I was looking for a way to invest the money from my winnings into the stock market. I made 10% that year and I was hooked! It got my attention because I received 10% of my investment doing nothing for that year. At that point I was looking to investigate what else was out there. I stumbled onto Yahoo news groups and met a gentleman, named DayTrader, who became a mentor to me. He introduced me to the option market initially, and we got very involved in discussing various ideas. I learned a lot back then. We had this relationship for probably 5-6 years, always discussing theories about options over the phone. So I started trading options rather seriously for two years but I never really felt I had the edge on what we were discussing so we kept moving on to different aspects of trading, predicting direction and diversifying our discussions. We were talking almost every day, analyzing charts and that was what initially got me interested into technical analysis.

We were always comparing notes to see if we agreed on chart movements and trying to design a winning system. Because I was always thinking outside the box I would come up with different ideas than conventional wisdom and offering them to him to see what he thought. And I didn’t do that well in the stock market, maybe because it is not as directional as the forex market, there are a lot more issues to deal with, such as inside trading or low-balling. But I was unwilling to give up. I was using software called Supercharts that could scan up to 9000 stocks (it would take about an hour on the machine) and it would pick up my filtered picks which would then be further filtered to about 10 candidates.

So that’s how I started – analyzing the stock market, scanning for results based on my criteria. It was very time consuming and the software had bugs. It was very hard to get straight answers from Omega Research who designed this software.  

And was that your mentor who told you about forex or was it just your research?

Well there was actually no particular person that introduced me to the forex market. I watched some infomercials and I wanted more information. 

So why forex, not the stock market?

The problem was simple: The Stock Market required a lot of leverage (that I didn’t have) to make a substantial income. I did not have enough money and it really bothered me. Than I found out that you couldn’t hold positions overnight and that didn't sit well with me so I turned to the Forex market instead.

Did you attend any forex trading training or seminars back then?

There was no seminars, nothing. GFT was my first deal-desk broker, I signed up with them at first. At that time the platform was excellent and reminded me of using Supercharts by Omeaga Research beacuse of its excellent graphics. 

And what about demo trading, did you do it before trading live?

Absolutely. What I did back then was to look at the various charts and watched how a position ended up being profitable by looking backwards. I call it reverse engineering. I would reverse the trade to see where the initial entry was and then forward. I would continue looking at thousands of trades over and over until I saw some type of repeatable pattern.

Is that what your Robot is all about?

Well that was why I became extremely interested in the forex market, because: a) I saw some large long-lasting trends and b) there is only a handful of currencies that I needed to be focused on, unlike the stock market with 9000+ stocks.  So I was glued to my computer and my wife, Rhonda, she was very helpful letting me stay in my room and study my charts. Every day I would look at my computer, studying the charts. I probably did it for maybe 10 years, 8 hours a day.

Did you have a regular job back then?

I was playing professional blackjack and no limit hold’em. I would occassionally take breaks from gambling and take on real jobs like accounting or various sales positions. I was also mortgage broker for about seven years. From the age of 18 until now I always considered professional gambling as my real passion.

I am amazed how did you manage to do all that…

You mentioned your wife being supportive and many people describe families as their biggest support and motivation, especially in the early days. Did you have any other sources of motivation/support?

I forgot to mention a very important thing – besides the jobs that I had I have always remained an entrepreneur. I have been an autograph dealer for about 25 years as well… I have always had many things going on at the same time so if somebody asks me: ‘What do you do in life?’ – I have to think about it! A long then I was on ebay when they first opened up, I was there, buying and selling historical autographs.  

But back to your question: my wife was always supportive. When I first dated her she knew me as a gambler and she thought this is not going to be a good thing, feared that if I ever took out a loan on our home that would be the end of me, I would be considered a ‘degenerate gambler’. That never happened. I quickly showed her that I could make a living, and a good one, and she became more confident and started to trust me. She was behind me in everything I did. She became used to the gambling, she would go on trips with me to different parts of the country to gamble. She supported my ‘treasure hunting’ looking for autographs as well. And speaking of the market, she wasn’t so happy that I would be in my room for eight hours analyzing the charts but she knew that I was driven.

That was a bit eccentric or compulsive, you might say, as I would take my portable computer with me wherever I went. If we had a party for example and I would sneak off and open my laptop and look at charts! So she tolerated me and I have to thank her for that.

I wanted to ask you about your Robot Trader. How long did it take to build the software?

Let me back up. I had a whole different number of ideas for the foreign currency market. I am aware there is a chance of becoming a constant winner in the Forex market which I was told is slim to none. Only 5% become winners and some of them only just break even. I guess 1% make a substantial living. It’s tough. I knew I had to do something really different to be part of the 1%. I changed my trading ideas all the time but would always return back to this one method I had: that was to go with the long term trend, to buy on dips and sell on rallies. So my first system (what I thought would be one that I ended up trading, and looking back – it was not) was focused on DMI (Directional Movement Indicator) with ADX overlapping this indicator. I think it was 14 period DMI and 14 period ADX. I found that when the ADX was piercing the DMI indicator (from the point when ADX would enter the DMI at the lower band and move to the upper band) it was a sweet spot and an excellent chance of a successful trade, because it was not over-bought or over-sold. If the ADX was too low in relative strength there was not really a trend present. If it was too high and exceeded the height of upper DMI indicator, then it was over-stretched and there was a good possibility of a reversal. So I focused on the sweet spot and when that occurred, I would look at the MACD to show a dip. So if DMI and ADX was long, I would look for the MACD to be short on a five-minutes timeframe. So it was a typical set-up: a 30-minute timeframe, DMI was positive, ADX going to the centre of the DMI and your five-minutes MACD was showing a dip, a good potential buying opportunity.

I thought: how could you go wrong here? You have your indicator showing you that the market was not overheated and there is a good buying opportunity by the MACD dipping down. I have seen this over and over again. So I did this and it worked quite well.

Then what I found was: I could be in a trade and all of a sudden ADX would start to go greater than the highest level of the DMI indicator or becoming over-extended. Then I would turn my platform to the next highest timeframe and look for another DMI indicator on a one hour chart and see if I still have an opportunity to stay in this trade and save it, if the next highest timeframe gave me an indicator, or indication, that the DMI and ADX looked like it was a good position on a higher timeframe.

 I wondered how could take advantage of this? There was so much to look at, all these different timeframes, so I decided to get a programmer. I had no idea that Metatrader even existed, I was with GFT at the time. I was going researching looking for a programmer and nobody had the slightest idea what I was talking about. I didn’t care if it was a C++, VisualBasic or anything else, just needed a API interface.

I stumbled on Forex chatrooms and noticed that everybody is using this platform called MetaTrader. I downloaded it and had no idea where to start. I gave up thinking there was too much to learn. So I started teaching my manual methods in Forex chatrooms. I started in a chatroom called ForexFactory.  I was looking around ForexFactory and stumbled on an indicator called "Heiken Ashi Smoothed."

Is that the one you mentioned on your website?

Yes, and it was love at first sight;-)! All the noise seem to be filtered out and since most everything is based on moving averages I thought this could be an excellent way of determining the trend strength.  So I went into hyper-speed mode and learned all I could on Heiken Ashi indicators and started a new thread on ForexFactory discussing a manual method that was really logical and powerful. When this indicator showed a retracement on one timeframe you could move to a higher timeframe to see that the retracement didn’t last long and it would eventually sucumb to the direction of the next highest timeframe. And that got me hooked. So I started a new thread, posted a lot of examples and found myself with thousands of followers who thought I was onto something big here.  I traded it manually at first with less then perfect entries. I was having an amazing success rate with no losses and closed trades occurring very quickly so I posted my results and people were amazed. All the trades were going to the direction of the main trend!

So after that some other people on ForexFactory (clever programmers) gave me free indicators to work with along with this Heiken Ashi Smoothed indicator to help me design something better. So we moved to MTF – Multiple Time Frame indicator, that would allow you to look at all the different time frames at one glance and the colors were matching  the Heiken Ashi candles. 

So I knew I had to get a good programmer to get this thing working. I found out that that were better programmers on a forum called ForexTSD. So I moved over there and again - lots of popularity and thousands of postings but nobody was able to help me with the programming except one guy. His name was Lee Yen, he was from China. Not only did he help me with making the indicator better but also gave me an idea about programming a robot. So with a little bit of a language barrier we managed to put together two different robots. The first one was looking at 4 timeframes (it was a bottom-up approach).  And the second one (the one I’m using now) while back testing never lost! I kept on testing and re-testing it but always had no losses whatsoever! I gave the robot to other people on ForexTSD as open-source. I thought I would let experienced programmers take a look at this and double check the code to see if this thing was working right. They said there was nothing wrong with the code and the results looked great. I took it off open-source as I wanted to get a good programmer to get the software refined. So I asked for a $50 contribution from people that had the software and within one day I had about 200 e-mails. So I got a lead programmer ($50/hour) and every couple weeks we had a new version as people were sending me ideas of what they wanted to see in the robot. It started in March 2007 (with the first version from Lee) and since then we have been releasing new, updated versions!

So how many users do you have now?

I have close to 6500 customers (as of 11/1/2008). I have about 100 new customers per week.

So if a total newbie starts with your system, what books would you recommend him to read?

Martin Pring wrote a pretty decent book called "Market Momentum". He talks about multiple timeframes there.

Ok, so they’ve read the book, they’ve bought your robot. What’s next? Demo trading for some time?

I recommend to trade on a demo until you feel comfortable then go live. The market is not going anywhere. 

So how long would you recommend? On average?

Two weeks or so. 

Is your system constantly evolving?

The current version is able to cut down on drawdown, because it is able to recognize if the market has changed from trending to consolidating. We have changed the code for the robot to acknowledge a change in market setiment and automatically switch internal functions to effectively trade the new market conditions. I call this "Intelli-switch" You can see it on the screen displaying ‘Set 1’ or ‘Set 2’ in use. By doing this we were able to dramtically reduce drawdown and raise the number of profitable trades.

Sounds exciting. And what would be your general advice to beginners? Different people got different opinions on what path they should take. What’s your opinion?

My first advice is to loose money.  yes it sounds crazy but you can only learn if you loose money and step back and ask yourself: why did that happen? If you don’t start out losing you will have a false sense of security from your wins and not learn anything.

So after loosing, what should they do?

Well after loosing, which is probably easy to do, do not over-leverage your account. I would stay with 1:100 and stay with no more then 10% risk capital .  They should start with a micro account. Try trading 10 currencies at the same time which gives you excellent diversification. 

Trade smaller then you would ideally like since this will have positive effects on your mental attitude and will allow you to stay unemotional. After you gain confidence you can trade larger and larger. 

Any other ideas for the beginners?

Well… Do not become your greatest enemy by closing your trades too early when you see profit. People are so excited when they see profits after having some losing streaks and tend to close a profitable trade too quickly. I did that myself in my early days. So just follow the rules – it’s mechanical.

 Also, I do not believe in stop losses. I think they are overused to help the trader deal with the unknown. They allow you to feel good and remain calm. It might make sense at strategic levels, but not arbitrary levels.

Oh. That is not a common opinion…

More and more people agree with me. People were taught that if you don’t have a stop loss, your simply crazy. But some people agree that they prefer to have a ‘mental’ stop loss, not a set stop loss that a broker can see. My program does not allow the broker to see my stop loss or take profit. They cannot hunt my stop loss or take profits. It’s all internal.

Some might ask how do you protect your robot when there is a power shortage? We have an external safety multiplier that multiplies the internal stop loss and/or take profit by 1.5 and sends that as an external order to your broker’s server. So we do have protection in case of a power shortage.

I learned an important thing while playing blackjack. I ran millions of card simulations to get all possible deviations I can expect to see in my bankroll, or fluctuations in my bankroll over a long period of time. So if you know what to expect, you are not going to panic. It’s the same thing with the Forex market. If you are prepared to see bad things happen, you know what to expect and feel confident and not second guess your trading decisons.

Ok, you are an expert, but what about beginners? Shouldn’t they put their stop loss just to be more confident? Or maybe start with properly adjusted stop loss and after gaining enough experience, follow a different path?

Oh, I guess it is not a question for me, because my system is not based on conventional wisdom. Conventional wisdom is to always use a stop loss. I have read some articles about recent studies showing that stop losses can seriously impact your chances of having a winning trade. And if you are forced to use a stoploss to use one that is much wider then whats intuitive. 

Any last words for our readers?

Just one thing everyone should consider. 95% of all people are loosing money. And those people are using the same canned indicators that you can find on every charting software program out there.  Albert Einstein once said “The definition of insanity is doing the same thing over and over again and expecting different results”.  

Good luck with your robot and thank you very much for the interview.