Trading Heroes: Talking with Hugh Kimura about Myths, Lifestyle & Simplicity


The Trading Lifestyle podcast brought to you by TradingHeroes.com. In this interview, Hugh Kimura sits down with Joel.

[Joel's] path to professional trading is one that some of you can probably relate to. He initially went down the more traditional path of going to law school and becoming an investment banker. Joel has also been a currency analyst, but once he was exposed to the trading floor, he was hooked. Find out how he made the transition to full-time trading, and what he recommends to people who want to become successful FX traders.

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Transcript of Interview

Joel: The other interesting thing is that when you look at adults, we talk a lot about ADHD with children, and there are a lot of adults out there that are riddled with ADHD, and they might not know it.

Man: You don't have to learn to trade to learn. Welcome to the Trading Lifestyle podcast where we interview professional currency traders and industry experts who can help you improve your trading and your life. And now, your host, Hugh Kimura.

Hugh: Hey, Joel. Thanks for coming on the show.

Joel: Great to be here.

Hugh: So you did a previous interview on Chat With Traders, right? With Aaron?

Joel: I did, I did.

Hugh: Yeah, it was very cool. I really enjoyed it, and if people want to find out more about your background and why you should trade Forex and stuff like that, then I would really recommend you check that out. But I'd like to extend on that conversation and maybe go a little deeper. I guess the first question is how did you first get into Forex trading?

Joel: So I guess there are different levels of that question to answer. The bottom line was I was always very attracted to speculation. I always talk about that first time in elementary school I was in the halls, and someone was coming down the halls in Ontario, in Canada, with this ticket in their hand, and I didn't know what it was. And I asked him what it was, and he said they had just legalized sports betting in the province of Ontario. I couldn't believe that that existed, and the idea that you could bet on a game was something that, I guess, wasn't known to me up until that point.

I was so excited by the idea, and so that's I guess where the origins of my, where I discovered that I really...I was always into sports and being competitive. And then I just liked the analytical side of that, so that's where I was drawn to it. But then, later on in life, I went into investment banking. And when I was working in investment banking, I really didn't have much knowledge to start out with. I come from a family of doctors, brothers that are doctors, father that's a doctor. I went into investment banking, and I learned the ropes a little bit. I started in de capital markets and, then at some point along the way, I discovered the trading floor. So it was just a natural transition for me. It was something that I was very attracted to, and those are the origins of my trading career.

Hugh: Very cool. So you were originally a currency strategist, is that correct?

Joel: That's right. I started off working in strategy. I started to go down to the trading floor, and I got a little bit of exposure. Then I transitioned into working as a strategist, and that's where I came up learning about the market. It's funny because when I started out...I come from a law school background and went into investment banking. I knew nothing about technical analysis so I guess I was fundamental at that point. Although, even then, I would say it was a bit of a stretch to call my knowledge fundamental. I picked it up and worked on the strategy side for several years.

There is a big jump from analyzing the market to trading the market. Via @joelkruger

Hugh: Oh, very cool. So if somebody wants to get paid to learn, I guess, basically becoming a strategist would be a good strategy for them?

Joel: Well, I'm a very big proponent of everybody doing what's good for them. I think that some people need to maybe spend more time on the research side, while some people need to spend more time in books. Some people might need to jump right into it. So I think you need to figure out who you are and what's good for you and then apply that. For me, strategy was great because it gave me the ability to learn without making mistakes, and I was drawn. And again, it's something maybe we'll talk about in a little bit, but you need to love what you're doing, especially if it's something like this. You need to be passionate because there's going to be a lot of bumps along the road. So coming into it on the strategy side, I felt blessed that I wasn't throwing myself into the fire right away. It was a good path for me to take.

Be passionate because there's going to be a lot of bumps along the road. Via @joelkruger

Hugh: Okay, great answer. So was it a big leap to go from a strategist to a trader?

Joel: Very, very big. It's one of those things that you hear it in life a lot. You really just don't know what something's like until you jump into it. And so as much as you can be prepared for it, and I'm sure you played sports growing up and you had that coach that told you how to play and what to do, and then whenever you stepped out on the court he couldn't hit a shot. It's like that a little bit. It's a different mindset, and there are different things that come into play, different components, different variables that come into play when you are effectively live and you're trading. So that was a big jump, something that you really...you can prepare as much as possible and that's certainly going to help, but once you get into it, there's going to be another learning curve that you have to go through to maybe get your emotions in check and your discipline in check and so, yeah, it was a big jump.

Adopt a trading style that compliments your personality. Via @joelkruger

Hugh: I see. Was there ever a point where you wanted to quit?

Joel: Many times. But I don't know if quit is the right word, but there were many, many times where you just get beaten down so hard that you just want to curl up in a corner of your room and put your thumb in your mouth, and you can't believe that happened. But you come back and you reflect. I think that, again in life, in general, a lot of times we put a lot of pressure on ourselves to have to change and adjust and correct ourselves almost instantaneously. And that's not realistic, and I think we put too much pressure on ourselves.

I'm not trying to give anybody a free ride here that it's okay to blow up. But, at the same time, that is part of the process. As you continue to reflect and make mistakes, slowly but surely you keep on that path to getting better and better. And I think the one constant throughout, again, it's a passion for what it is that you're doing and that's what keeps you going. For me, it was always the idea of it's great to be right, and it's great to make money on a trade, but just the idea of finding something that was compelling and looking for a compelling trade idea, something that maybe somebody else wasn't seeing and doing that research and coming up with an idea and thinking about it and then applying it. That's where a lot of the gratification comes from. But, definitely, a lot of days where I felt pretty beaten down.

Failure invites reflection and reflectionleads to growth. Via @joelkruger

Hugh: Yeah, I think we can all relate to that for sure. Go ahead.

Joel: No, I was going to say I think everybody, I can't stress enough, I think that if anybody's listening, for all of you that are listening out there, it's a part of the process. And you're going to get beaten down, and it's just like that in life, too. And you just need to get back up and you need to push forward. And you need to keep pushing forward and keep learning from your mistakes and don't be discouraged. If it takes you 10, 15, 20 years, whatever it is, you just need to keep working toward that goal, and you'll get there. Failure is a wonderful part of the process and something that, in today's society, people just don't get that enough. And people aren't told enough how important it is to fail and why that's so important. It's so much better when you get to the other side. You look back and you have those lumps, and you can look back and say, "I made it to the other side, and it was so much more worth it to go through that process than to have some quick, instant gratification."

Hugh: Yeah, for sure. And I've talked to traders who've spent 10 years sometimes until they became profitable. If you really want it, then you have to work at it.

Joel: Absolutely.

Hugh: I guess one of the biggest things that can help pick you up is the influence of mentors and heroes and stuff like that. So who were your biggest mentors and trading heroes?

Joel: Well, I guess I did come from...it didn't always necessarily have to be a trader per se, but I think I was always attracted most to successful, down to earth people that had really put their dues in over time. And so really, the people that stand out are not necessarily traders, but they're people that I look up to that were a little bit ahead of me, whether they had grown their own business or whether they worked really hard to get where they were in whatever profession they were working in. These were the people that I looked up to.

And again, because a lot of this can be extended across the board. It doesn't have to be trading per se, but specifically when it came to trading, I was always attracted...I wouldn't characterize myself as a textbook academic. So I guess those people that were more talking about the trading and less academics and more trading. The more successful hedge fund managers that I felt were a little bit more down to earth are the ones that I was attracted to. One that stands out in the asset management, hedge fund, global macro space, I was always drawn to Paul Tudor Jones. I always liked his approach and what he's done with his life. He's done some really good things with charity, and he's been very successful. He's very down to earth. He's a gunslinger. He's not just one of these guys that sits back and lets a model run. He approaches markets with what I call the G-U-T model, the old gut model. Those are the people that I respect, I think, people that I can relate to.

Hugh: I see, okay, awesome. It's always interesting to hear how people have been influenced. What do you think is the biggest myth that most people believe about Forex?

Joel: I think the biggest myth about the industry is the whole idea...I don't know if I would call it a myth or a bad association, but I think the biggest problem with the market is the leverage. I think that if people were to understand that FX is probably, arguably the best asset class to trade because when you're looking at an asset class, what more can you ask for? You have liquidity. You have volatility. The market's open 24 hours a day, right? It's always moving. It's the biggest market in the world. So when you have a market that you have access to like that, well, what could be bad?

Unfortunately, the only drawback, which is really not a function of FX and more a function of regulation, and I'm not one who's advocating over-regulation by any means, but when you do give people that are not educated leverage of 200 to 1, 100 to 1, 50 to 1 even, they're going to blow up. They're never going to have that opportunity to learn how to trade. They're never going to give themselves that opportunity so there's no point. You're basically going to a casino and you're throwing your money away, and you never did trade. You never gave yourself that opportunity. I think that's the biggest myth is the idea that you can hit it out of the park and you can make a ton of money really quickly. And I think that if people approached FX and used the leverage that they have maybe 5 times, maybe 10 times, but certainly not getting much more aggressive than that, I think that they'll be able to last a lot longer or at least last to the point where they can at least see what they're capabilities are as a trader. I think 99% of people that trade FX don't have that opportunity, and it's a shame.

Trading on leverage denies you the opportunity to properly learn to trade. Via @joelkruger

Hugh. Yeah, yeah, that's for sure. So what's your favorite Forex related trading story?

Joel: Well, I guess the one that comes to mind is earlier this year with the Swiss Franc. That's the one that stands out. That's the one that's the most recent. I actually had a position in January when we all know the Euro/Swiss was trading just above 1.20 for several years, and the S&P had basically said they weren't going to let Euro/Swiss fall below the 1.20 level. They were committed to that, and they were firmly committed to that. All of a sudden, one day in January, they decided to not be so committed to that, and it rocked the industry.

I had, actually, a position on, I was long Euro/Swiss at the time, so I was long Euro/Swiss at about 1.2012 so just over the figure. The market wasn't really doing much for days, and it was just 12 points over the figure. So what I did was I put a long position on, and the only time I've ever done this, and specifically for this, I sent out a strategy report to my clients just explaining to them that for this one instance when I was going to put my stop loss, it was going to be above the figure, not below. So I was long 1.2012 about. I can't remember the exact number but somewhere around there, and I put a stop loss above 1.20. Normally, when you're trading a long position like that you put the stop loss below the figure because you don't want to have it above the psychological barrier, and so I put it above specifically because I knew that if that level was taken out it was going to be a disaster.

Now, nobody was thinking a 40% move in five minutes, but I thank God I was taken out just over 1.20. I have to credit my liquidity provider and the broker I was working with. But it was quite a day, and that's one that stands out. And I feel sick every time I think about the damage that was done on that day. There was a lot of interesting things going on in the market at that time. And since then, I do not take any exposure over the weekend. I just can't stomach the idea of anything happening. All through the Greece crisis, all those weekends, that was nothing compared, but the result of that that weekend risk, I was just very happy to go into the weekend without any exposure.

Hugh: Yeah, that's a great lesson for sure. Along the lines of your trading, I noticed that you're one of the few educators who I've come across who actually shows his real money results in his membership area. That can be a good and bad thing for both the student and the mentor, but why do you choose to show your results?

Joel: I think it goes back to what I was talking about before. What I try to do is I try to run, for clients, I try to show them what the possibilities are and what the potential is. And I'm not really fixated on how well I perform. The idea is to trade an unleveraged account and to trade that unleveraged account and to take positions and to show people that if you trade in unleveraged accounts, even if you make mistakes, you're not ever going to be in a position where you want to throw up at night.

We actually launched the book back in August of 2014, and we just completed the first year this past August, unleveraged, and we generated returns of over 30% unleveraged, so had a phenomenal year and was very lucky. But that's not the goal of this. The goal is to maybe try and hit 10% unleveraged and just take it slow, and so it really is less about me trying to spin out returns for clients and me just putting my head down and focused on good trades and not focusing on dollars and cents.

And I find that if you can not focus on the dollars and cents and just focus on taking good trades, you will be way ahead of the game. It's amazing how many little, simple things you can do that aren't complicated. People spend so much time reading books and strategies and this and that. It's just way too much I think. I'm not trying to knock that, but I think that people, instead of focusing on all those things, they could just focus on a few simple things, and they'll put themselves in that one percentile, that successful one percentile. I guess that's how I feel about that.

Worry less about the money and more about the percentages. Via @joelkruger

Hugh: That's one of the biggest things, actually, you start off with all these indicators on your chart, and you go to all these other courses and you try to get as much information as possible. And then it comes back to just paring it down and keeping it as simple as possible.

Joel: Yeah, I always say if you're starting out, open up an account, a small account. I do think it's good to have a real account, but it doesn't have to be anything substantial. It could be $1000. It could be $500. You need to take it seriously, so it needs to be enough where you're going to take it seriously. Trade that account, forget about the money, trade an unleveraged account. So you have a $1000 account, take a $1000 position. The market moves for you 100 points, you make 1%. Against you, you lose 1%. Very easy. And if you do that, just focus in, you don't need to know much, just watch your chart, you don't need to throw up all the indicators, just start like that. Say, "Okay, this market looks like it might be topping out." Great, so take a short, short the market. If it looks like it's going to top out, then try it. Have a stop loss in mind and pick a target and then you'll see, and you'll gradually learn without putting a lot of capital at risk.

And again, the other beauty of FX and most large financial markets and asset classes is that if you can...one of the biggest luxuries we have over the past 15 years is the accessibility of these markets to retail traders, and that's a blessing. It's a blessing because if you can trade a $500, $1000, $10,000 account, whatever it is, for a year, 24 months successfully, and you're generating solid returns on a percentage basis, the money doesn't matter. The dollar returns do not make a difference. But if you can generate consistent returns over 24 months, that will be highly scalable. People will be throwing money at you. So you don't have to worry about that. And if you just take those one year, two years, even six months and just focus on that, you'll be way ahead if you can do that. You'll have enough confidence to raise as much money as you want. People just get too clouded by the unrealistic glamour out there, and it's unfortunate.

There's no better market than FX. You get liquidity, volatility and24 hour access. Via @joelkruger

Hugh: Yeah, that's true. In a lot of markets, like you mentioned, 500 bucks or a thousand bucks will pay your commissions. You can't even get started, so I think that's a huge advantage of FX for sure.

Joel: Absolutely.

Hugh: So I guess the big question right now is can you share with us how you trade a little bit?

Joel: Sure. So going back to a little bit of what I touched on before, I told you, I was talking in a different context, but I said that it's always important to figure out who you are. And once you figure out who you are, and I think most people have a handle on who they are and what they're about, you need to adapt a strategy that works with your personality. So, for example, I'm always on the other side. If somebody in life says this, I look at the other side. And so I'm always a contrarian in life, which is the way I am. So I apply that to my trading. I am not a trend trader. Occasionally I'll, of course, trade with the trends, but most of my entries on positions are contrarian-based.

So first and foremost, I'm looking to always go against whatever the underlying trend is. A lot of my strategy is based on simple stuff that you've heard, I'm sure, of a lot. I'm looking for markets that are overextended, and I'm looking for mean reversion. I would also say that my strategy is somewhat techno-fundamental, so while a lot of it is grounded in isolating entries and being introduced to ideas that are technically compelling, I also over the years have become more fundamental in that I like to use that as a filter, an added filter for basically pulling the trigger on a trade and just feeling more comfortable about the position I take. So techno-fundamental, discretionary, certainly contrarian-based type of a strategy.

Simplicity isgenius, so keep it simple. Via @joelkruger

Hugh: Okay, very cool. What would you say are your greatest strengths and weaknesses as a trader?

Joel: Okay, so I guess greatest strengths, I guess it's a bit of a double-edged sword. I feel that I've always had a good intuition for markets. I'm drawn to speculation, and I like risk, and I like taking risk. It's not something that necessarily scares me. So when I see something I like, I feel good about going for it. At the same time, that sometimes can bite you in the ass. Because when you have that type of a mentality if you're a little bit too cocky about it or you feel a little too good about the idea and sometimes you can feel like you're bigger than the market, the market will eat you up pretty quickly. I think that it's something that can help me and something that can also hurt me.

I think the other interesting thing is that when you look at adults, we talk a lot about ADHD with children, and there are a lot of adults out there that are riddled with ADHD, and they might not know it. And I think there are a lot of people that are drawn to trading because there is an element of risk taking in an ADHD patient or somebody with ADHD. And so I do have ADHD, and so it's something that I've certainly learned to cope with. And again, there are good things about it that you grow up and you didn't know anything about that. And I didn't know that I had it and it certainly didn't hold me back I don't think too much. But when I look back, in retrospect, I can see that there were certain times where, wow, I realized that I had to battle through something not really knowing that I had that obstacle in front of me. And so these are things that you learn. You learn your weaknesses and your character and your personality, and you're able to correct them, and that's how you come out even stronger. But certainly, bottom line, my gut and my intuition can sometimes help me, and they can sometimes hurt me.

#ADHD and risk taking go hand in hand. Via @joelkruger

Hugh: Okay. Very interesting. What's one of the biggest traits that you've seen in your successful students?

Joel: A trait? A willingness to stay the course, a willingness to really buy into the program. There's no official program. It's just when I say that I mean really being able to really commit to the idea that...I guess I'm the anti-broker in the sense that I'm really trying to let these guys know that, and gals, that you need to forget about leverage and money, and you need to commit to just trading trades that you take on a daily basis, that you're committed to just good ideas and seeing them through and forgetting about the bucks. I think that the most successful in my community, and I'm very blessed to have a really nice following of clients now that are wonderful. I have really good interactions with them. Generally, they really can appreciate what the markets are. They appreciate that you're not going to get every trade right. They appreciate that it's a process. They appreciate that I'm not somebody who's advocating leveraging up your account. So those are the types of people that I think are the most successful and the ones that I've seen, the ones that really understand what it's about, that this is not about an overnight success. It's about being in it for the long haul.

When trading, you need to be passionate and committed to the long haul. Via @joelkruger

Hugh: Yeah, for sure. So I guess we're almost coming up on our time here, but just a couple more questions.

Joel: Sure, of course.

Hugh: What are the top three books that you would recommend to people to read? Not necessarily trading books.

Joel: Okay. I guess one that I actually think that a lot of people have read that hopefully people can relate to a little bit, if you haven't read it, Market Wizards is a wonderful book. The first Market Wizards, I think I've certainly turned on to that. Obviously less academic and more just hearing about the lives of different traders. And so that I thought was fascinating. Reminiscences of a Stock Operator, great book, just a great read. A lot of fun and something that I highly recommend. And then there's Ugly Americans is not necessarily a financial markets textbook, but definitely a good story that I enjoyed. There's lots of good light reading. I can say that I'm not attracted to...I don't have the time and, again, I guess this goes back to my ADHD. I'm not a big reader, and I can only read stuff that I think is really going to captivate my eye at each word. Otherwise, I'm out cold in about five seconds.

Hugh: That's probably a good thing.

Joel: Yeah.

Hugh: So what do you like to do when you're not trading?

Joel: Well, I have a family. So I've got my children. I love spending time with my children and my wife. I still try to run. I run every day. I think that's really important. And again, a lot of trading and being successful in whatever you do comes down to a good balance in life. And I certainly can't play basketball like I used to. I remember I went out a couple of years ago to try and play and it was a disaster. I just couldn't even touch the bottom of the backboard. So I said, "Enough of that." So I try to run, and I just try to keep myself busy on a daily basis. I'm fortunate to have a good thing going, and I have a lot of time on my hands. And daily routine really comes down to just watching the market, going out for a run, helping the wife, being there for the children, taxi cabbing around to a lot of sports practices and whatnot. That's pretty much it. And watching, I actually do watch, shamefully I watch a lot of television, a lot of programs I watch. I just finished watching that Narcos on Netflix.

It's not healthy to stare at screens all day. You need balance. Via @joelkruger

Hugh: Oh, yeah? Is that good?

Joel: I feel a little bit guilty because it was excellent. But I feel guilty because it's about Pablo Escobar, who obviously wasn't a great guy, and the show does a good job of getting into his life. I don't know how accurate the portrayal is, but it's fantastic if you're looking at it as fiction. I highly recommend watching that series. Love Silicon Valley and all those shows that are out now, a lot of good TV. That's pretty much it, not too exciting of a life.

Hugh: That's cool. Yeah, I loved Blow, so I think I'll check out Narcos.

Joel: Oh, you're going to love it. You're going to love it. It's pretty cool. The thing I like about it, I like that it's subtitled, so you get a lot of good...I always can appreciate a good subtitled movie or series, and you have phenomenal acting. A lot of actors that you wouldn't know or see, and the production's great, the cinematography is great because you get to see Columbia, and there's just fantastic acting. So go give it a shot. I'm curious. You let me know what you think.

Hugh: Yeah, I'll do that. Well, Joel, really appreciate you taking the time out. I know there's big news today with the FOMC, so I want to let you get back there. If people want to find out more about you, where should they go?

Joel: I guess, feel free to visit JKonFX.com. Come over and all of our information's up there. You can reach out. Always happy to answer an email. So anybody can feel free to come over and look forward to meeting you.

Hugh: Cool. Well, thanks a lot again, and I'll talk to you later.

Joel: Thanks, Hugh. I really appreciate it. Have a good one.

Hugh: You, too. Bye.

Joel: Bye.

Man: Thank you for listening to the Trading Lifestyle podcast. To listen to all of the other episodes and get free access to Forex trading tools, tutorials, and resources, visit TradingHeroes.com.


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