Nick McDonald: Kiwi trader Tim Rea

This week in a new series of interviews with Kiwi Traders, Nick McDonald speaks to Tim Rea to gain some insights into his life as a trader.

Tell us a little bit about yourself

I live in the Nelson area which is a great place for weather and lifestyle. While I used to be a US Registered Commodity Trading Advisor and had a client base overseas, these days I purely trade my own private trading company accounts.

What attracted you to trading in the first place?

As a businessman I really liked aspects which are unlike most traditional business, such as being independent from the state of the economy, being able to profit from a falling market just like a rising one, the ability to trade from almost anywhere and the ease of scaling the business up or down.

Please give us a glimpse into your daily routine and life as a trader?

I typically start the day in our morning which is near the end of the US trading day, looking at what trades I have done and doing a P&L summary. During the NZ day I am pretty flexible so usually get in a walk, bike ride or game of golf. The rest of the day I would be working on things like the algorithms behind my trading methods and planning exactly what systems to trade and what trade sizing to use as my account size is changing. My trading is all automated so during the NZ nights I will check my server in Chicago at intervals as a precaution in the event of a tech issue and I can do that from my smart phone so don't need to be in my office all night.

You have performed well in some trading competitions, can you tell us a bit about that?

In 2008 I won first place in a World Cup Trading Championship. In 2010 I placed 3rd in the Annual World Cup Trading Championship and took first place in 2011 in that same year-long, real money, trading contest that has been running since 1984. I achieved that goal I set for myself and did not enter again.

What makes New Zealand a good place to trade from?

The end of the US trading day is about the start of the NZ day so you are pretty flexible with what you do with your time. Also I think it is easier for us to have a "World perspective" where many traders in the US seem to only focus on what is happening in their timeframe and markets.

Please tell us a bit about your strategy and your approach to the markets?

I use about 100 computerised systems and most of my trading is fairly short term, so a lot of day trading or 2-3 days duration sort of thing. I use a range of methods such as breakouts, reversals, trend continuation, typically trading in excess of 500 times round trip futures trades per month. I also trade over quite broad hours although most of my transactions are done in the European and American hours. I use the same but opposite rules to take advantage of a falling market the same as a rising one.

Which markets do you trade and why?

My focus is on Futures which enables me to diversify over about 25 different contracts covering a wide range of metals, energies, agriculture and financial based products. Futures provide significant leveraging capabilities which can mean relatively small short term moves can be worth trading and trading uncorrelated markets helps as a risk management tool.

What is your method of managing risk?

I have a stop loss built in on every system I trade which represents a fraction of a per cent of my overall account. Also my risk is spread across many different contracts and methods and only a portion of my systems will carry positions overnight.

If you had one piece of advice for aspiring traders, what would it be?

Most private self-traders end up having lost overall for a lot of reasons. It's probably going to take a lot longer and cost a lot more to learn enough than what you first think.

If NZ Herald readers wanted to learn more about you, where should they go?

Just Google Tim Rea, Trader and a number of video or print interviews will come up at the top of the search.

Are you a Kiwi Trader? I would like to interview traders of all experience levels. The main criteria is that you are a trader/investor in financial markets and that you either live in New Zealand or are a Kiwi living overseas. Please email me with a bit about yourself to nick@tradewithprecision.com.

Nick McDonald is a New Zealander teaching everyday people how to trade the worlds markets via his company Trade With Precision.