The response to Mr. Cho’s interview has been amazing. We have received a lot of messages and follow up questions. Most people were amazed at the $65,000 loss he incurred on his first trade. People wanted to know more of the details surrounding that trade and his mindset during and after. As a result we reached back out to Mr. Cho, who was gracious enough to extend us additional time and answer those questions.
If you have not read the first interview with Mr. Cho you can do so by clicking HERE.
Drink Forex - Thank you for giving us more time and answering some of the questions people have had since we initially posted your interview. The response has been amazing.
B.I Cho - You are welcome. Tell me, what questions did people have?
Drink Forex - Can you explain the lead up to putting on the wheat trade?
B.I Cho - Well, back then we really didn’t have any charts or quotes. We would have to call the broker to place orders and get quotes. The one thing we did have at my firm was a Chart Book from Moody’s. Each month Moody’s would send us a book that contained old charts. The book used to cost $1000 a month! We could then draw our indicators manually on those charts and figure out the trades we were going to take. But, on the wheat trade I didn’t use those charts or anything. My mindset was that I just wanted to make money. No game plan, no analysis.
So, I called my broker and said buy 5 Wheat. The position didn’t initially go against me all that much. The first couple of days it just floated around where I was up a little, then it went minus for a couple of days. Then for three days straight it locked limit down. I was unable to get out of the position and just had to wait until it stopped going limit. By the time it was done I had lost $65,000 USD.
Drink Forex - What were you feeling during that time?
B.I Cho - I was so fucking scared. I was feeling like oh shit oh shit. It is one of those things where it doesn’t feel real. It is like you can’t believe you have just lost so much money. Similar feeling to when you are playing large in Seven Eleven and the snake eyes are watching you. I was only 21 years old at the time and $65,000 was a lot of money to me.
Drink Forex - How did you recover from such a large loser so early on in your career?
B.I Cho - It was not easy. It took me 5 years to get back to being comfortable trading. For the next several years I just tried to be + or – 0. I didn’t really try to make money during that time, just tried to get more comfortable with the markets. It was a difficult time.
Drink Forex - Another question we received was what time frames do you look at?
B.I Cho - I have tested a lot of variations on time frames. I have found that doing my analysis on 4 hour and 1 day charts works best for my trading style. I do all of my analysis on those time frames and then use a 1,3 or 9 minute chart to find my exact entry and exit. Using the smaller time frames allows me to get the best possible price.
Drink Forex - What is the average length of your trades?
B.I Cho - It is tough to give you an average. Sometimes it is 1 week, sometimes it is 9 months. I was in a wheat trade about 5 years ago for over 9 months. But most of my swing trades, which is 60-70% of my trading lasts about 1-2 weeks though.
Drink Forex - Jumping back to risk management and mind set, do you ever let a winning trade turn into a losing trade?
B.I Cho - Mostly I put my stop loss at break even in my mind once my trade is in the positive. I don’t ever place stop losses on the platform though. But, if I am wrong I have no issue cutting a position and going the other way. It just all depends on support and resistance. I know when I am wrong. I am a firm believer that every day is a new day in trading. Just because I am a swing and position trader doesn’t mean I don’t look at the markets daily. Every morning I look at the charts for 60-90 minutes during my morning shit and over coffee and a cigarette. Then I decide what type of positions I am going to do and if I need to change anything with my current positions.
When I open positions against the market trend I typically will start with Options to limit the downside risk. When the market starts going in my direction I then start working Futures too. In case the market is going against me I let my options run out and open mostly futures in the other direction. I don’t like to take a loss on trades...so most trading decisions can turn into a win trade too by working with this strategy. Currently, I believed Oil would have a reversal. So, I bought 5 puts when it was trading around 50.80. I knew it could have went higher, but I had a feeling it would turn around.
Drink Forex - What Futures markets do you trade?
B.I Cho - I mostly trade CME and CBOT products for Futures. And trade FX and CFDs during the Asian hours. FX and CFDs are new to me though. I only started 5 years ago because the Futures market changed. It was becoming very difficult. I wasn’t a fan of FX and CFDs for a long time, but I had to adjust.
Drink Forex - We have talked a lot about a bad trade you have done, do you remember any good trades?
B.I Cho - Well… I remember one good trade, but it was more lucky than good. I was a Futures broker at the time. We had a female customer who didn’t really know anything about the market, she deposited $200,000 with us. Her parents had just passed away and she received a large inheritance. It was 1994 or 95, I can’t remember the exact year. But, there was a coffee crisis going on in South America. There were mushrooms or worms growing on the coffee plants and most of the beans were destroyed. As a result coffee prices were running straight up. So this client deposited on a Friday and typically we were instructed to not put positions on during Friday’s session, and certainly not to hold positions over the weekend. Well my boss told me to buy 20 Coffee contracts, but make sure I closed them before the weekend. So, I bought 20 Coffee contacts pretty early in the day. I got busy and on Fridays we would head out for a beer and dinner around 3pm.
We headed out and were drinking and having a good time. Early evening after some cups of beer I realized I did not close the position. I jumped in a cab and rushed back to the office. But, by the time I got there the market had closed. It closed at 8:15pm my time. In the Softs and Grains markets, prices can move very quickly. The whole weekend I was shaking and scared because it was my fault that I didn’t close the position. I thought I was going to get fired. Come Monday, the markets opened and went against me. Now I really couldn’t tell my boss because we were in a losing trade, so I waited. Late during Monday’s session the market started to rally, it continued into Tuesday and Wednesday and the rest of the week. Finally, I went and told my boss about the Coffee trade and how I kept the position on during the weekend. But, the good news was the client now had $1.1 million in her trading account. My boss was so happy and I received a huge bonus on that trade. By the end of the week though the client closed her account. She didn’t know about the mistake, but she realized she was lucky and that the market could have easily went that far against her, and she would have lost everything.
Drink Forex - Yeah, I would say that turned out well for her though.
B.I Cho - We were all lucky, but it was a very memorable experience.