Trading for a Living

Gary Portugal talks to Agnieszka about his core beliefs on finding success in trading, and it has nothing to do with quick wins large amounts of capital. For Gary, trading is a process that requires an honest look at yourself, learning from mistakes, and evolving the process over time. Everyone makes mistakes when they first start trading. It's how you handle those mistakes and grow from your experience that sets the professionals apart. 

With decades of experience in trading and working for large financial institutions, we hear Gary share the valuable lessons he learned and his philosophy on getting better at trading: train, learn from your mistakes, get a second opinion on your process, work on your  confidence and patience, and continuously refine your system. Gary's biggest advice is to embrace changes and make peace with being wrong.

About Gary Portugal

Gary Portugal began his FX journey in New York in the 1980s as a spot G10 Market Maker, before specializing in European Monetary System currencies in the 90s. After the creation of the Euro in 1999, he transitioned to trading emerging market currencies and to developing a spot FX e-commerce business at a major financial institution in London. He then spent a decade at a proprietary trading group as a market-maker in emerging market currencies to various electronic currency networks. He now trades and invests independently across all asset classes.

Resources discussed in this episode:

• Oliver Velez

—

Contact Agnieszka Wood | Ahead Coach: 

• Website: aheadcoach.com
• Twitter: @Ahead_Coach
• YouTube: @aheadcoach
• Facebook: Agnieszka Wood
• Instagram: ahead.coach
• LinkedIn: Agnieszka Wood

Contact Gary Portugal:

• LinkedIn: Gary Portugal

—

Transcript

Agnieszka  0:00  

I'm Agnieszka Wood and on today's show, I'm very excited to introduce my very special guest, Gary, Portugal. Gary has been a professional trader for 35 years. And now he's still trading mostly on a swing basis, and also managing his investments. I asked Gary to join us today to discuss his point of view on the topic that most traders are wondering about all the time. Will I ever make it? Welcome to episode number three, Trading for a Living. Hi, Gary, and welcome to my podcast.

Gary  0:35  

Thank you so much, Agnieszka, I hope that I pronounced that right. Yes, I think, yes. 

Agnieszka  0:38  

Yes, you absolutely did. Wonderful. 

Gary  0:42  

First attempt, wow.

Agnieszka  0:43  

Yeah, you're very good at it. Gary, you started in 1983, as a commodity and foreign exchange trader in New York, worked all the way up to become a head of European Monetary System, currency trading desk in London. And finally became a wealth management consultant. Not long before you decided not to work for anyone else, and trade for yourself. That's pretty much the dream of most traders, right, to quit their job and trade for a living.

Gary  1:14  

Absolutely right, to be able to pick and choose when you work. 

Agnieszka  1:19  

Exactly how to spend your time, right? Nobody's gonna tell me what to do. Tell me with all your professional experience in trading, I'm sure you were able to make consistent profit long before you actually started for yourself. What made you wait? How come you didn't make that decision to start trading for yourself years earlier?

Gary  1:40  

I think to be fair, most of my career was spent market making. And then as part, as part of the market making, I could indeed take some proprietary risk, but there was a certain amount of income that I was able to generate from market making. And then I could leverage some of that to take proprietary trading risks, as well. And then as markets, particularly say, from 2000 onwards, and even more so from the financial crisis onwards. FX markets, and I think all assets, in all asset, came increasingly automated, electronic, and it became more difficult to compete, basically, as a market maker, foreign exchange and in particular, it became clear to me that I would have to probably rely less on market making income, and more on taking proprietary risk. And then I just reached a point where, as we said, off air before, I felt like I'd have a better chance of making money, if I could trade more selectively. As opposed to necessarily trading every hour of every day, if I could pick and choose my moments, and then maybe take more risk. In those instances, even if that meant doing nothing for two or three days after that, but I'd have a better chance of succeeding. And I think also, I reached the conclusion that I was more likely to succeed, taking risks myself, if I was doing it rather than day trading more of a, on a swing trading basis. In other words, seeing if I could pick out a trend that I felt might last a week, two weeks, maybe even a month, mainly a foreign exchange, but also in equity markets, interest rate markets, and commodities, but the key was trying to see if I could envision a move that would happen over time. And, and capture, not necessarily all of that, but at least a reasonable chunk of that, as opposed to just trying to day trade every day. And I just felt like the best way for me to do that. And trade sensibly, rationally, was just, you know, trading my own money. I mean, it's scary in a way in that if you, if you lose, it's, you know, it's your capital, it's not your employer’s capital. But the upside is, you know, you really do trade as and when you think it makes sense to trade. And not just because oh, I’ve gotta pay my boss, you know, to pay for these computers that I've rented. I've got a, I got to pay for my brokerage and for my charting service. And so, that's basically how I ended up in doing what I’m doing now. Now, it's, to be fair, it's been a transition. Yeah, it means in some ways, it's a lot. And I still love the markets. But in some ways, it's a lot less exciting than it was, you know, being on the market and making bets where you're literally in and out of the market all the time. And where you felt there was necessarily there might have been opportunity every day, this is different, I'm more happy. So, there may be a handful of times during the week where I have a really strong feeling about where the market is gonna go. And not only that, but I think that the move is going to be meaningful, so, I can really get something out of it.

Agnieszka  4:57  

Oh, that’s so interesting. So, It's actually you sort of, you're trading less than when you were.

Gary  5:04  

Much less, I mean, the biggest difference is the frequency is way less. And that is, that has been so difficult to adapt to, it's taken me time, and yah I'm getting better at it, I'm still, I'm still adapting, because part of me, will never totally let go of what it was like, you know, to be active. It was like, it was fun. It was it, you know, I've thoroughly enjoyed that. But this is, this is totally different. It's not market-making, and it's not even short-term proprietary, you really gonna have to be taking somewhat of a view, well beyond just the next 24 hours. I'm not saying that there isn't scope for, for some short-term trading, of course, but I think on balance, you're gonna make more if you're looking to capture bigger moves, and not necessarily doing the micromanaging, that you do on a market making desk or elsewhere.

Agnieszka  6:01  

Yeah, I can compare it to when I day trade, you know, and I evaluate and look back at the bigger picture of, you know, the moment in time that I trade a momentum stock, and then I look at the bigger move. It's just so revealing, like how much you can make yourself, you know, emotional and crazy about this little move on, I don't know, five minutes or one-minute chart? Well, in a bigger picture, you think if I would just get in here and stay for a few days, I would not lost all my emotional capital, and I would have much more money. You know.

Gary  6:37  

Absolutely. I mean, you hit on. And that's a great phrase, emotional capital, which I think is overlooked. Yes, obviously, we all do this, to make money, we want to be profitable doing it. But there's, there's emotional capital that you expend as well. And you have to make sure that that's being used wisely, that you're not just burning yourself out or spinning your wheels. And the biggest reward, I don't think and, obviously, there are exceptions. But generally speaking, I don't think it's reward, it's gonna come fly, be able to predict the next hour's move, the next five minutes of me, you can drive yourself crazy doing that, unless you're doing that in very significant size, I'm not sure that it's going to really be that productive anyway. Whereas, if you're, if you see a bigger moves in whatever it is, whether it's Tesla, whether it's a currency or whatever, and you're not rushing yourself to make the money within 24 hours and saying, Oh, the P&L has to be made by Tuesday morning. If there isn't that sort of time limit on, I think you have a greater ch