James Hughes - chief market strategist for Axi Trader - has been working in the trading arena for almost two decades. In that time he has learned some hard and fast rules that he is sure have helped to make him the success that he is today. The Lazy Trader spoke to James about this and about what the markets might be up to in the near (and far) future.
James Hughes - chief market strategist for Axi Trader - has been working in the trading arena for almost two decades. In that time he has learned some hard and fast rules that he is sure have helped to make him the success that he is today. The Lazy Trader spoke to James about this and about what the markets might be up to in the near (and far) future.
Takeaways
GBP reacts to clarity rather than good or bad news
Treat your trading like a business and you will have much more success
Try to mix seasonality with other factors to secure a good trade
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James Hughes has had a long and illustrious career in the trading markets and therefore knows what to look for in the markets. He understands trends and this is very important if you want to be a successful trader. Hughes knows that however successful he becomes, there is always more to learn.
This applies even if he might think he knows it all. It is this humble thinking that has helped to propel him to greatness when it comes to trading. It is something that he wants every would-be trader to understand. Never stop looking for learning opportunities.
Hughes suggests that the key themes for the spring and summer of 2018 will depend on what comes out of the White House. Donald Trump is the driver of everything. We can talk about debt and economics but what cuts through all of it is what Trump is doing.
We need to look out for global trade wars, as we have already seen what has been happening with aluminum and steel. The negotiations that are happening between US and Canada are part of this.
Even in the last few days, we've seen Trump focusing on trade with China. Anything between US and China will cause massive repercussions in the market.
What is interesting from an economic point of view is that we are moving out of the low interest rates into a world where the central banks are becoming more and more important. After a long time of them not doing too much in order to keep interest rates low, things are now changing.
We are looking at more interest rate hikes and so on. In the UK there is so much uncertainty around Brexit, some markets are not doing so well because we do not know what is happening with that.
Hughes thinks that we may have got past the stage in equity markets where rate hikes are bad news. That is because of the old world we used to live in where everything was very different.
Now we see upsurges in interest rates because of their necessity so things are changing. We cannot keep the same monetary policies anymore, especially down to Brexit.
GBP doesn't necessarily react to good or bad news, especially with Brexit. It reacts to clarity - it needs hard facts that shed light on what's happening. It doesn't have to be good or bad news, just clear news.
If there is a press conference that does not answer any questions, that is when the pound becomes negative.
Are cryptocurrencies a fad or a realistic proposition, James wonders. When we see a market continuously moving in one direction it causes an issue. It is always a worry that the bubble will burst as quickly as the market rose.
Crypto is a strange one. There are so many different cryptocurrencies at the moment. It is a case of doing research and getting a good understanding and then making a decision if you want to invest in cryptocurrencies. There is a lot of choice, but there are still some worries so homework is essential.
There have been such big swings in crypto that it can be extremely volatile and that's the issue according to James Hughes. You can never be sure where the moves are coming from or why they are happening.
It is much safer to buy through a trader than through an unregulated platform where you find you have to pay to get your money out. Go through a broker regulated by the FCA. Even if cryptocurrencies are not regulated, you will still have some form of comeback should you need it.
James Hughes believes that precious metals can possibly reach their 2011 peak again within the next five years. Remember that gold was a safe haven - that is why people bought it. But that became unpopular after the financial crisis of 2008.
Now, since Trump has entered the White House, it has become fashionable again. It is a safe thing to do again, as far as any trading is safe. So there is an upside to be had in gold and it is certainly linked to the US dollar. There is a negative feeling to the US dollar at the moment, so it is worth checking out.
When it comes to swing traders, having more than one string to your bow is a good idea. Looking at the economics is essential to help choose what they should be trading in.
There are so many different outcomes, some of which will help in the long term, some are more short term. Therefore learning the fundamentals is the best thing that you can do. Technicals and fundamentals are both equally important.
Technical analysis has always been a good way of getting an efficient entry, says James Hughes. However there are some other things to look at including the history of each trade. Gold, for example, always rallies over the Christmas period.
Seasonality is an interesting way of looking at things, but the problem with it is that there is nothing to say that it will happen next year. Marrying a seasonality move with technicals is a much better idea.
When looking for the perfect trade some would say that it is never going to happen. These things cannot marry up exactly as you would want them. If you wait for the perfect trade you may never trade at all!
So it's important to use common sense and work out the best scenario for you to make it all come together as you want it to.
It is no secret that trading does have a high failure rate even though it is easy to get into. The biggest issue that retail traders have is the emotional side of things. People are reacting to trades and that can be a big mistake.
Find the right platform for you, and take the time to know the ins and outs of the platform you are choosing. You will be surprised how many people go into trades not understanding how the platforms work, and that can cost you a lot of money.
It is also important to treat your trading like a business. Manage it well, keep on top of it, and take it seriously. Even if you have another job and trading is part-time, take it as seriously as you can. It is real money, after all.
The best way to learn, in James Hughes' opinion, is by jumping in at the deep end. Demo trading is not always going to be that useful. It is a different beast altogether. It is better, for many people, to just get into the real markets from the start, take calculated risks, and see what happens.
You need a degree of luck, of course, and take the opportunities that are given to you if you want to learn. It is a matter of working hard and understanding that there is always something to learn. There will always be something that you don't understand. Do not be arrogant and assume you know it all - be prepared to learn as you go along.
None of us have any idea where the trade will go. It can do absolutely anything and we have no control. So we need to protect ourselves and that is what it is about: live to fight another day. Do not stay in bad positions and trade safely!
James Hughes can be found at: Twitter @james_hughesUK
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