Neil Norton is a full-time trader and private mentor to aspiring Forex traders. DailyForex.com caught up with Neil and we discussed his journey into trading, his trading room and how he views the markets.
Questions about Yourself
[DF] What's your professional background outside of trading Forex?
I'm an Entrepreneur: I have built many businesses from scratch; the last one was an online retail business for consumer electronics.
[DF] Where did you grow up?
South London, UK
[DF] How did your journey into Forex trading begin?
I was looking for my next venture when I saw something on line. It was a where they guy bought GBPUSD at £1,000 per pip & set a target of 20 pips. Looking back on it, it was a very basic trade that I used myself for a while. Anyway he took profits at +19 pips (i.e. GBP £19,000 profit less spread) a few minutes later and that's good money in anybody's book with what seemed very little effort. If someone can do something then anybody can do it (as a basic principle of NLP). Little did I realise how hard the journey would be. I took the normal route of reading all the books on trading I could find, went to various seminars, some costing thousands of pounds but eventually realised that the only way to learn properly is to trade live. This was a very costly education but worth every penny.
[DF] What interests do you have outside of trading? Do the skills or mental requirements overlap with what you need to be a good trader?
I practice various martial arts including Muay Thai and kickboxing amongst others. I believe this helps with self discipline which is obviously crucial to any Forex trader. I also enjoy extreme sports such as skydiving; again I think this helps in trading as some people may have a tendency to hesitate when a trade sets up. I have seen this in some of the people I have mentored. I am doing a Psychology degree in my spare time; I believe this will help with the understanding of how the mind works and emotions during the trading process, as well as other things.
[DF] What drew you to trading in the first place? And why Forex, and not say futures?
Realizing that the online retail market was becoming saturated with costs increasing and profits decreasing, I looked for a venture that would return me to me the high income that I was used to. I was also looking for something I could do all over the world and that was not dependant on my age. Trading ticked all the boxes. I traded US & UK stocks when I started out but they moved too slowly and price action was too random. Also, the market makers are the main winners in that game what with gap-ups & gap-downs, earnings etc. Because I trade from the charts (price action) and I am primarily a technical analyst, I found Forex respected the rules amazingly, i.e. support resistance, breakouts, candlestick patterns etc. Once I was trading forex and making money consistently, I didn't try to trade anything else. As the old saying goes, "?If it ain't broke then don't try to fix it."
[DF] Would you say you're a full-time trader?
Yes I trade full-time; I start at 6.30am and I normally trade through to around 4.30pm working Monday to Fridays most weeks. I have been full-time for the last 4 years. (5 years in all as I spent a year part-time trading/learning.)
[DF] How long have you been trading the way you have now?
I developed my core system about 3 or 4 years ago.
Trading Questions
[DF] Which currency thepairs do you focus on?
EURUSD, EURJPY, GBPUSD & AUDUSD (I will trade most major pairs if there is nothing on the 4 main pairs but a setup develops on something else).
[DF] Do you trade markets outside of Forex?
Not any more, I traded UK & US stocks for a while about 4 years ago.
[DF] What platform do you use for charting?
Various but mainly MT4.
[DF] What timeframes do you use?
4h, 1h, 30m, 15m, 5m & 1m, most trades are taken from the 30m & 5m charts.
[DF] How long do you hold a typical trade?
The 30m trades can last from under 30m to a few hours. When scalping I may be in and out of trades in a few seconds to a few minutes.
[DF] Do you ever hold a position overnight?
Rarely but if a position is developing well, I will leave with the appropriate stop.
[DF] What kind of stop-loss size do you keep in pips?
Normal stop is around 30 pips, it can go up to 70 pips but it all depends on the price action at the time of the trade & the targets will be relative to the stop.
[DF] What's your typical target in pips?
1:1 or 2:1 so if stop is 30 pips, then first target 30 pips and second target 60 pips.
[DF] What hours do you keep for the London Session? I'm in front of screens at 6.30am GMT and I look for the big money going in at the open. I'm very unlikely to take a position after 10.30am due to the low lunchtime liquidity.
[DF] Do you use market orders to enter, or stop/limit orders?
I use stop orders mainly for entries and I always set the stop & targets when placing the order.
[DF] How does news & fundamentals affect your trading?
I check the calendar every day before the open and mark on the charts (in case I forget, which can easily happen when I'm in a trade) events that are likely to cause volatility. If I am still in a position when the risk event is due I will adjust my stops accordingly. 9.30am GMT is normally a risky time for GBPUSD and 1.30pm GMT for EURUSD. I stay away from trading big news such as non-farm payroll as it's too risky and in my opinion more of a gamble.
[DF] Over the years, have the markets changed in terms of how you can apply your methods?
I developed my core method a few years ago and have just been refining it since. The method I use can be traded in trending or range-bound markets so there are normally a few viable trades throughout the day.
[DF] What are the most common errors you see traders make?
Taking profits too early and not cutting losers soon enough; also bad money management. Although I set my stops when placing the trades, I do not get married to the trade and if a reversal forms while I'm in the trade I will take some profits out and manage the stop to either breakeven or the first target. I may also look to trade the reversal or correction if all criteria are met.
[DF] What mistakes, if any, do you still make yourself as a Forex trader?
When I started trading I kept a journal and that helped me turn the corner. I made the same mistakes as everybody else but once recognized, I corrected them. I wish I could say that I was a robot and never made a mistake; however, saying that, if I am not 100% on form, for example, if I'm tired or not 100% focused, I have been known to take profits a little early.
Performance Questions
[DF] What's your win percentage like?
60-80% wins depending on the day.
[DF] What drawdown do you tolerate?
I will tolerate a maximum 2% drawdown per day (I risk about 1% of my equity per trade; if that is hit then I won't trade for the rest of the day.
[DF] Do you maintain a track record?
I used to record every trade when I started but now only sporadically. The reason for this is that the set ups are the same and all the trades look very similar. I record some trades for my blog and YouTube but I prefer just to trade and walk away when I'm done these days.
[DF] How many trades on average do you execute over the London session?
Normally between 1-10, but more if I'm scalping.
[DF] Do you aim for a weekly pip count as a goal?
No, I find that with a pip goal there is too much pressure and it may force me to take trades that do not meet my criteria 100%. I just wait for the set ups and trade what's there. Some weeks are obviously a lot higher in pip gain than others.