short EUR/USD.This is extremely simple, yet it can win with a fairly high probability.

Speaking of fast news, Bloomberg and Reuters are common, but at Hirose FX and JFX, Reuters is available for free, so it’s recommended to have accounts with these two FX companies in the group.

The second opportunity exists outside the U.S. as well, Canada’s employment statistics.

Sometimes the U.S. and Canadian employment data come on the same day; when the U.S. economy is positive and the Canadian economy negative, USD/CAD shoots up; going long USD/CAD can be very profitable, so it was suggested to set up an environment where you can view Reuters information and give it a try.

We were able to hear about various trading methods this time as well, but when people think of trading methods, they tend to recall technical analysis.

However, the trader’s method is about capturing characteristic price moves at event timings on the calendar, and it seems that he has many—indeed countless—patterns, which is why his capital has grown.

With more of the full-time trader’s methods released in the future, if readers adopt many, countless methods, becoming a trader worth hundreds of millions of yen may not be a pipe dream.

Written by Hayakawa