26-01-09 Radio Interview Transcript: Nick McDonald on BBC Radio Oxford

A programme on BBC2 “Million Dollar Traders” gave 8 ordinary people the chance to try and make real money on the stock market

Nick McDonald from "Trade with Precision” who has been involved in the programme and teaches people how to become city traders from the comfort of their own homes was asked what he thought of the show...

Nick: These traders certainly they seemed to have had some training but form the television programme it’s hard to see that. What they are lacking is any kind of trading strategy and every trader needs a trading strategy. On there, what they seem to do is to read the paper and make uneducated guesses on what they should do next, which actually is not what I would consider trading at all – that’s gambling, because I don’t know where the price is going next, they don’t know, the people who are mentoring them don’t know. Nobody knows.

Lou: Just watching the programme, they must be under such a huge amount of pressure?

Nick: They are under a huge amount of pressure! They are trading… especially trading someone else’s money. So most traders like them wouldn’t start off trading for a hedge fund just like that. So they are very much thrown in at the deep end and when you talked about our company being involved in it, well Steve Ward who is actually a colleague of mine – he is the psychology coach and he has done psychology coaching with him in the background. And in fact that was one of the things they needed most. New traders have all sorts of psychological impact on them. And you can see it. You can see the emotions they are going through.

Lou: Well, talking about that emotion…some of them aren’t coping very well at all – one of them threw in the towel last week , and another is finding it hard to cope with it emotionally. How tough is that and how a big a part is that to play in it… the sort of managing the emotions?

Nick: It is very tough but also it comes down to knowing what you are doing and having confidence in your strategy and in your ability. So they are under so much more pressure, so much more emotional stress, because they don’t know what they are doing. They also… they really are lacking mentorship – I’ve seen the people on there get really angry at them for doing simple things wrong and then doing huge mistakes and getting no guidance whatsoever. So, it’s a kind of a strange mix of mentorship down there...er…. which…. you know, and lack of strategy.

Lou: So let’s talk a little bit about you then and how you got to this position. What’s your background?

Nick: Yes, so I did work in the city for a while but never actually as a trader. The whole time I was trading the markets on my own, on my home account, then one day I just decided I don’t need to working for anybody else anymore and I left my job, I went off to trade. And at the time I made that decision, it probably wasn’t, you know… a sensible thing to do right then, looking back in hindsight, but I have survived it, I have got through it. And over time as I started to trade from home, first of all friends and family told me don’t do it, you’re crazy. Er… then they all started to want to know what I was doing and how to do it. And then that moved to around to you know, friends of friends, and friends of family asking me how I do it, I started running little seminars in my living room and built up to the point where …in fact a city company asked me to write a foreign exchange currency trading seminar for their clients. So I put together a two day course and then I just started continuing with that course, I really enjoyed and it’s kind of grown from there. So it’s grown from word of mouth and up to the point now where we are training thousands of clients each year.

Lou: You say you can teach ordinary people to become traders for real. Is it really possible though, do you not have to have a certain kind of psyche, a certain mentality to be able to succeed?

Nick: I think there’s a real key thing and that is persistence. I see… I mean one of my top traders was a fisherman, another one was an IT specialist, completely contrasting professions previously. So I think really the key thing is that they persist. The people that make it as traders don’t give up. And yes you do need a certain psychological mind set. You need some commonsense more than anything but …we talked earlier on about that mindset and about controlling your emotions. It does come from having a strategy and having the confidence to stick to that strategy and if you do that in trading, because it’s a game of probabilities, your strategy should give more chance of winning on the market than losing. You will never when you win or lose, but you‘ll more chance of winning than losing. And if you have confidence in that, even if you have just lost on the last trade, you are still confident to put the next one and you can start to put a lot of those emotions aside.

Lou: Why do you do it? What do you get out of it? Is it just money, is it the adrenalin rush? What is it?

Nick: It’s both. I love trading, I love the markets, I’ve been fascinated in it since I was a young kid. I always read the financial papers and was …you know interested in markets even before I started trading them. It is a rush, but it’s not a place you should come for a rush. It’s exciting, it’s fun, it’s a buzz. But if you really want adrenalin, go and jump out of an aeroplane, because it can also be very, very boring so there is… don’t get me wrong, there is lots of boredom, there’s lots of looking at the screen with not much going on. But lately, the last few months on the market we have been blessed with an erratic market, which is great for traders for me.

Lou: Yeah, great I guess if you are sort of into that, but a lot of people would say…is it a good time to be playing with the stock market during these… you know, difficult times?

Nick: There’s never been a better time. I think people get confused reading the papers and listening to the press with things like – the stock markets are going down, which to an uneducated person implies don’t buy. And that’s actually correct – you shouldn’t be buying and holding for the long term until you see the market start to recover. But in the short term what a trader like me wants… I’m trading over minutes, hours and days and all I need is movement. And I teach people just to profit from that movement and one thing, we’ve never had more movement than this in decades. So we want movement, whichever way that movement is, we can profit from it.

Lou: Well let’s sort of get down to how you actually do it. If I wanted to start now, how much sort of time, money would I need to .. to kind of put into it before I start seeing a serious return?

Nick: To be realistic at least one hour a day .. you would need. And that’s Monday to Friday. Some people have told me they don’t have that one hour a day and then suddenly when I help them find that one hour a day they find two or three hours a day and once they start to enjoy it. How much money do you need? It’s accessible to everybody. It really is. So you can open a currency trading account with as little as £200. Now that is a very small amount, but it’s something you can start with. And when we come back to that emotional control …if you are putting £200 in an account, for the average person they are not going to be too emotionally attached to that, so it’s still £200 but its not £200,000 – they are not going to be losing thousands, so they can start to learn with very, very small amounts of money. And then of course depending on the capital that the person has you can put in as much as possibly want to.

Lou: I know it’s all down to experience for you, but for somebody coming into it new, how do they know which shares to go for – we haven’t got a crystal ball. What do we do?

Nick: So, what I teach people if a form of technical analysis which is looking at charts. So we look at chart patterns and the basis behind it is that what has happened previously over hundreds of years of markets, happens again. So there are certain patterns that occur, certain patterns, based upon certain things that happened in the market which are based on what human beings do. And human behaviour just hasn’t changed over those hundreds of year. So when a certain pattern occurs we just know… let’s say there’s 70% more chance of this happening then that. We don’t know what will happen, but we know there is more chance of it say going up, then going down and therefore if keep on placing that trade 100 times we should win on 70 out of 100.

Lou: How successful have your students been then?

Nick Very successful ... it comes down the effort that they put in. So I won’t lie to you and say to you that out of the thousands we’ve taught they are all successful. But we have really educated some very, very successful students who have gone on to become actually very big traders, very good traders in their own right. Many who have left their day jobs now, and trade full time. And it’s directly proportionate to the effort that they put in. We provide all the support needed to help them get there. I’ve done it, I’ve helped people do it, we show them how to do it and if they put that effort in, then they will get it back.

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Notes to Editors:

• Nick McDonald founded Trade with Precision to teach people 'real' and 'precise' trading strategies, omitting irrelevant information which is not conducive to trading success.

• He teaches a variety of scalping, intra-day and swing trading strategies using technical analysis on both FX and index futures.

• Trading currencies on the FX market is about the future expectations of how countries will perform relative to each other. They are traded in pairs, so investors are always long (buying) one and short (selling) the other. A simple trade would be to short British pounds and buy US dollars if you believe that sterling will continue to weaken versus dollars.

• The internet has made it easy for beginners to trade currencies, joining the hedge funds, institutional investors, global corporations and others that collectively trade trillions a day on the FX spot market.

ENDS