We discover what makes great traders tick! My ‘Ten Trading Questions With…’ guest this week is Paul King, PMKing Trading.

1. What is it about trading that gets you up and motivated in the morning?

It’s a huge and complex online game where one gets to compete with the very best minds and technology on a global playing field that is more accessible to the small player as it has ever been in history, and it’s easy to keep score – just look at your account value and see if it’s going up or down ????

2. How did you first get involved with the financial markets?

Back in 1999 I had the opportunity to leave a safe but relatively boring job in the Midlands in England and work as a consultant to financial firms in Manhattan during Y2K and EUR conversion not to mention the .com era, and that was my “baptism of fire” with the financial markets and I was instantly hooked.

3. What was the turning point that really propelled you towards trading success?

As with anything challenging but worth doing in life, becoming a successful trader is a combination of hard work, persistence, continual improvement, and luck.

Although I tend to believe that it’s more serendipity as a result of hard work that creates the environment where one can take opportunities when they arrive, overcome problems with persistence, and finally succeed.

Winners never quit and quitters never win is something I live by as well as the old saying “Those that say a thing is impossible should not interrupt the people doing it”.

4. What are your personal trading goals?

My personal trading goals are:

1. Continual improvement – we’re never “done” learning, expanding, and improving
2. Make zero trading mistakes (where a mistake is a deviation from your trading plan not a losing trade)
3. Continue to develop controlled risk, unlimited profit potential, positive expectation trading programs
4. Give access to institutional-quality products to retail investors as a reasonable price (click here for one such program)

5. What trading mistake have you learned the most from?

Trading in a way where the asymmetrical risk:reward is totally ass-backwards and the risk was way too big for my account, and subsequently getting my butt kicked.

An example of this would be selling naked options on futures without being properly hedged with long puts just before a massive unprecedented move in the underlying.

What I learned is always, always have controlled risk/loss, and unlimited profit-potential NOT the other was around.

6. What are the main trading strategies and markets that you trade?

Trading strategies can be classified into 2 main types:

1. Ones that make money when price moves (which most people call trend following)
2. Ones that make money when price doesn’t move (like selling options)

Most of the systems I trade are type 1 and I trade anything that is liquid using strategies I have developed over the last 15 years that use concepts that go across markets and effectively capture trends in price no matter what the instrument types is, as long as it is liquid enough to trade at the desired size.

I also have a few specialized systems that take advantage of structural problems in certain financial instruments (e.g. volatility-based ETFs and inverse-leveraged ETFs)

7. What 1-3 trading books should every trader read?

Other than my 2 books you mean? [Editor’s Note: You can find links to Paul’s two books in the Bio below – A.R.]

I have a recommended reading list on my website, but I would say the book I have read most (and continue to listen to on Audible occasionally even now) would be Reminiscences of a Stock Operator.

8. If you had 1 minute with someone who wants to learn how to trade in stocks, what would you say?

First, read every single book on my reading list on my web site.

If you don’t have the persistence, urge, or motivation to get over that relatively simple hurdle then you’ll never have the fortitude to weather the inevitable losing periods.

There is no “easy” was to learn trading that avoids all the hard work.

9. What separates the average from the very best traders?

You have to truly love trading, treat it like a game, and enjoy what you’re doing to be a top-level trader.

Yes, ultimately it is just about making money and that should be objective number 1 for your trading, but if you don’t really love it, and would continue doing it whether you were getting paid or not then you will never reach the pinnacle of trading success.

10. How do you ensure your trading will continue to be successful in the future?

Firstly this is about how your trading strategies make money.

If you design strategies that work across markets as long as the instruments are liquid and don’t use any techniques that depend on certain market conditions being in place then the only way your system can “fail” is gracefully; if liquidity moves somewhere else and your instrument universe decreases to only a few instruments.

Therefore I always design systems to either fail gracefully due to lack of liquidity, or adapt to changes in market or regulatory rules that invalidates the reason to be trading the system.

Bonus Question: If you were not a trader, what would you do?

I love to play guitar and sing so I suppose I would try to make music in my basement to make a living, if that didn’t work out I’d probably just develop apps for smartphones and/or business software since I love to code.

Paul King’s Bio:

Mr. King is the Investment Officer of Hawking Alpha. Mr. King was an investment manager and managing partner for a proprietary trading operation, Emblumoven LP, a group specializing in long/short trading strategies focused on global equities, currencies, futures, bonds, and derivatives.

He continues to provide consulting for multiple financial organizations on their trading strategies as well as front-end asset management products and risk management expertise.

Paul’s career started with an education from Staffordshire University, UK, where he earned a Bachelor of Science Information Systems with First Class Honors. From there, he was a systems engineer and project manager AT&T UK.

Paul left AT&T to engage in a consulting agreement with Merrill Lynch in their debt derivatives division in Manhattan where his task was to design, test, and deploy a new version of Merrill’s Cash Manager System for the conversion to the new European currency that needed to be deployed in 14 countries. This job included the need for a fully automated regression testing environment as well as a management environment of massive amounts of data.

From there Paul then worked with the company made famous by the book Dark Pools: Instinet. After starting on the technology-side of the Transaction Cost Analysis division of the organization, Paul’s work subsequently focused on the business-side of the Analytical Trading Division.

Since leaving Instinet in 2002 to form his own company, he has been the CEO of PMKingTrading LLC, where he manages the task of trading system research, testing, development and automated implementation. Over the last 10 years he has created his own proprietary online trade management software environment called, “Positive Alpha”. Mr. King is noted author of the books “The Complete Guide to Building a Successful Trading Business” and “Protect Your Wealth from the Ravages of Inflation: A Three-Step Method.”

Paul also holds the Series 65 Investment Managers certification in the US and the Investment Management Certificate Level 3 in the UK.

More Trader Interviews:

• 10 Trading Questions With…Ray Barros
• 10 Trading Questions with…Paul King
• 10 Trading Questions with…Malcolm Stacey
• 10 Trading Questions With…Michael Gouvalaris
• 10 Trading Questions With…Steve Ruffley
• 10 Trading Questions with…Van Tharp
• 10 Trading Questions With…Robert Carver
• 10 Trading Questions with…Richard Weissman
• 10 Trading Questions with…Jack Schwager
• 10 Trading Questions With…Adrian Reid