Hello Traders I have a special interview for you today with Mike Kulej from Fx Madness. I have been reading Mikes blog for a long time and I highly recommend that you check it out. The interview has some great information for traders, there are some jewels that Mike left so make sure you check it out.
I have included an mp3 file you can download if you want to listen to the interview. The transcript is also included as well because the audio was a little choppy but the material was excellent.
Casey: Hello, traders. This is Casey Stubbs from Winners Edge Trading and today I’m excited to present to you an interview with Mike Kulej from FX Madness. Hello, Mike. How are you?
Mike: Hello, excellent. Thanks for having me.
Casey: You’re welcome. I appreciate you taking the time to share some things about trading with us today.
Mike: My pleasure.
Casey: Okay. Let me start out by asking you how long have you been trading in the Forex market?
Mike: Well, I’ve been trading Forex exclusively and in the current form since 2002 but I started oh, in 1999 in Forex and current futures a few years before that.
Casey: So what made you make the move to trade currencies exclusively?
Mike: Ease of access, the cost of trading are low plus I’ve always been very interested in the concept of currencies and the way they move. And one cannot discount it 24-hour market which is kind of unfortunate when you’re located in the West Coast like me. You can trade whenever it’s convenient for you.
Casey: So since you’re on the West Coast, I’ve talked to a lot of other West Coast traders, a lot of times the active trading time is a little bit early for you, do you wake up earlier so you can trade when the market is more active?
Mike: Well, since I did this exclusively now I can trade, I can adjust my lifestyle when I need to be trading. What I do, I tried to catch the opening of London shares typically but I do avoid opening at New York. I have to join in a little later like an hour, an hour and a half later after the New York opened. I find the opening very confusing. There’s too many news coming in. There is a rush and very often there are fake moves. I don’t like that.
Casey: Okay. That’s good. So when you get ready to trade each day, there’s a specific routine that you go before you start your day or even a routine that you make before taking the trade.
Mike: Well, those who’s reading my website, FX Madness, see that most of my trades a little longer term that’s core of my trading using hourly charge for hourly charges that type of stop. I do some shorter term trading but this is not the core of my activities. Yes, there is a routine whenever I start, I always go through charts first with daily four hours, one hour chart and they’re always have a list of specific charts that I get more exclusively something I’d like focus on.
Casey: Okay. The reason I asked that because I was recently reading a trading blog and the author mentioned mental preparation in trading and I was curious to see if you had a routine or what other type of steps that you used for mental preparation. Do you feel like being prepared mentally as an important aspect of your trading?
Mike: Yes, it is but I do not go about it for a certain thing. One has to be fully awake and not to be tired that’s about it. And if I do not feel comfortable, I do not take any short-term trades so if I rested then yes and I will, I do not keep any exercise routine to get myself in shape with them.
Casey: Right. What is it that attracts you to the long-term trading over short term?
Mike: It’s slightly, well, there’s four fake breakouts that’s what I’ve found. The moves tend to be somewhat big, they’re easier to focus for me on the 120, 150, 200 bids of objective rather than M15 plus I also have a Forex related business which is a hedging advisory and I have to attend to that also. So I cannot sit in front of computer all day long and as powerful or do very short-term trading so one hour type of chart is my bread and butter you can say.
Casey: Okay. So since you’re focusing on long-term trades, do you practice a strict risk to reward ratio in your trading?
Mike: No. I compensate that by using lower margin; 1:1, 2:1, maybe 4 or 5:1 but that’s about it. I tend to not to go higher than that. Risk reward, yes, that’s something like 1:1, I will not be risking twice that I can possibly make but every trade has an objective and at least mental stop.
Casey: Okay. So do you find that you allow your trades to run past your target or you have it set in order and you don’t go pass that?
Mike: Ninety percent of the time, well I’ve got like this there’s a target always set but it’s fast and I feel like it has more potential, I will close half or more on occasion and let the other parts run. Ninety percent of the time though that pre-shift targets that’s it.
Casey: Okay. So when you say that you have a mental stop the way that you determine your risk if you feel like you need a bigger stop, you’ll actually make your trade size smaller, is that kind of how is that works?
Mike: That’s right. For example, if I’m looking at the daily chart that the price wings are obviously bigger than a smaller chart and let’s say I would be targeting 500 peeps, most likely the target and most likely those are something like three to 500 pips, then I will obviously go with the smaller charge.
Casey: Okay. So really even though your stop may adjust your risk is probably similar on each trade because of these size adjustment.
Mike: Yes, yes. That’s the pretty close too, although I do not strictly speaking, I limit myself to say one or two percent risk per trade. I do it more through leverage.
Casey: Okay. When you’re going through your daily routine of looking at your charts, do you have a specific strategy that you use like a set of criteria that guides you in making trades?
Mike: Well this may sound very strange but I focus on what is the easiest for me to recognize whatever gadgets catches my eye, this is what I tried to focus in. In most cases, I use very simple setups. Breakouts, out of multiple supports and resistances and that’s basically it. A little bit of confirmation by MACD and recently, ichimoku I used hundred SMA, Simple Moving Average, as an additional support system level indicator. I mean it’s natural that would be most of it.
Casey: Okay. So you said recently I didn’t really catch that last part, recently you added something new.
Mike: Over last few months, I have been experimenting with ichimoku charting.
Casey: Oh, okay.
Mike: And I’m using that more and more in a selection of my trades. Basically, I’m adding another support resistance level.
Casey: Is that to get another confirmation maybe for your trade to help increase your probability?
Mike: Precisely, Casey, that’s the idea. I’m looking for confluences of a fact that’s why multiple support resistance is at the same level that should be combined with a candlestick charging and recently ichimoku.
Casey: Do you use price action for your entry points when you say candlesticks?
Mike: Price action, do you mean previous swings?
Casey: I mean like if a candlestick forms closes in a certain as the candle itself, is that what gives you your signal?
Mike: If it forms a predetermined level or the levels I’m looking at, then yes it is important but I only look at the most easily recognizable patterns. I trade esoteric formation something that’s easily recognized. For example, Hammers, Shooting Stars, etc.
Casey: Right. Okay. If you have some new traders that were listening in today that we’re trying to figure out what would work and what wouldn’t or maybe they were struggling, what advice could you give them to help them along?
Mike: Cut down the size. Most of it when I’ve found out my own scheme and by talking to other people is the people of the leverage that’s kind of like the number one stand in Forex trading I think. People get into leverage way too soon for being you know probing to themselves that actually can make money. So I would say somebody cannot make money, cut down the leverage to trade one for three months or hundred trades whichever comes first, and prove to yourself that you can actually make money before you start freezing leverage that’s the first thing.
Casey: Okay. Well that’s a pretty good guideline. How about as far as increasing size, do you think that it’s wise for traders to increase their trade size when they increase their account at certain level or do you recommend them trading with the same size all the time?
Mike: Oh, no. You have to decide if they can’t growing by all means that’s the only way to really get ahead but it doesn’t, you know once should go while let’s say we’ll have $10,000 in account and trading $20,000 lots, once you get 25, I’m sorry once we to 15 then we can increase the site to 70/30. Once you actually form a plan how to go about it, for me it’s deep because for longer-term trading which is one to one.
Casey: Okay. So since you do a long-term strategy, how many trades do you think you make generally in a day or in a week on average?
Mike: You know between 10 to 20 and having five days or three shorter trades a day when I’m in the front of the computer.
Casey: The short-term trade, you monitor that the whole time, you are in front of managing that position?
Mike: In most cases, very often the share does not come to place, I would simply close it or I will leave it occasionally with the stop and account objective. Once I find I can walk away and not think about it.
Casey: What do you think about adding to a position once it’s already in place, have you ever experimented with that type of trading?
Mike: Yes, but never quantify it, if not to justify doing on the steady places and I personally prove this would only work on a really long-term trade, for example using daily charts as new fundamentals emerging can provide additional stimulus to your analysis this may convince you we should add.
Casey: On your website, FX Madness what type of article and materials can traders find there daily trading?
Mike: Well, first of all what makes FX Madness consists of my own trading that it started. I never started out to provide any item or be educationally, it was more describe my own trials and tribulations of the trading and that’s what it focuses on. My own trip but it occasionally I disclosed very specific strategies and you know for thoughts and opinions.
Casey: So it started to be kind of like a guide just to explain your own trade and that’s what your main purposes for your own trading.
Mike: That’s right. It keeps me honest with myself. I used to keep journal by hand which I still do that I find is useful also.
Casey: So what made you decide to go ahead and start doing it on the website?
Mike: Well there’s a material on the web and at that time when I was thinking about starting a blog, I actually already had a blog which wasn’t daily as an add up to MySpace type of thing and where I’ve posted something weekly. In the process when I was reading other people’s blogs, I noticed that their discussing trades way up their fact so I thought why not start talking about trades as everything as developing and see how that goes and that’s pretty much how it started.
Casey: Okay. If I go on there, is there specific time that you post usually. Is there a consistency there?
Mike: During the week, our current time is late afternoon is when I post. On the weekends like on Sundays, I tried to post something for the markets is up.
Casey: How would you recommend that let’s say if I want to use it, would you recommend for me to go there to maybe look for some ideas in trading, maybe look for some way to maybe tweak my own strategy or improve a little bit. Would that be a recommended usage for your blog?
Mike: Yes, yes. I feel one could use everybody, anybody not just mine but anybody else’s inputs, ideas, all this confirmation to there on the research.
Mike: Or you get an idea and then develop on their own. Because what works for me when not necessarily work for somebody else, but I think that would be the precise way to use it. For example, if I see something developing and I post it, I consider it high probability because I’m willing to put money on. So this is an idea for somebody else to develop whether he agrees with me or not and only go along if his/her own analysis line up my view.
Casey: I see. So if you’re posting an idea do you usually post it as you take the trade or do you say if the trade get this point then I’ll considering entering or is there like some advance description there?
Mike: Most of the trades I post they’re simple breakout so they can’t post it a four-day event that’s the way it start.
Casey: So you would say I’m looking at this particular level and if I see a breakout here at this point, I would consider going in at that level.
Mike: Yes. At some point I mentioned sections, for example, you know it will depend and comes out on the news. I do not trade news themselves but they can lead to development of trend. So it means it trips me out a little bit but in most cases I simply look at levels and that’s how it was then on the blog. If the trade reached a certain level, yes I want to buy there.
Casey: So when you’re looking at levels and breakout trades, do you wait for account to close before you’ll enter trade on a breakout or do you do it as soon as it crosses the price point?
Mike: I don’t like for a confirmation of this short trade that are posted on the blog in past major deal cases, I simply have an order standing there so not to wait for close of the candle. There’s nothing wrong with that approach and probably in a bigger trader they should try it like that waiting for confirmation.
Casey: Okay. So you use a lot of pending orders then?
Mike: Yes, almost exclusively; 95%, 97% are pending orders.
Casey: Okay. So I would say that maybe your thought processes as if the price gets there then a continuation is more than likely.
Mike: The breakout itself is the confirmation to my line of thought.
Casey: Okay. Well, Mike, I appreciate taking the time. I got a lot out of this today and I’m going to encourage the readers of my blog to come and check out your blog and see if they can get some ideas.
Mike: Well, thank you very much. Thank you for having me.
Casey: Thanks for posting your trade ideas ahead of time and giving people some material to help them study in their own research.Mike: I’ve found it very rewarding too. I get a lot of emails from people on what I also my own trading and I like dealing with the public in general. I don’t think I would like to have a school per se because then the obligation, you know, pleasure is now.
Casey: Right. Yeah. Now you just do it for fun. You get to meet people and help people as well. Yeah. I definitely find it useful though even in my own research to be able to read what other people were doing. I find it sharpens me.
Mike: Well, yeah, there’s a lot of smart people out there, smart there and yes, it pays to pay attention other people are doing. That’s the way I feel, although while I’m trading itself, I tried not to get myself influenced with too many opinions at the same time you know very specifically.
Casey: That’s probably because it could influence a trade that you might not make normally. A bias could set in or something like that.
Mike: Correct. Especially if you hear too many opinions at the same time on the same subject and they are all confusing, you start losing or you could start losing are conflict in your own abilities and at this point it’s not good and…
Casey: Yeah, I agree and then you could be all over the place and there’s no consistency.
Mike: It’s probably time for a break of it.
Casey: Yeah. All right, Mike. Well, I’m going to let you go and have a great evening on the West Coast.
Mike: Thank you very much, Casey. Thanks for having me and have a pleasant evening as well.
Casey: I will.
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