Expert Q&A with TraderNick
In our latest Expert Q&A series, we spoke to Nick Syiek (otherwise known as TraderNick) about the benefits of demo accounts, the similarities between business and trading, and just how important a trading plan is. Make sure to check out Nick's hugely popular YouTube channel!
This interview has been slightly edited for brevity and clarity. Alternatively, you can listen to the interview as a podcast on our YouTube channel here.
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So to start off, I was wondering if you could tell us a bit about how you began trading?
When I was a kid, my dad was interested in investing in stocks. I actually started out looking at the stock market and I was really interested in the idea of being in and out of companies and finding good deals on the stock market. I’ve kind of grown up around entrepreneurs so trading was something that kind of lined up with that.
It started out as a hobby, and slowly became more and more of a passion for me. I had a lot of failures like everybody else, but I definitely was able to, over time, learn a little bit here and there and started just digging around on YouTube and reading articles, and really just kind of fell in love with the whole thing.
My background is in computer science, I went to school for developing and software development, so I actually started getting serious with trading when I started using my degree to start building software and tools and analytical things to analyse the markets and that was where it went to a different level for me.
You spoke a little bit just now about some of the difficulties you faced when you first started out - could you talk a little bit more about the kinds of difficulties you had and how you overcame them?
Absolutely. I think one of the biggest things that myself and other people get tripped up on is the world of trading and investing - from the outside when you first get into it - is a way to make quick money in a short period of time. I think that for me was a big realisation: this is not something that you do for a month or two and then you start to make a bunch of money.
Again it goes back to software developing for me where I was able to test concepts and to do a lot of backtesting with software and test my strategies. It was a big realisation for me when I realised that making money in a short period of time is very unlikely. What I realised was that it was going to take capital to make money - just like any business - and the biggest struggle for me when I was starting was overcoming that concept of not trying to make a lot of money in a short period of time, but rather learning about risk management, learning about keeping things practical and building things slow and steady.
While we’re on the topic of starting out in trading, and being as realistic as possible and managing risk, what do you think are the essential elements of a good trading plan?
Number one for me is risk management. I think that even having a plan in the first place is sadly something that most traders never even get around to. I made a video at one point talking about creating plans and I asked people to comment below whether they had made a plan, and it was amazing to me that most people hadn’t. I’ve done polls on Instagram and said, hey do you actually have a trading plan written out? And a lot of people don’t.
It is, it’s crazy. And even if they do have it, they lack some of those pillars that we’re talking about. For me, the big ones are risk management, having a if-then statement - I’m a developer so I go back to those concepts: if this happens, then what am I going to do? Another big one, which is a little bit clichéd but very important, is the psychology of it all. Getting to a point where you’re comfortable executing, and you’re comfortable with the entrepreneurial side of trading.
What I mean by that is: trading is not like a standard job. When you go to a standard job, you show up and you get paid a linear amount, you get paid your paycheck and you go home and you make money just for doing your work. When you trade, some days you make money, some days you lose money, some weeks you don’t make money - and to somebody who is not entrepreneurial, it’s hard to comprehend that.
As an entrepreneur, I run a business, we do media content, we do work for brokers and we offer one of the largest online trading communities. There are a lot of similarities between starting a business and understanding the ebbs and flows and ups and downs of managing a business, and knowing that not every day you’re going to make money. A lot of people are not able to understand that and accept that.
Absolutely, and psychology plays a really big role; managing those anxieties is really important. In your experience, what are the main psychological things that can block a trader’s progress?
If you can’t sleep steady because of some position, your position is much too large. Everybody has emotions, we’re human beings, we’re not robots. We’re still human beings, and that money still means food on the table for our families, it’s still real. It’s impossible to completely detach, in my opinion, money from emotions.
But there are some things that you can do to not get yourself in trouble. Again, going back to having a plan that has ‘if-then’ statements, those are some practical ways to know what you’re doing before you get into those situations. If your positions are too large and you’re stressed about your trades, then that’s not good. People don’t work well knowing that they have so much stress on them - it’s harder to stick to a plan and to execute properly if you’re constantly worried and you’re constantly stressed.
The biggest things are greed and fear. If you’re greedy about trying to make a lot of money in a short period of time, that will almost certainly betray you. If you’re fearful all the time and you can’t stick to a plan because you lack confidence, then I think you’re shooting yourself in the foot from the get-go.
I think you set yourself up for success, and I think some of it definitely comes with time, with experience, and dealing with tough situations. I’ve been doing this for about five years now, so there have been good times, there have been bad times - and some of it is truly just experience. It’s something you can’t really learn beforehand - you have to experience the highs and lows yourself, and overcome them.
I think that most traders fail purely due to a lack of willpower; they don’t have the mental confidence, or the willingness to stick something out that is painful. That is what entrepreneurship and trading really is: it’s how much pain you can endure. It’s not how much money you can make, it’s how tough you are at dealing with tough situations.
You spoke about the importance of experiencing the highs and lows of trading, and I think a lot of traders would agree with you. I think a lot of people start off on demo accounts for that reason - so when do you think is a good time to move from a demo to a live account, and what would you say are the determining factors for that move?
That’s a great question - because it’s very valuable. A demo account allows you to learn without losing any money, and that’s amazing. And to your point, making that switch can be tricky because technically you are not getting the full effects of, like we talked about, money being a real thing.
A lot of times you get people saying that demo is worthless because you don’t have the emotions, but my approach to demo is if somebody really wants to succeed, and they want to practice on a demo, I would say that treating it like a real account is possible if you take it really seriously. You journal everything you’re doing, you put in the time to test your strategy - because although it’s not real money on the line, a demo account should feel like your time on the line, which is also valuable. So if you’re spending hours and hours backtesting concepts, it is costing you something, even if you don’t lose money, you’re losing your time - and for people who have full time jobs, that’s a lot of time commitment.
If you commit your time to a demo account, then you do have something on the line and that can really help you to see if you have two or three, months of results, and then that’s a pretty decent time to start slowly moving to a small, real account. Trading minimum size, and not going crazy, and seeing if you can adapt those same results to your real account.
So for traders looking for live accounts but without the capital to fund it themselves, they might turn to prop firms. When do you think that a trader should make the move to a trade a larger capital base, and what they should look for when researching funded accounts?
It’s probably the next step from what we just talked about. It’s going to be different person to person, but for me, the slower the better, because most traders lose money for a few years - if not for a lot longer than that - before they actually make any money. So rushing the process to me is not worth it. So when we talked about going from demo to live, and going slow and taking your time, when you get to a real account a lot of the time people have the same emotions. Going from a live account to more money, that’s a big step too, I think that you kind of have to repeat the process that we talked about initially, which is going slow.
I know we spoke a bit about risk management earlier. Should a new trader use a percentage amount to configure their risk or a fixed dollar amount per trade?
I think it comes down to risk management but also risk tolerance, it’s how much you want to see your money swing. Of course you can do what you want in the forex or stock market, but for me, I like the 1% rule. But I also like - if you have a larger amount of capital, being even more conservative, half a percent. When you’re working with larger amounts of money, you can still make decent money on making smaller percentage gains. So it kind of comes down to your tolerance, but the 1-2% rule is pretty standard and I think it’s a decent one - especially for newer traders working with lower capital.
For traders who are a little bit more experienced, strategy flipping can be pretty common. What’s the one thing traders should ascertain before they decide to change to a new strategy?
I think that before you even get to a point where you’re flipping between strategies - and I did that, so I’m speaking from personal experience - I think that strategy selection starts before you even trade. Again, my background in software meant I spent a lot of time testing concepts, testing strategies, testing momentum, market environments, currency pairs, charts, and stocks.
You have to choose something and then go test it. So before you even trade and flip strategies, you should be testing what you’re thinking about doing, and if it looks decent, then test it, and then if it doesn’t work after maybe two three months of testing, then maybe you could look into other things and repeat the process. No strategy is going to be perfect, so it’s taking the time to test, then apply, then evaluate, and then decide if you want to stick with it. If it returns well, then test it again and see how it does for another two months - just having the patience to do that I think will propel somebody new to this to a different level.
That ties into my next question, which was going to be about time value. You often hear traders saying you need to put the time in to become a consistently profitable trader - but what does this mean to you exactly and where should a trader be putting in the most time?
I think that’s going to be heavily reliant on the person. Because if you take a more data and analytical approach, like I did, then testing is 100% where I would invest my time. If you’re more of a person who loves to read financials and understand the underlying fundamentals, then it makes sense to do that. I think you have to experiment with everything when you’re a new trader, and figure out what the overall jargon of the industry is. Developing a passion early on is very important so you don’t quit just because it’s not easy.
A lot of traders will use signal services. Where do you think signal services play a role within the forex trading industry?
One of the services that my company offers is a way to follow what some of our analysts are doing, but it’s not necessarily just a ‘buy GBP/USD at this price’, it’s more: this is what so-and-so is doing, here’s why, here’s their chart rate, and they usually share an article or a write up with what they’re doing - not so much so that people can just blindly copy, but rather follow along with their methodology with their idea behind what they’re doing. And I think that’s the difference between a good service and a poor one: I think you gain a lot of value from understanding, and very little value from just copying somebody who could disband their service a month later. And anybody you follow should have some sort of track record, that’s super key.
What made you decide to start your channel, and what’s the most common question you’re asked by traders?
I started the channel when I was in college. I never really expected anybody to watch my videos, it was mostly just for me, documenting my thoughts along the way, and people started watching and emailing me about the software tools I’d developed. It slowly built into a bigger and bigger channel, and I hired analysts and editors.
The biggest question we get on average may be: where do I get in? And there’s so much more to an effective strategy than approach - it’s not just entry, but how do you exit a trade? How do you manage when this happens? Do you close out before the weekend? There’s so many different dynamics that a strategy encompasses, more than just when you get in. In fact, for a lot of our research, the entry point is important but not nearly as important as a long list of other things combined.