Monday, 11 April 2011 15:30

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Triangle Trade by Hoosain Harneker.

Mr. Hoosain Harneker can you describe how you start your typical triangle trade - day? Do you just survey charts or do you check the calendar first?

A : At around 7 a.m., the first thing I will do is look at the news to see if there are any major releases to be careful of that day. If it's a very quiet day, the first signal normally appears within the first two hours. I'm trading on a system or model, so I've got a little alert that notifies me when the trade sets up. As soon as the alert rings, I enter the trade, I set my profit and I set a stop-loss, and after that, I just forget about it.

Q: So you actually set your target for 10 pips from one triangle trade. (NAREIT)

A : That's right, yes. Since I have a system to see how my triangle trades are progressing. If I am up six or seven pips, then I'll look at the indicators again. Should I feel that this trade is going to turn against me, for whatever reason, then I would close it out for the profit. Once I've reached 10 pips profit, I also close the trade even if the indicators are indicating that the price may still go in my favor.

Q : What kind of equipment do you use for trading mr. Hoosain Harneker ?

A : I use a Compaq P3 laptop connected to my cell phone for Internet access.

Q: Does your trading platform come with charts?

A : Yes. You can actually trade off of the charts. It was a pro­gram developed by a Russian company. It uses very, very little bandwidth, which is one of the reasons why I like so much. Also, besides currencies, they've offer trading in the metals, gold and silver. If I ever trade from home, I use a laptop, which I then connect to my mobile phone to access the Internet.

Q : Do you end up trading at work or at home more often?

A : Work. Definitely.

Q : And your company's perfectly fine with that?

A : They are perfectly fine with it, yes [laughter]. In fact, a lot of them want me to teach them how to do it.

Q: In the beginning you told us that during specific hours, news flow would affect your triangle trading, and you would avoid it because of that. So how often would you check the calendar for news flow then? Every single morning or once a week to figure out the times of day that you may not want to trade?

A : The habit is every single morning. In fact, sometimes I will look at those calendars even two or three times a day to see if I have forgotten anything that may be coming up in the afternoon. I actually did try to trade the news in the past with a beautiful subtle sort of strategy for news, but what I found was a bunch of blocks. For example, the platform would freeze only during news times and that actually made it completely impossible to trade efficiently. The specific news release that I use to trade was nonfarm payrolls. I had so many problems technologically that I just told myself it wasn't worth it to trade the news anymore.

Q: A lot of people don't trade news because of the same prob­lems, and they realize that if they have a solid strategy, money can be made in any sort of timeframe.

A : Yes, that is right.

Q: So, mr. Hoosain Harneker - would you basically, say that most of the resources that you use are free?

A : That's right, yes. The triangle trading platform and live charts are free.

Q: Do you feel that it is necessary for someone new to invest in something that's expensive? Like one of the premium charting packages?

A : No, don't invest in expensive charting packages. Live charts are available at no cost with equivalent information. I love reading and I love learning. I think that's part of the challenge of working in FX. I spent like $90 here, $150 there, etc. But what I found was a lot of the books that I purchased were quite honestly not worth the paper they were written on. They taught the standard issue such as the moving average crossover or stochastic. I don't even think these guys took the effort to actually thoroughly test the strategies that they were teaching. Admittedly, the strategies would work once or twice. But more times than not, they would not work.

This actually leads me to my next point, which is that just over a year ago, I backed off trading for a while and turned to my current

software provider because they gave me the ability to program my own indicators. I had met a Russian guy on one of the forums. The two of us started chatting, and he's the one that actually made me aware of the platform. I started learning as much as I could about indicators and robotic or fully automated trading. I was fascinated by it and actually got to the point where I can now develop my own indicators and I have my own robot, which, basically, does the trading for me. I've got one robot which is quite successful as long as it is shut off during key news releases. It requires a little management, but nonetheless works well if I turn it on and off because news can kill the robots. You need to keep him out of the news, which is something that I learned in forward testing. I've actually got it honed down now. I know exactly when to switch him on and when to switch him off. I started giving classes in South Africa where I teach people how to trade using the robot. In the beginning I had about 4 guys and I've now probably have about 16 live traders.

Q: Do you think systematic trading is really necessary, because you were doing pretty well in terms of a 10-pip target on a discre­tionary basis. Now that you've created a robot, what difference has it made?

A : A huge difference. When I was trading manually, I would set my target at 10 pips, my stop-loss at 20, and then I would walk away from my computer. When I would come back, I would on occasion find that the trade had become a loser, not because I was wrong about price action, but because I let the price go as high as 8 or 9 pips in my favor. But then I let it reverse and turn what could have been potentially an $80 or $90 gain into a $200 loss. So where the robots come in very, very handy is that I've inserted a function into robot such that it will protect my profit. Effectively, if I set my pip profit at 10, I could leave in a 3-pip profit protection. This means that if the price goes up by 7 pips, then retraces to 3 pips, the robot would close the trade. So I have created a virtual trailing stop that would allow me to walk away with $30 in profit instead of $200 in losses.

Q: So you feel like the robot basically helps you manage the triangle trade better?

A : Absolutely.

Q : Do you have any sort of alert system that you've created to tell you when a trade has been placed?

A : Yes, I do. Whenever the robot enters a trade, my alert would beep and that is when I would know that the robot has entered a trade.

Q: Mr. Hoosain Harneker do you think that having a trading robot has made your trading a lot more relaxed in a sense?

A : Yes it has because a lot of the time, I may not even be aware that the robot has opened a trade. I will come and check the platform and find that the robot has entered and closed one or more trades in most cases successful ones. As you can see, with the robot, I actually have enough confidence to trade more. I am still going for the 10-pip profit, but the trades are managed better so that I can build the profit if need be.

Q: Does the same go for losses then, in the sense of letting the robot trade more if you have a loss for the day?

A : No. If I've taken a loss then that's it for the day. I don't let him trade again. I'll turn the robot back on the next day.

Q: So pretty much you stick to your original plan?

A : Yes to my original manual trading plan because the discipline to walk away with profits is the most important. The robot just makes it such that I don't need to be in front of my PC anymore to wait for signals. He is picking up signals as they happen and he's entering the trade.

Q: Do you feel like your IT background has given you an advan­tage in creating the robot?

A : Yes, it most definitely has, as well as some programming skills I developed in my early computing days.

Q: Do you think people like you are much more likely to move to some sort of automatic trading than people that don't necessarily have it?

A : Yes, but even people who do not have that background are interested in robotic trading. In terms of the people whom I train, some of them are not that computer literate, and when they heard about what I was doing with the robotic trading, I've absolutely fascinated each and every single student with this concept. What I've found was in the beginning, when they were trading manually, they would win and lose, but because I was doing so well with the robot, I thought it's quite unfair to not give the robot to these people and hopefully help them turn their trading around and make them successful as well. Everybody is telling me down here that I'm absolutely crazy and that I should be charging for the robot. But at the end of the day, it's all about helping people. As my student you will get the robot with your classes and I can tell you that it has made a phenomenal difference to these people. To be honest, they are not really trading, they are just switching the robot on and off, but I have made it a requirement for them to understand the mechanics behind trading.

Q: Let's continue to talk more about your trading style. Do you usually go into the market with your entire position or do you average up or average down into a triangle trade and stagger your entries?

A : No. Just one entry, one trade and that's it.

Q : What timeframe charts do you look at?

A : Initially, I start with a four-hour, but I take my signals from the 30-minute chart.

Q: You said that initially you learned from your friend and then you read some books afterwards, what has made the difference? Has it been the initial training with your mentor that really taught you most of what you're doing now or did you learn more tricks of the trade later on in books or forums?

A : I learned more from the forums and my own research. It is on the forums where you have guys talking about actual strategies and things that are going on in the markets at the moment. However the bottom line was that at the end of the day, I plugged in each and every single indicator on the charts, one at a time and I would sit and look at this indicator, understand it, analyze it and critique it. If it didn't look easy to me I would take it off and I'd move on to the next one. Through this tactic, I found a group of indicators that I was comfortable with. The next stage for me was then to hone that group down until I had about two or three indicators. Once I had done that and found the indicators that I wanted to use, it was then a matter of tweaking the setting until I got it to point where I was happy that, if X lines up, then Y will most likely happen. I would use the second and third indicator merely for confirmation, and that is actually when success finally came.

Q: So your charts are fairly simple? It sounds like you have about three indicators on them, one primary and two for confirma­tion?

A : Two is confirmatory. Yes.

Q: Now given that you have developed the robot, do you believe wholeheartedly in systematic trading, or do you believe that there needs to be some sort of discretion as well?

A : There should definitely be discretion as well. In fact, the most important thing about making this robot successful is the fact that you need to manage the robot. You need to be aware of when news is coming out, the time of day and if there is news, then by 9 o'clock, 9:30 my time, I should be out of my trades before the numbers are released. In the beginning, when I tested the robot on the demo accounts, I let him run 24 hours a day. After about two weeks of trading I analyzed all the losing trades and the funny thing was that 90 percent of those losing trades were during times when news is released. That was when I realized that, if I just keep him out of the news, the robot was an absolute winner. So when I started applying the discipline of keeping him out of news basically, that was when I finally became successful.

Q: You hit on a great point, which is that one of the most im­portant things for people to do to improve their trading, especially when they are not doing so well, is to take a time out, go back, and analyze the trades that were both successful and unsuccessful because, more often than not, you will find a common theme of when you tend to lose money and when you don't. It could be one currency pair that for just some random reason you can't trade well. It could also be like in your case, every time data comes out you trade poorly. This is a great tip for new traders. What do you think is more important: indicators or price action?

A : A tricky one but ultimately, speaking for myself, I rely on my indicators.

Q: Mr. Hoosain Harneker wat was your worst triangle trade ever ?

A : My worst tade was when I opened a trade, and just as I opened it, the telephone rang and I had to attend to something urgently. I attended to the matter not realizing that I had not set a take profit or a stop-loss, the trade was wide open. To make a long story short, I came back and I was down about $380 and I got the shock of my life when I saw that. In a state of panic, I just closed the trade and it took me quite a while to recover from that.

Q: Was there any lessons that you learned from this?

A : Yes, I will never, ever trade without a stop-loss and a take profit. It's actually a habit now, where the minute that I open the trade, I will immediately put in my take profits and stop-loss. My trading robot has been programmed that way as well. This is part of money management, which is critically important to a trader's survival.

Q: What about your best trade ever?

A : My best trade was during nonfarm payrolls and actually it was when I broke all of the rules that I have now, or more specifically, before I developed my current discipline. In that trade, I made over $3,200.

Q: Can you tell us a little bit what was happening during that time? Did you have large position on and it moved quickly beyond your 10-pip profit?

A : I could probably have gotten more if I had stayed in the trade longer. But basically what I did was, at 2:50 our time, I opened a buy stop and sell stop, and I just waited, and suddenly the price shot up and my buy was triggered. I was trading I think it was at three lots, which are $30 to a pip. 1-2-3 boom before I knew it [laughter] I was $3,000 up, and I just closed it. I didn't even think.

I just clicked on close and that was it. My profit actually went a bit higher than that. It went up to about $4,000 but by the time I hit the close button and it went through, I was back down to about $3,200.

Q: In terms of the buy stop and sell stop, is it something that you still use right now?

A: Not anymore. I used to only use it for news trading. But like I said before, because of the issues I've had with brokers and their execution around news, I've actually stopped trading this way and have advised my students to do the same.

Q: It seems that you increase your positioning a lot more nowa­days to make meaningful profits. Before you said that you had $1,000 so you were probably trading a mini-account, right? Now it sounds like you are trading a regular account?

A : Yes, that is right.

Q: Can you tell us a little about your success, in dollar terms and percent terms over the past few years?

A : I would say, I've been quite successful, but the first few years were very, very difficult. I was winning and then losing and then winning and then making a little bit here and there. Right now, though, I trade the British pound in the early morning and then silver later on. Between those two, I earn enough to sustain myself from trading alone.

Q: That' s great. Do you trade every single day except weekends?

A : Every single day, but I have a tendency to not trade on Friday afternoons.

Q : Do you ever hold positions overnight?

A : No, very rarely. On silver though I've had two trades that went overnight I think.

Q: Let's talk a little bit about silver. Why did you start trading that?

A : About four months ago, my eldest brother came to me. Now he's aware that I'm trading currencies, and he said that he wanted to trade gold. I said to him, why would you want to trade gold when you've got all of these opportunities in the euros and the pound, and he said, listen just do me a favor and find out whether the company that you trade with allows us to trade gold. So I went to my trading platform and checked that they certainly had gold. So my brother was the one that started it all. I opened up a chart of gold, I looked at it, analyzed it, and I was quite shocked at the move that gold actually makes. However, I realized that you need a lot more capital to trade gold [laughter]. Silver is cheaper.

Q: How long did you demo trade silver before going live? A : I demo traded it for a month every single day.

It seems that you typically demo trade for a pretty decent amount of time before actually going live, is that right?

A : Yes, the shortest will be a month.