Developing trading consistency through Backtesting - Interview with Reima Huovinen

Home-Based Naked Trader with Walter Peters and Reima Huovinen

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Announcer: Sometimes, forex trading can be a wild and wooly place to be but forex trading doesn’t have to be the bad lands for your partner instead hunker down and bend your ear. You will be burning the breeze in no time. Here at the Truth About FX Podcast. 

Walter: Welcome! It’s Walter and today we have a trader who trades after my own, own heart. He has a very similar life to myself. Reima Huovinen is a stay-at-home trader. He has a style of trading that is quite unique as you’re going to find out today.

He’s also going to talk about the people who’ll affect your trading -- and these people are very critical to your success, and you probably haven’t really thought in depth about the effect that they may have on you. He’s also going to talk about how he built his confidence up and why he trades in such an unusual way. All of these in this session. So, welcome, Reima.

Reima: Hi, Walter. Thanks for having me here.

Walter: Reima, one of the interesting things, I suppose, about you is you -- and I sort of have a similar life, I think. We both have a lot of time. We both have kids to look after, although yours are a little bit older and the way we structure our day is basically based on the fact that we trade higher timeframes.

So, can you talk a little bit about your trading day and what it’s like? How you got to that point, I suppose. I suppose a little bit of background would be great on how you found trading and then why you’ve settled on this style of trading for yourself.

Reima: I agree that we share same kind of lifestyle. For me, it’s more like my wife, she got an expatriate assignment. We were living for a long time in Italy and then we moved to the Netherlands. I was there because I have an I.T. background so, I was thinking to have my own, you know, own business there - I.T. business there.

All of a sudden, in just after a year -- two years and a half -- she got a new assignment in Poland where we are living at the moment. Of course, we moved the whole family here in Poland and I started to realize that, “Hey, if this is going to happen in the future, every two or three years, we are moving in a new location. It will be very difficult to set-up the business and start to do things in I.T.” So, I’ve thought that, “Okay, I need plan B”, so something else that I can do from anywhere.

It’s not really tied to any location but kind of professional or a job that I can do from any country. I had already previously some interest in financial market so I have done some trading, mainly with stocks and it all started from there. Trying different things, failing and having some success.

I think it’s very similar to what other people are doing. Then, at some point, I landed on your forum. I started to talk with other people there and other traders and I started to talk with you. It all started from there.

Walter: You’ve decided that you were going to trade currencies. Did you, at some point, change your focus from indicator-based, technical analysis to more of a naked approach? How did that work?

Reima: Yeah. In my case, I have to say that I don’t remember that so well because, when you are trying to figure out your strategy or your system or whatever, you try so many different things and you don’t even remember what you have tried. I think that one really big inspiration for me was your book, Walter.

After I read that, I thought that, “Oh, okay. This is simple and it is really there.” When I realized that before I read that book, I think that I didn’t -- and I’m sure -- that I didn’t trade forex. I didn’t even consider because this is the thing that I knew but I never really study what does it mean, what does it mean to trade forex.

For me, trading was more like mainly stocks or options or some other things. So, I think that it was after I read the book, it was clear to me that, “Okay there is other things also in trading world.” And, also, the techniques you describe in the book, I like them a lot because I think that the most important thing was the simplicity. They were very simple and you could really understand them well so, from there I started to shift my focus more on forex.

Walter: You’ve also done a whole lot of backtesting, haven’t you? That’s something I know you, as a trader, have made that a priority for yourself. To spend the time back-testing and building up your confidence in your system and really fine-tuning your system.

Reima: Yeah. But, it’s a funny story and I think that I’m not here alone because, of course, then when I got involved and I joined the forum and started to exchange ideas. I started to follow your webinars and all talks, the content, what you have there in a forum. You had a lot of strategies, a lot of systems, those naked strategies that it’s like I bought forex tester but I was really struggling at the beginning.

I started but then I saw that, “Okay, this doesn’t work”. So, I just left it and on some point I was really thinking about Kangaroo Tails and Big Shadows, how you describe them in the book. In the forum, you have plenty of people who have tested them so, why shouldn’t I test them because it has been proven that they work.

I really didn’t understand, at the beginning, the importance of the back testing. It’s not only that you test exits and entries, there are so much more involved, that came with trial and error. After trial and error, I realized that, “Okay, I just can’t have a system if I don’t have the statistics from backtesting which I have done myself, not by somebody else”. So, I did a lot of backtesting.

Walter: Yeah. And that’s such a common thing, isn’t it? We think that the reason why you do backtesting is because you have to decide whether or not the system works. Really, the reason why you do manual backtesting if you’re a discretionary trader is because you want to make sure it works for you and you want to make sure that you have the confidence to withstand those tough times when you go through a drawdown.

Reima: Absolutely.

Walter: That’s really what it’s all about, isn’t it? Yeah, I mean, that’s it. That’s it.

Reima: Yeah. It’s really because there is always this discretionary part in your trading. This is something that you just can’t take from other trader because it’s a trader itself. I think that somebody else had said that but I fully agree with the trader who once said that,  “Okay, trader itself is a very important part of the system”.

So, it’s not really that even if it looks on the paper, you have mechanical entries and exits and whatever, but still there is some discretion. This part you can only develop when you do backtesting yourself. You just can’t rely on the data from somebody else’s backtesting.

Walter: Yeah. It just doesn’t work, does it? It’s always going to be the case that the trader who runs the stats through the computer and spits out the profit factor and the average winner and the average loser and the win rate and all that. That trader is in a totally different spot than the trader who’s gone through and taking 1200 in forex tester, has seen these trades unfold in different types of markets, and understands how the system works in different types of situations and knows what kind of market it makes money and what kind of market it won’t. That’s just the difference. It’s a different experience altogether.

Reima: Yeah, absolutely. Because, for me, what I realized when I start to do backtesting, I managed to get over those initial difficulties. I started to have, let’s say, the significant number of trades and I started to have some statistics. It was really that when I was doing backtesting, I realized that there are feelings involved. You have to think, you have your thought process you have to go through when you take the trade.

As it says, it’s a trading simulator. Maybe this is not really the same for everybody but, for my case, I was really having feelings, similar feelings, in forex tester that I’m having when I’m trading live. When I had three losers in a row, it felt bad. Even if I didn’t lose any money but still, I knew that, “Okay, this will make my statistics look burse.”

It’s like, still, there are these things involved also that you just can’t have if you don’t do them so if you don’t do the backtesting by yourself, you just can’t experience these things.

Walter: Yeah. For you, it’s interesting because you have a unique approach. As you say, your backtesting, sort of, mirrors your life trading for you and you feel the pain in the losers and that sort of thing, which is great. Sometimes, we treat it as a video game and losing trades and winning trades don’t really matter as much when we’re back testing. For you, your approach is a little bit unique because your trades take a long time to unfold, don’t they?

Reima: Yeah. But, this is the one thing that you just can’t simulate in, let’s say, in forex tester. So, it’s like we could trade, it can take like three months or four months or even longer to, let’s say, to fold out. But, in forex tester, it’s just a matter of a couple of space per clicks and you’re done.

Of course, there are some things that you can’t simulate. This is really something that I think that, which is then, when you go from forex tester and you start to do the demo trading or you start to do some small, mini account trading. Then, this aspect is something that you can leave only with, let’s say, with real trading and which cannot be simulated in forex tester which is, of course, also one thing that you just have to take in account. So, it’s just doesn’t happen so fast in the real life how it happens in forex tester.

Walter: Yeah. So, how do you deal with that? How do you develop your patience as a trader knowing that with this daily and weekly chart trades are going to take time before really you can do anything?

Even say, taking a loss before it’ll hit your stop loss, that’ll often take days. So, how do you decide what to do with yourself when you have all this time? It must be tempting to go in there and take more trades or over-manage the trades or things like that. So, how do you deal with that?

Reima: Let’s say that it’s something that you can always be better at. It’s still a work in progress also for me. I think that my approach to trading when it comes to these really long term, like weekly’s and daily’s also, is slightly because I see them -- especially, weekly’s. It’s a little bit difficult to explain but I see them almost like a short term investment.

It’s like, “Okay, so I see a good setup” and I think that okay, this setup has a potential to give me a nice return so I place my bet there and then it’s okay because also when you do investing. You always have quite a long time period, like years or whatever. This is something similar applied in a trading world.

Of course, the timeframes are much shorter but, for somebody to keep open a trade for two months, it may sound strange. For me, it’s not. When I enter the trade, I think that, “Okay, either this will work out nicely because I try to trail my exit to maximize the profit”. Or, “Okay, if it doesn’t work, then I’m not that interested to have a small profit”.

For me, it’s a little bit more like -- I would not say all or nothing -- but to have a nice profit or if it comes back, after being up like two hundred pips and stops me out, that’s fine. It’s just it didn’t broke out as I wished. I don’t feel so upset giving back too much because my ultimate target was something else.

Walter: The way that you setup your system, after extensive testing, is to take advantage of the big moves, right?

Reima: Yeah, it’s trend. I try to jump in a long trends in the early phase. Of course, you have to use discretion because sometimes when you only have one leg down and then you have a retracement and then it looks that it gives you another leg down so it’s not really a clear trend yet.

Then you check the overall price context, you try to understand that, “Okay, could this be the beginning of the new downtrend?” Of course, the earlier you get in, the more profit you can get from that. That’s basically my trading style.

I try to benefit from those very long, long term moves which the market can go in a one direction for like, months, or 6 months or even a year. Sometimes, it happens. It hasn’t happen for me yet but eventually it will, I think.

Walter: Yeah. And, you’ve seen the data in forex tester that you occasionally get those. I mean, when you use a trailing stop, you give back some profit in the end. You’re never going to get the whole move, but the trade-off, obviously, is that when there is a huge move, you will get a big chunk of that huge moves so, you just have to catch a few of those and that makes for a really nice year.

Reima: I think that’s exactly so. I think it’s because my target is to get, catch those big fishies, if you use the analogy to fishing. It’s like, sometimes you just lose your bite so it means that it’s just,take a small lost. But, I’m not really keen to have those small fishies so it’s more like, to those big ones I’m interested in. This is really my approach to have a steady, constant growth of my account. I’m not there for quick wins. No.

Walter: Yeah. And so, talk about this because this is the one thing that people are going to say, people listening to this are probably thinking, “You know, that sounds great that it works for you, Reima, but I just couldn’t. Even if I could sit through these trades and how long they take to unfold and holding my trades over the weekend and all those things that come with this, I would get enough trades. I’m not going to get enough trades if I trade this way.” So, what do you say to people who say that?

Reima: I think with that the number of trades, there is no exact answer on how many trades you should have. I don’t know if more trades lead automatically to more money. I don’t think so. For my trading style, I don’t need lot of trades because if I make like 20, 30% per year, that means I may take like two trades per month or something like that. It’s like when I am able to maintain this kind of performance for next 10 years, I can’t be happy with my, let’s say, with my return.

So, it’s like I’ve put it always in a very long, long term perspective and in that perspective. It is really my trading style that I’m not keen to have many trades. I prefer to have not so many of them because I don’t want to manage them. So, it’s like I don’t have to do many trades to manage. As I said, if I can get the returns that I’m happy with, let’s say, not so many trades, I don’t see any reason why should I take more of them.

Walter: Yeah, right. You can have multiple markets that you’re watching. You have many markets that you can follow. You don’t have to simply stick to the major pairs or whatever. Do you also look at CFTs? Is that something that you also trade or you just trade the currency pairs?

Reima: Yeah. Actually, I watch almost everything. I use Oanda as a broker and it just Oanda UK, and they have just -- I don’t know how many instruments they have but it’s like hundred. There are so many of them. They are like T-bills -- treasury bills -- from US and everything.

You have NDCs and so, basically, I watch lot of markets. I watch lot of markets because my idea is that if a pattern works on a -- because it’s a technical pattern so there is really no reason why it should not work on any market. So, this is my way of thinking, my philosophy why it’s like one pattern. When you have tested it, then you know how to trade and can’t be applied to multiple instruments.

Walter: And you have your data on multiple markets, obviously, from your back testing as well.

Reima: Yeah. I don’t have everything but I have tested it really in many, many, many markets. So, it’s like, forex tester when they have this standard or VIP subscription where you can have lot of different instruments. I have gone through many, many, many of them.

Walter: Yeah. You’ll have to show us at the event, at the conference, how you’re able to watch all these markets and yet not spend that much time in front of the screen because I know you’re pretty clever about the way you approach that. It would interesting to hear. I hear do that.

Reima: Yeah. Actually, this is something that I did just recently that also, keeps me away from always trading, from not taking the trades where, actually, there is no trade. But, you know, not taking those, I would say those setups which, sometimes, can be very tempting.

Walter: Why do you think traders overtrade? I have my own theories but I’m just curious because you’ve adopted an approach that’s clearly designed to avoid overtrading. Why is it that it’s so tempting for most traders or many traders to overtrade?

Reima: There are many reasons for that but I would guess -- this is only a guess -- that one of the reasons can be that, for some reason, the psychology of the people is designed in a way that people think that more trades means more money. If I’m not in the market, they think that, “Okay, if I’m not taking a clear… If I’m not taking a signal, I’m losing money.”

If I’m losing a trade, it’s like losing money. People, I think that they are afraid losing, missing opportunities. This is then when they are trying not to miss more opportunity. They go to see their charts and maybe they don’t miss an opportunity but then, they will see another one which is not really that good but it’s tempting. They take that one and then it leads to taking also that signal which is not that clear. I think that this is how it works. I don’t know, maybe this is one of the reasons.

Walter: Yeah. I think people feel like they need to be doing things and they feel like the more trades they make, the more money they’ll make, which is not. The data that I’ve seen doesn’t support that. In most cases, traders lose money and pay more commissions if they take more trades but that’s just what I’ve seen so, it may just be me.

Reima: Yeah.

Walter: Yeah, that’s interesting.

Reima: Yeah. I think I would agree because people should rely on their statistics. If their statistics said that they don’t have to take so many trades to achieve their objectives,  they should stick on those and not to start to have weird ideas that, “Okay. Yeah, I have to be there, I have to trade. I have to trade”. It doesn’t work in that way so I think that it doesn’t lead to anything, do nothing good.

Walter: Yeah. When you’re doing your backtesting, what is your process? How do you go through your backtesting? What are the numbers that you’re paying attention to? Is it win rate? The average win? How do you validate a system when you go through your testing phase? How does that work for you?

Reima: Yeah. It’s very similar to what other people are doing. Of course, also here when you start to do things and I think it’s very important, especially, when you do the backtesting because I think that, by far, too much people are concentrating only on some specific kind of information they get from backtesting.

So, like, win rate. I think that the win rate is highly overrated so it’s like you can use, have a system less than 50 % win rate, but still to make a lot of money out of that system. I think it’s nothing different from what the other people are doing. When I have done my back testing, I just want to see that I have a system that has the positive expectancy.

Mainly, that one is important. In my case, because I’m trying to catch those big trends naturally that leads to that, I have a lower win rate but then, I have a bigger risk reward so my average winner is far much bigger than the loser.

One thing that is sure is that I don’t pay so much attention anymore to win rate because, for my trading style, it’s not really the most important parameter in my system. To have a confidence that my system have positive expectancy so I can expect that in the long run, I can make money out of that and, of course, to have some idea to possible losing streaks.

How many losers you will have in a row, maximum drawdown? There are very good calculators online for that one also have that numbers. I think that these are the numbers that then you can use to build your confidence or a system. You say that, “Okay in the long run, I can expect that I’m not going to blow up my account in that system and I will do some money.”

Walter: Yeah. Which mistakes do you think a lot of traders end up making when they’re going through the backtesting process? You’ve mentioned one about focusing in on the win rate. What are some of the other things that you think that traders have to be wary of when they go through the backtesting process?

Reima: I can talk what was for me. It was not really an error but … I’m structuring a lot you know, because I don’t know how many times I decided that, “Okay, I know that I have to do this but I just gave up.” I gave up too early so, I didn’t give enough time to test session, or whatever.

It’s like if I decided that, “Okay, I want to test this pattern”. I was far, far too impatient to wait for enough trades there in a way that it has kind of of statistical value. So, I was like after 30, 40 trades, if I saw that in forex tester I don’t have the dollar amount there was not peaking up. I just gave up, said that okay.

I did my calculations, I projected that value to the future so if I do monthly this amount of money, then my yearly returns will be this. Then I’d say, “You know, this is not good enough so I have to find something else”.

So, my advice to anybody who is doing backtesting is that, really, just write your rules and then go for it, don’t give up. It’s like you have to have hundreds of trades before you start to understand if one system works or not. For me, that was really by far the biggest issue at the beginning and when I overcame that, then it became much easier.

Walter: Yeah, and people make that mistake. They’ll get really excited because maybe they just locked into a win streak or, the other thing is, they might not risk the right amount. The constant percentage on each trade, so that will mess up your stats too because some of your winners might be bigger positions. Some of your losers might be smaller positions or vise versa.

So, it’s tricky because you could be trading a trend-following system or some system that has a trailing exit during a strong trend or not. So, like, for example with you, when you used this trailing exit, you are going to take advantage of those markets that really move.  So, if you just back tested during a period when the markets are very choppy and not really going very far, you might just give up and say, “Well, this is no good.”

Reima: Yeah, that’s very good point. That’s excellent point because it’s just, you have to go through different market conditions, of course, because that’s how the real markets are. You can do that only if you’ve got, if you test enough data.

So, you go through like,10 years of data and that gives you, you know, enough information about your system but also gives you the benefit that, “Okay, during this test, you went through different market conditions and that will happen also when you traded live.”

It gives you even more confidence that, okay, even maybe there were like choppy conditions that the market was not trending, I was able to survive with my system, throughout that period.

Walter: Yeah, exactly. And, what’s interesting to me is that you’re stuck with your back testing. It was something that you felt in the beginning, early. Early on, you felt like, “You know, why should I do this?” Everybody knows whether a system works or not, you can just look up the stats and see how it works for other people. “Why do I have to do this?”

In the end, you took an approach that was quite disciplined and I think, to me, in some ways that was made all the difference for you.

Reima: Yeah. Backtesting is so much more than only to have your statistics. It really gives you that confidence. For me, I have to say that you’re part of working on psychology trading. Psychology, of course, back testing, was really the game-changer,

That was really when I started to understand, “Okay, this is how I should do things.” Because, also when you do the backtesting, you train yourself to recognize the patterns. You train yourself to recognize the different market conditions.

I do running, run marathons, so it’s not very different when I train for the marathon but it’s like doing backtesting, you can see some similarities. You are training for your life trading because you train yourself to see those setups and recognize the different kind of market conditions.

Walter:   But, when do you get the trader’s high? Like, you get the runner’s high? How you get the runner’s high from running a marathon so, when do you get the trader’s high?

Reima: Yeah, I’m still waiting for that. Let’s hope that eventually it will come. Trader’s high would be nice to have but I have to say that there is a huge difference between now and before I had done all my backtesting in my confidence and in a way I trade and in a way I feel about the trades.

They are completely two different things. It’s really the keyword here, it’s the confidence. You just can’t  have that confidence before you really have all the data from, from your back testing and not from somebody else.

Walter: Right. Yeah, that’s interesting. So, let’s talk a little bit about how your day goes right now. I know you’re going to share at the conference, you’ll share your system and all that and what you’ve come up with and how you trade the daily and weekly charts but give us an overview of what’s it like for you, living in Europe. What is your schedule like in terms of trading these higher time frame charts?

Reima: Yeah. Actually, I’m a home parent so I don’t have duties. The only thing in the morning, I just drop kids to school and normally what I do just before I open my computer and start to see, maybe check something from the charts, I normally do meditation.

This is the other thing that I have discovered during this journey. Psychological aspects and meditation. I started that almost a year ago and now I tried to do it at least once in a day and that’s normally in the morning. I meditate for 30 minutes to get nice, calm, mindset.

In the morning, I like to check if there is something interesting. I do take a look on charts -- not all of them, only some of them. But, basically, what I actually do, which is a little bit different to maybe what other people are seeing, at least in the forum are doing.

Normally, what I do, I check the charts for the new trades in the evening my time, which is actually, just after the New York close. Sometimes, it may be that if there is something interesting, in daily charts, especially.. But of course, also on Monday, on Tuesday, for weekly charts, I may place my trades before I go to sleep.

It’s like quite opposite what many people are doing. They’ll wait for Asian session to close before placing the trades. Sometimes, I do it before I go to sleep. It’s not set and forget because I have to trail my exit. During the daytime, I’m not managing these trades in any way. I’m not checking charts in any way. I’m doing some other trading activities, doing some testing, and demo trading, on lower time frames

When it comes to these trades, weekly and daily charts, they are just once in a day and I check them only once in a day. Normally, it’s like in the morning I check them, how they have been involving and then if there are any new trades to place, I place them in the evening.

Walter: Right. So, you spend a lot of time setting things up and then very little time managing it?

Reima: Of course, you have to trail your exit but you have a specific rules for that. There is no really reason why should I go to see those trades during the daytime. I use it for other things. During the daytime, I do completely different things. Some of them, they are related to trading. As I said, I’m testing some other systems, or other things but those trades once they’ve been triggered, I just left them.

I check them once in a day to see that if I have to manage to exit but that’s it. I don’t pay attention to news, I just can’t avoid them because it’s like if you follow a little bit news in the world, you just can’t avoid them. I try to not to think about them in a way that, “Okay, how these news now impact my trade?”. So, I try to avoid that as much as possible. I try to keep away from the news.

Walter: Yeah. Do you think that if you use the information from the news in your trading? What

kind of effects would it have on you trading?

Reima: I don’t know. I don’t have an idea. I think honestly that if I don’t kind of take these news events which move the market in account in my back testing, I just can’t take them in account. Also, in my live trading.

Maybe what I’m trying to say here is that I try to be as pure as technical trader can be. So, it’s like a pure technical trading without considering the news especially when you are trend trading and you see a trend. So, it’s like, you see a down and up trend, the fundamentals or news, they are already, let’s say, in that price action.

You can see that there must be a fundamental reason or something that drives market down or up so it’s not really that even if you just trade technicals that you ignore completely the fundamentals because you can read them from the charts. This is how I see it.

Walter: Yeah, exactly. I know that. You’re going to talk a bit about your strategy at the event but, just thinking about your strategy which is quite very simple, do you ever entertain thoughts that it may, at sometime, just breakdown and stop working?

In another way of asking this question is would there ever be something that would happen to your results or something, I don’t know, outside of your trading results? Some reason why you would say, “You know what, this is just isn’t working anymore. It’s not going to work anymore.” Or, do you think that that’s highly unlikely?

Reima: To be honest, never thought about that kind of scenario so what I can say here is that, “Okay, if we are talking about individual black swans events, everything can happen”. This is only a limited event that can blow up your account or whatever. In the long run, because if I have tested my system, I think that the data starts from 2003 or something like over 15 years of data and I see that, “Okay, it works”.

So, it has worked out 15 years, this is the information that I have available. I don’t have any proof. There is nothing that prove in contrary that it should not work for next 15 years, or next 20 years. I’m not saying that it’s not possible. It is possible that the forex market, for some reason, maybe there will be regulations or whatever, it changes completely.

For some reason, the market, they don’t trend anymore so there are no trends and I really depend on trends. My whole strategy depends on trends in the market. If something like that happens, of course, it’s like my system won’t work anymore. If I think about that with the information I have available now and that information come from my back testing, I just don’t see any reasons to be worry about that kind of scenario.

Walter: Yeah. Even though every five or six years, there’s always an article in the financial newspapers and magazines about how the trend following funds are no longer doing very well. This is the end of trend following and trend following doesn’t work anymore, and there’s too many funds that are using algorithm at trend following so it’s not going to work and blah, blah, blah. And, yet, every time those come out, it’s usually a pretty good sign that the trend following funds are about to have a really good year.

Reima: Yeah, it’s interesting. Now I can define myself as a trend trader. I’m listening in some podcast which are specific for trend trading and reading a lot of book about trend trading and I have seen those kind of news also.

There are a lot of people who are saying that trend trading is the most difficult way to make money from. You have to be good so it’s like, “okay I agree”. They can have their opinions but it’s just seems to work quite well for me so I just stick to that until something else is proven.

If all of a sudden, I see that my losing streaks starts to be too long or something else happens then, I may reconsider my strategy part. Today, I don’t see any reasons why it should not work for another 15 years, after tha I can retire. That’s enough for me.

Walter: Yeah, exactly. That’s so funny. I mean, we really just want the markets to go up or markets to go down. As long as you just don’t sit there and flatline and everything’s good, yeah.

Reima: Yeah, that’s exactly the case. Trading those higher time frames, weeklies and dailies, you really need some nice trends. If you go down to four-hour and one-hour charts, of course, you see trends everyday.

You can have a trend that goes on like two days but, if you go up in dailies and weeklies, they are not trends there. You really need some fundamental moves to get those big winners with my strategy.

Walter: Yeah, absolutely. It’s been really interesting seeing your approach and sharing your approach with the listeners. I guess, I’d like to know if there’s anything else that you feel like you want to make sure that you get these across to people before the event. Is there something else that you feel is important to touch on before we close?

Reima: Yeah. I think and again here, I can speak only from my own experience. The one big thing was apart from backtesting and all that thing that we’ve talked about, the other really, really important aspect in trading which is I think it’s really under estimated, under evaluated trading psychology.

There are so many things in that that you have to take in account. In my case, it was something that it changed a lot. It changed a lot to have that in place and that was, really, after I joined the forum and I started to have some discussions also with you.

To give you an example, it’s like people around you. In my case, it’s my wife and my kids, family. If they are not really supporting your idea, your beliefs that this will be your new job and this is how you will make money. I honestly believe that it has a big impact to your success.

If they are not with you, it can be difficult to make things work.This is maybe something that people who are around you, their opinion may have a quite big impact to your results even if you don’t realize that.

Walter: Yeah. I agree and it’s not always the case. You have the support of the nuclear family that you have that’s helping you out with this because. Even thinking about just everyday, think about the people who go to the doctor and the doctor says, “Op. Sorry, you got this horrible disease and you’ve got six months to live.” I mean, that should be illegal for the doctor to tell you that.

Even if the doctor believes that that should be illegal because it’s the same thing. I mean, with your trading, if your wife or your kids or your parents or whoever, your brothers, thinks that you’re crazy for trying to make this work and saying that trading will never work and trading’s a losing game and this and that. What’s that going to do for you?

You can say to yourself, “Well, I’m going to prove him wrong” or, “I’m going to prove them wrong. I’m going to show you guys”. But, in the end it’s so difficult when you have so many people dragging you down and not believing you.

It’s the same thing as your doctors telling you you’ve got six months to live. I know the doctors don’t think of it that way but what they’re doing by setting that expectation for the patient, it’s essentially a death sentence. It’s the same thing with your trading.

If you are trading in a situation where people around you are not helping you and they don’t believe in it, then either you need to find new people around you or just give up, or just trading’s not for you because it really is important.

Reima: Absolutely. What you said is exactly what I have experienced. Of course, I can then talk about this later in that conference. But, really, what this situation does when people around you are not supporting your idea of trading and you know that you will make it, that leads automatically to the situation where you put yourself, “I have to” mode.

“So, I have to prove them that I can do it. I will let them know at the end of the year that I have done so much money and I have to.. And I have to” When you’ve put yourself in that “I have to” mode, you create a lot of pressure. You start to think that, “Okay, now. By end of next month or by end of this year, this must work”.

In  my case, that was a big problem. That was really a big problem because I started to set this goals to myself. That okay, because she said now that it’s -- she said something -- now I will prove her that she’s wrong and I will have this amount of money by end of the summer.

You can imagine what happens then when you have this goal that, “Okay, I have to do this  amount of money now to prove that she’s wrong”. It’s not good for your psychology because then it leads to that okay, you have to trade, you have to. You overtrade and there are a lot of problems that come with that kind of a situation.

So, it’s maybe something that people doesn’t understand. People, really, they don’t understand that how important it is that people around you, they are really supporting. The forums like yours is such just a great place because the people are so nice there. But of course, home is… Somebody’s saying everyday that, “This is not the job. I don’t know anybody who has ever done money from trading”. It can and it will have impact to your success, your eventual success.

Walter: Yeah, there’s no way around it. It’s a really good point. That’s an important piece of the puzzle.

Reima: Yeah. I have lived through that situation so I really know how it was and now, really, I have to say that the situation is completely kind of, you know, under control and really happy how it is now. When I started, it’s a completely different thing. At that time, when I was living in that situation, I didn’t understand how it can impact to my results, how it can impact to my trading. And now, kind of hindsight seeing backwards, I realized that “Okay, that was the problem”.

Walter: Yeah, exactly. Well, this has been really great stuff, Reima. I appreciate it. Looking forward to seeing you at the conference and seeing what you share with everyone. I really appreciate your time. We will see you at the conference.

Reima: Okay. Thanks, Walter. It is great to be here.

Walter: See you soon. Bye.
Reima: See you. Bye.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.