Meet the Experts: Rothenstein Trading

Rothenstein Trading has been working on his current system for 18 weeks on the platform. Though the trading system is still “fresh”, the performance looks promising while the ranking is rising steadily higher. Rothenstein Trading has generated a 9% annualized Return on Investment (ROI) and 690.8 pips Maximum DD. The overall NME is currently at $340. He is an active member of our forum where he gives frequent updates. As mentioned in his strategy description, his system is a combination of swing and day trading strategies while he is trying to maintain the drawdown at reasonable levels.

Let’s meet him and see what he has to say about his engagement with ZuluTrade.

  • Tell us about your trading background and how you got started trading

When I went to school, in the 80th, I had a teacher, who introduced us to the markets and I was fascinated by the very concept, to provide supply/ demand and to get paid for it. And of course, of the idea, to make money out of thin air, without employees, academic grades, shop, and machinery. From that time on, I formed opinions about stocks and tradable instruments like oil and gold. But that was the time before the internet and trading was a big boys game, due to high margins and incredible high fees. When I bought my first stock, I went to my local bank; they filled out a large form and called me the next day, to confirm the execution of my order. In 1999, I got internet access and discovered online trading, at the top of the wildly boiling dot-com bubble. Soon I got so hooked, that I decided to make trading my profession. That means, not to find the next hot stock and get rich, but to acquire the tools, to make trading the source of constant income. So I started out, trying to trade stocks by the rules of classical technical analysis and realized soon, that this won´t be enough, to be successful. I began reading everything about trading, that I could get my hands on, from the very early classics to the latest neuronal strategy. Simultaneously I was trading, on a frequent basis, trying to apply the read theory to practice. I switched from stocks to futures, to warrants and back. I applied indicators, I developed indicators, I built fully automatic trading systems. After some years I stopped losing money and sometime later, I began making constant profits. By then, I had specialized in trading the big American and European stock indices via futures. The liquidity and strong trends I found here, were just the best trading environment, I could imagine. That was even topped, when I made my first acquaintance with FOREX in the early 2000s, which became later my exclusive field of day trading. After testing so many approaches, I have come to using the purest price action. No information can beat the latest price. You will see only clean candles on my charts and very rarely a trend line. Maybe that’s where you end, after almost twenty years of chart watching…

  • When did you first discover ZuluTrade? What was it about ZuluTrade that got your interest?

I can´t remember, when I found ZuluTrade, it must be some years ago.
I was always fascinated like a child, by the markets and started early to spread the word of this miraculous, wealth-creating thing among my folks. But soon I realized that not everybody can share my affection. Trading is not for everyone like fishing or race car driving is not. But I always thought, how nice it would be if I could share the success, I have in trading, with people not common with trading. That’s where Zulu comes into play, as it offers to people, who know nothing about trading, to get the performance, of someone who dedicates his life to it. I think that´s like magic! Maybe it sounds weird, but I like the idea, that someone profits from my work, besides me, as trading by definition, is very self-centered and can be kind of lonesome. There is also money involved, but that is not my driver. As it never should be, when you seek true passion. 😉

  • Give us the basic structure of your strategy.

I can´t say, that I have one specific strategy. I study the current state of the market, watch charts 12-14 hours every day. Based on my “feel” for the actual situation, I decide, what approach would work best in the market given. Like a surgeon, who has found out, how to apply his knowledge to the special case, he finds on his table today.

All things I do, come from the school of price action and are based on simple things like support and resistance, or formations from classical technical analysis.
But I have to say, that the way I use them is kind of special and personally altered. It has changed over and over again, during the decades I use them.
My goal is to trade daily, so I have to find setups on a constant basis, in merely any market, as long as it moves.
A big part, influencing my trades, is empathy for the other market participants. I try to figure out, how they feel about their position, where they would enter, or exit.
I don´t trade fixed positions with fixed entry and exit, but often I keep positions longer, widen and narrow them, as price develops.

  • What’s your trade management approach – taking profit and exits, trade size and account- level risk management?

I´d describe my risk management as quite conservative: I use 5:1 to 25:1 leverage and the total risk of a position is in the low, single digit, percent area. The key element of market is surprise and to go beyond wildest predictions. So I don´t believe in stop-losses and take-profits, I read with my crystal ball from the charts. I follow a setup and manage what happens, but always within my risk management rules.

  • How can your followers get the best by your strategy?

My aim is to reach a performance, which is way above stock markets. I focus on constant gains, with little drawdowns. So following me should be a good idea, to put the risk capital share, in an otherwise conservative portfolio, to work. Or if you want to diversify into forex. To enable a lot of people to follow me, I start with a minimum equity of 800 € and chose lot size 1000 K (1 micro lot). Every multiple of that will do too! For best results, you should set the position limit to “Max.

  • How do you feel when you have a good and a bad trade? How are you dealing with this?

Let’s first define what I regard as “good or bad”. Losing trades are not necessarily “bad”, as losing is a substantial part of the game. Even when technical analysis (misunderstood) and computerized trading create an illusion of “ever winning”. I define “good” and “bad” as “well” and “badly” played. Trading is about sophisticated and rule-based behavior in an environment, characterized by uncertainty. Comparable to a surgeon or fighter pilot. Although both professions can be confronted with bad, even deadly results, we can judge their actions by the level of professionalism they showed. That’s a kind of mark for me: What would I think if my trade would be featured in a trading book? Did this guy master the challenge? And to what degree? From there on, you have criteria like “good” and “bad” And I can judge, what was good or bad there, from an objective point of view. But yes, I feel great, when I can watch a closed trade from every angle and see that I did the right things in the situation given. And I can feel bad when I played a trade badly. An example comes to mind. I had a long position in AUDUSD, which I scaled in and out, without anything really happening. After ten hours of boredom, I felt really tired and exhausted and closed it for a very small loss. Immediately afterwards, you guessed it, that pair went straight up 40 pips. What made me really mad, over the lost day and I could call this position management “bad”. But I´m only human, which has many advantages and I must be fresh and motivated tomorrow, to keep on trading.

  • Finally, if you could give some advice for the aspiring traders out there, what would it be?

That depends on what kind of trader they want to be. If they are someone who buys an EA, which makes them a nice profit constantly, there is not much to say, except “Prepare for power outages!”
When they are people who want to become real traders, with a trader´s mindset, I´d say, that the very first task is to forget, that trading is about money. It sounds absurd, but when you focus on the money aspect, I´m sure, you won´t make it, or only after enduring extensive hardship. The way to forget about the money involved is, to trade ridiculously small. With an account size, you could lose monthly, without any harm.
You will find, that, no matter what great things you accomplished in your life, the markets are a different challenge, because nothing you learned, works here. So be ready to deconstruct yourself and your beliefs, to find a deeper truth, a clearer view of the world.
My recommended reading is “ Thinking, Fast and Slow”, by Daniel Kahnemann, followed by “Incerto”, by Nassim Nicholas Taleb.

Enjoy the journey!

That was all from Rothenstein Trading. More Traders’ Interviews to follow…Stay Tuned!