On this weeks Blog we have Chris Tubby, Chris is a leading trainer and has been assisting individuals to become successful traders for the past decade. Chris offers unique Flexi-Courses that offer the choice of taking it as a block or spreading it out over weeks or months, which his customers prefer as they get to practice between sessions. His courses provide fundamental as well as practical training.
Each course is bespoke and created around the individuals experience. You simply cannot buy that kind of experience, but you certainly can share in his 40+ years of it!!
Chris started his career in commodities and became a Senior Trader at the age of 22,
- Apart from his courses and practical workshops, he has created over 20 full-length videos plus his e-book Master Trading (338 pages and 117k words) which provide all the tools to begin your journey to become a successful trader.
- He has provided educational content to a major global exchange.
- Was a Consultant to the London Stock Exchange.
- Had trading related articles published in magazines.
- He consults to companies to provide flexible hedging strategies to minimise risk and protect against volatile price movements.
- His experience spans energy, soft/agricultural commodities, FX, STIRs, fixed income, equities, and metals. and crypto.
- His expertise covers proprietary trading, arbitrage, market making/liquidity providing, hedging, and technical analysis and risk management.
- Risk Manager
- Fund Adviser
So lets ick off with this weeks Q&A session!
1. I first met you back in 1986 as a clerk on the LIFFE Floor and I understand you have now been trading for 46 years, can you give us a summary of how you actually got into the markets back then and walk us through the progression from Floor to screen if you can.
On leaving college in `73 I was offered a position with the London Commodity Exchange. After two days I knew this was the career path for me!
My first role was as a price reporter. I was placed in cocoa and when a trade occurred, I had to chalk up the trade on a giant blackboard. I then added writing the trades down in real-time during the openings and closings. Before I left, I managed to take a few calls as call chairman too.
Commodity trading was quite different in the way trades were transacted. When the price was agreed the buyer and seller would negotiate the volume by saying “how many” to each other. Each `how many` was 5 which multiplied up by the number of times it was said to each other. Then after 20 times it would be 100 plus, 200 plus etc until it was agreed. It seems very strange now, looking back at it.
From the Exchange I went to a small broker as I knew they had the time to train me and from there I moved on to one of the largest commodity trade houses in the world. Some of the best years of my life! I ended up in charge of coffee, which was great, with a bonus that the gold futures market was just through a door to the side, so I would go and trade that from time to time. I traded around 30% of the daily coffee volume.
There was never the mention of limits I could trade and even my MD asked one lunchtime what my limit was…which was the first time I had ever heard that accounts had limits ha-ha! I just replied I had no idea, but I am sure the first time I have a big loss I would be told I had broken it 😉 We never had that discussion!
Everything was processed manually, although as a company, we did have probably one of the only computers in London in the early 70s! Late 70s they brought screens into the market to replace the blackboard and real-time prices became more easily available.
In `82 the Financial markets opened in London and I was there from first day until the last day before going electronic. Around the time I met you, Spencer, was when I began trading my own capital as a `local`
When data came out it was a great opportunity to make some quick profits. Always knew where the best bid/ask was and you just hoped they were still there when the data came out! When the data was released you could see the rush of brokers either trying to buy or sell!
Over the years on LIFFE things progressed very slowly, technically with just a few screens news.
We were so restricted with what we could trade as our limitation was a physical one. We could only trade the contracts within the exchange. We had to use a broker to trade other markets on other exchanges.
We are spoilt now as we can sit at a desk and trade the world.
Before 2000, traders had to qualify to become a trader. Now anyone can trade if they place some money in an account. Unfortunately, many have no idea what they are doing and lose their money very quickly. There should be some form of proficiency test before people are allowed to risk their hard-earned money or savings!
Electronic trading opened up many new opportunities in trading. Institutions benefitted immensely from it as they had total transparency, direct market access, depth of market, create multi-leg strategies against cash markets etc.
I created many arbitrages and I must say it is useful for when I am market-making. The downside is the HFTs that abuse the system rather than add to it. They promote themselves as the good guys and liquidity providers, but where are they when it all kicks off as in March and the subprime…nowhere as they switch off as they are risk adverse and only after the easy money!
Trading strategies such as calendars spreads is so straight forward too.
Another benefit that came with electronic trading was superior charting. I remember keeping my chart on LIFFE and it became so long that when it was fully opened it would go almost round the `pit`. Now we can change charts and time frames so effortlessly to analyse multiple contracts and overlay other contracts to compare correlations, Add studies at the press of a button for moving averages, support & resistance, pivot points, Fibonacci, Ichimoku, Relative Strength Index (RSI), MACD and hundreds more.
A key area that opened up was market information. Now we can access company reports, mining reports, weather reports, even central bank balance sheets, receive big data instantly and research almost anything through the internet,
2. Your trading specialty is derivatives, which includes precious metals, energy, soft and agricultural commodities, FX, fixed income, equities & crypto, with such a broad asset class cross over capability where do you suggest a new trader starts to get his toes wet in the water?
The first thing I do is allow the guys coming through my courses to practice them all. I believe this is important so they can find the market that is right for their character. It’s like going into a candy store…you must try all the flavours to find your favourite…and the ones you hate!
Passive, aggressive, patient impatient, fast, slow and risk appetite all come into the equation. FX can be too slow for many, Nasdaq too fast for most, so something like gold, which moves and charts well and is medium paced (usually).
3. What precious metals contracts do you trade and why those? Can you also go into some details for the readers on arbitrage opportunities across exchanges as part of that answer?
Mainly Gold as I use it when I have a strong macro view or see USD trending or as a hedge against S+P or Dow. Of course, the usual inverse relationship between stocks and gold becomes clouded during QE.
Rarely, I trade silver as it has to be based on technical. I usually blend fundamentals, technicals and instinct into my trading, and although I understand the uses of silver, never understand why people try and associate it with gold!
Although it can be capital intensive for the smaller traders, there are frequent arbitrage opportunities on precious metals, especially gold, as it is listed on so many different exchanges
4. Trading volatility has increased throughout the markets and the gold market has been seeing swings of $100 intraday, what mechanisms do you deploy on days like that so you can sleep at night?
Having seen all the wild markets and their causes since the 70s, I was fortunate enough to predict the crash end of February. In fact, I placed a post on LinkedIn on Friday the 21st warning investors they were not taking the virus serious enough…and the crash started on the Monday!
When I sense the big moves, I usually buy options to manage my risk but allow time for my view to be right. On some contracts I bought option strangles as a hedge.
I have options running into next March on some contracts. This is because we have the U.S election approaching and the strong risk of Covid-19 lockdowns returning.
I keep my options until expiry, however when they are In-The-Money I tend to hedge using the futures. I usually end up making more from the futures than the options.
5. What’s your current view on Gold, Silver, Platinum and Palladium from a traders perspective and why?
I am a buyer on dips for gold and a buyer of option strangles until the markets calm down sometime towards the mid to end of next year. World debt levels are dramatically increasing, and we have the Fed QE program I see investors nervous on the USD. Any sell off on stocks will also encourage gold buying. Russia and China have been buying it by the tonnes for years to remove their USD dependency.
Palladium was the star of the last decade with a meteoric rise in price due to supply difficulties. There was a sharp reversal as C-19 began to impact though, again providing great trading opportunities.
Overall, I expect demand in coming years to possibly reduce for Platinum and Palladium due to the consumer switching over to EVs as one of the key uses of them both is to neutralise the gasses coming through the catalytic-converter on conventional vehicles.
6. Powell has said rates will remain extremely low for years. Do you see them going negative and do you think he is right to focus on inflation?
When we consider the strength of the recovery prior to C-19, it was only the Fed that managed to raise rates significantly from 0.25 to 2.75%. It seems low rates could be with us for decades and for those moving into negative rates, they seem like quicksand…once in, almost impossible to escape. I hope the U.S and the UK avoid it. Central banks have struggled to achieve their optimum level of 2% inflation on a stable basis, even during the past recovery! I have a theory as to why this is the case, and the simple answers are the internet and Asia. Consumers have changed their shopping habits, (even more so during the lockdown) with more and more online shopping, My explanation is your local market is now the global market! Unless we are already out, the first thing we do is research online for the product we want, the price and how soon will it be delivered. As we know delivery times are from hours to a few days, regardless of what it is unless it is a specialised item.
Before, when retail felt the buying pressure, they would increase prices to profit from it and to pay for additional staff. Unfortunately, as their competition is now international, it prevents them from doing this. Asia would rather sell more units than increase price as their overheads are so low and staff unbelievably cheap!
The only solution is tariffs, which in themselves will be inflationary!
The only inflation we have experienced in the last 30 years has come from increases in raw materials such as oil and grains. True inflation comes from demand from consumers created by an increase in disposable income and confidence in the economy. Unfortunately, corporations are too focused on rewarding investors and themselves rather than the employees. Since the subprime crisis most workers have been thankful just to have a job and forgot how to ask for a raise! This will be the case again now since Covid-19 destroyed tens of millions of jobs.
8.How do you see Gold versus BTC?
Gold has the potential to become the standard again as money is out of control and governments and central banks (QE – key stroking unlimited funds) devaluing it and the public and possibly investors eventually losing faith in it. BTC is still fighting to be recognised as a credible alternative to fiat currency, however, Switzerland has enshrined its crypto-friendly policies into law, which will come into effect early next year. I believe all developed countries will have their own digital currency by the end of this decade, China is already testing theirs in four cities.
9. Where can people contact you to find out more or sign up to one of your courses?
You can follow me on LinkedIn or via our website https://www.masterc.co.uk but the best way is to contact us at firstname.lastname@example.org. We then arrange a call to discuss how best we can help and what to include in their bespoke Flexi-Course. The latter sounds expensive; however, we are one of the cheapest around as my aim is to help individuals become traders rather than make my living from them. The revenue from my trading helps subsidies the courses.
With my new subscription service, I will be providing not just news and views, but also trading tips, strategies, some levels using my 40 plus years of trading experience across all asset classes, plus insight into my trading decisions.
From January 2021 there will also be a WhatsApp group where we swap ideas and I will pass on levels etc in realtime.
I am limiting this to a maximum of only 100 so you will need to be quick to register!
The monthly fee is only £50 per month until the end of this year. Cancel anytime!
There is also a discount for annual subscribers of only £500 for a whole 12 months, plus a copy of my e-book Master Trading or if you already have a copy, you will have access to my suite of full-length market videos (23).
Next years subscription will also offer a gold subscription (Price TBA) which include a few additional benefits such as mentoring sessions and performance analysis.