Episode 070 – Part 1 – Discover the world of Trading, how to approach risk, a Trader’s mindset, learnings from 18,000 hours of live trading and more – with Ali Crooks
One of the best ways to create a turning point (a Seekardo) in your life is to improve your finances. One way in which to improve your finances is to expand your knowledge around creating wealth and money. Within this large category of ‘creating wealth,’ there are tried and testing methods.
In this episode, we’re talking about one of the most popular ways of making money and creating wealth – Trading!
For most people when they think ‘Trading’ they think – isn’t it risky? Don’t you need money to start? What if I’m rubbish at maths? Can I really become a full-time trader? How much time do I need to spend on trading a day?
And that’s no doubt just scratching the surface of the questions you have. To help answer these questions and more, we’re joined by a special guest and expert full-time trader:
Alistair (Ali) Crooks
At the age of 45, Ali Crooks has been trading since 2001 and has traded successfully through two bull markets and the financial crash of 2008.
Alongside his own trading portfolio, he now trades his own fully regulated UK trading fund which has over £1million in assets under management and is currently running at over 22% ROI since its inception in June 2020.
He has spoken alongside many famous investors and traders and personalities from the world of business and sport including Robert Kiyosaki, Jordan Belfort, James Caan MBE and Dame Kelly Holmes OBE.
He is one of a handful of trading educators to ever agree to trade their own accounts live at the London Forex Expo and was hand-picked to be on the Rich Dad Education’s Global Board of Advisors in 2011 & 2012.
He is the Founder & Head Trainer of the Traders Support Club where since 2009 he and his team have put in over 18,000 hours of live trading and coaching time since TSC opened its first trading room in 2011.
He has coached and mentored 100’s people globally to make consistent full and part-time incomes from trading and he enjoys nothing more than being in the live trading and coaching environment.
The best place to open your mind to the world of trading is through this episode with Ali Crooks – Founder of Traders Support Club.
By the way, this is just part one. Where you’ll discover how Ali fell into trading, his approach to risk, the mindset of a trader and more.
Listen to part one now and look out for part two – coming soon.
Learn more about Ali Crooks and Traders Support Club:
Get access to Free Traders Support Club membership site click here.
To learn more about Ali and Traders Support Club click here.
Look out for part two.
Harms: Hello it’s Harms here and welcome to another episode of the Seekardo show and today we have an amazing episode for you.
Right now in the market space in regards to making money there are rapid market changes taking place. Now what you’ll see if you load up YouTube, Instagram and Facebook is there are more ways to make money now online or by other wealth mechanisms than there has ever been before.
So, for example, you may have seen crypto, NFT show up on your social media feed and more, and ultimately this kind of leads to the fact that there are kind of like too many choices in the market space.
But more fundamentally if you’re listening to the Seekardo show for the first time we’re very much about creating turning points in your life here at Seekardo, that is exactly what Seekardo means.
One of the best ways to create a turning point and a transformation in your life is to transform your finances and that’s where we’re going to bridge into our guest today who is an expert in his own right in regards to trading.
That could be the vehicle you select as part of your wealth creation, money making mechanism in comparison to what we’re seeing online at the moment, which is a massive choice.
We’ve bought this special guest today who I’ve known for a short period of my life, but Ro for a longer period of your life.
Dr Ro: Thanks Harms and again, as always we’re super grateful that you joined us today, particularly as we have a very special guest and a close friend of mine. I think gosh, is it like one half decades?
Ali: About 15 years.
Dr Ro: Ali is currently 45, looking good by the way. He has been trading since 2001 and has traded successfully through two bull markets and the financial crash of 2008.
Which I just want to add that there are so many young people online at the moment, who are professing to be master traders and at 21, 22 years of age I’m thinking they haven’t sat through a recession and seen what it’s like.
I have personally experienced this and traded through as well just as Ali has. Alongside his own trading portfolio he now trades don’t fully regulated UK trading fund, which has over £1 million in assets under management and is currently running at over 22% return on investment since its inception in 2022, that’s literally just a couple of years. Unbelievable.
He’s spoken alongside many famous investors and traders, personalities from the world of business and sport, including Robert Kiyosaki, James Khan MBA, Dame Kelly Holmes, OBE and many others who I’ve seen him speak alongside.
He’s one of a handful of traders and educators who has ever agreed to trade their own account. Most people won’t do it as they don’t have the balls to show their own account at a London event Forex Expo live in front of an audience and was hand-picked to be on the Rich Dad education, global board of advisers in 2011, 2012.
This is where Robert Kiyosaki will handpick people to go onto different events and literally take live questions in the specialist areas which Ali was trading.
He is the founder and head trainer of Traders support club which was originally founded in 2009 and he and his team have trained over 18,000. If you’ve read anything about outliers to create a level of expertise you need to put at least 10,000 hours in, 18,000 hours of live trading and coaching time since Traders support club opened its first trading room in 2011.
He’s coached and mentored hundreds of people to move from basically a career to either being full-time traders or part-time traders and being able to step away if they wanted to from what they were doing.
I want to say on a personal level, I still remember meeting Ali for the first time at a seminar. I think I was onstage with him, bounding up Ali in his own right was a successful trader already at that point then and was in that transition, taking it to big audiences.
How I describe Alistair crooks. First of all I would say boundless energy, constant passion, enthusiasm in any situation, no bullshit, what you see is what you get, authentic, the real deal, great husband, loving and supportive partner, great father and prolific athlete in his own right.
A great friend and never afraid to tell it as it is. That’s how I’d describe my dear friend Alistair Crooks, welcome to the podcast mate.
Take us from the young Ali Crooks to where you are today and what you do.
Ali: I think if you could sum it up in one sentence, it would be a failed sportsman.
Anyone that knows anyone that was good at sport was never quite good enough to be either national or Olympic you’ve got a drive in you where you enjoy competing and I think if I could have my time again it would be an Olympic athlete it would be something sport orientated so I think without consciously thinking about it at the time I always enjoy competing and I always enjoy trying to get better.
Dr Ro: I see that in you today just in the way you attract business and trading.
Ali: I think if I wind it back the early days the challenges were that I wanted to be good at everything and as I got older I realised that it is not happening and that enthusiasm you talked about is an asset, but if I look back with the benefit of hindsight it was probably a detriment at times.
It was like I’ll do that, I’ll do property training and business and actually what I was doing was spreading myself at the time too thin. When I look back at the things that I’ve always excelled at without realising it was the things I’ve been very focused on.
I was fairly lucky that I’ve got a fairly good gift from a genetic point. I could run an athletics track and I was good at sports. The sports I did really well out were the ones where I was focused. The trouble is at school I wanted to be a PE teacher and my natural direction either to be if I wasn’t on the team I wanted to be coaching the team but then I realised my PE teacher drove a crappy yellow Ford Escort.
I was like I want to be rich and help people. How is this going to work?
I had this constant conflict when I was younger of wanting to be what the kids call today a baller and I looked at the teachers and thought it’s the poor helping the poor. I wanted to be rich and back then you didn’t have the benefit of all these people out there saying you can actually do both.
Back then being rich was about hustling but about getting one over, you had to be the best.
Dr Ro: Is this in the 70s?
Ali: I’m not quite that old, probably late 80s.
Dr Ro: Take us back home to your parents’ background. Let’s find out what defined you even prior to that.
Harms: I think why this is important, is often people think of a trader or successful businessperson and they think it has been handed to them or their parents as you mentioned your dad was a trader so naturally Ali was always going to be a trader.
That’s almost the default assumption.
Ali: That’s a really good point to make, because if you look at my parents, who are lovely, caring and kind they couldn’t be more different, so they were both what you would call amiable.
My mum’s quiet, my dad’s got that look on his face like he’s going to kill you at any point. I remember I was hustling for money and we lived in an area I would say probably in the bottom rung.
The people at school I was at were in the bottom 20% in terms of wealth. It wasn’t a private school, but the kids there tended to be more wealthy than we were. What was interesting was I got the least amount of pocket money so I went to my dad and said I want more pocket money, up to a fiver.
Which back then was a lot of money and he said no, get yourself a job, I said I can’t I’m not 12, they won’t employ me. He looked at me to say it was not my problem.
Anyway I blagged it got a job lied about my age and after my first two weeks getting up at five in the morning delivering paper, falling off my bikes as it was winter skidding on ice, I remember walking in to pick up my £2 of pocket money and there was a fiver on the side and that was a real shift for me because I went if I go out and hassle, suddenly I’ve gone from £2 a week to 15.
I had that moment, I think that’s quite pivotal. I was like hard work does pay off because it’s not intelligence for me. I would say stick me in the C grade area as a student, but back then I got that subconscious reward of if I work hard I’ll get double bubble here, I’ll get more and more from here.
Dr Ro: I was the same. Saturday was a milk round Sunday was paper round, there are 10 years roughly between us, I don’t see that in the younger generation anymore.
I think our generation understood that now people don’t want to put the effort in to get up in the cold weather and go out to do that. I’m not trying to be negative but I don’t see that same level of discipline that might be because of security and safety and technology has changed, but that was built into us back in those days.
Ali: I think back then you had no option but to go outside your front door. If I look at my two for example, James is going to make his way through his high level of intelligence, Kate is going to make it for her hustle.
She bought herself a pony and realised it could be trained up and then sell it on, so she’s got that out the door entrepreneurialism, but there are kids that are doing it from their bedrooms. I think as a parent I had to relax my view that it all happens outside the front door.
I would say there are less kids these days that are hustling, which actually gives the kids that are hustling it gives them the opportunity to really do well because actually there are a lot of kids that have everything they want: the iPad, computer so what’s the incentive?
Dr Ro: I guess my question was, if there isn’t a built in natural discipline an early age to take knock backs and to refocus if somebody sat home not doing the outdoor stuff just sat there and it doesn’t work online they give up too easily, trading to me is such a natural crossover into that discipline.
I do believe that’s a big part of what’s made you the success you are today.
Ali: I’ve got the ability to bounce back. In the early days of trading my enthusiasm not only was a hindrance to do too many things, but when I did focus on one thing that enthusiasm was magnified and I talk about with the clients I work with you’re always disowning something.
We tend to our beliefs to filter the world and say this is how I see the world therefore, this is right and whilst that’s advantageous and that will be of use to you, something there you will be disowning. So for me it was slowing down, looking at the data, looking at the numbers, looking at spreadsheets, whereas I was like you’ve got to be in it to win it.
You can’t learn to ride a bike on a blackboard which got me into the market, got me trading and experienced the losses and wins.
What I wasn’t doing was owning the data side of it to see if there was a pattern to my losses and wins and there was.
You have guys on the other side that will have their head in the spreadsheets and will watch 25 videos before they decide what strategy they use and two days in they’re reorganising and you want to tell them to get on with it. We tend to lean towards the side whether it’s nature or nurture that we have built up. What’s interesting is I’m the complete opposite to my dad.
My dad is an engineer, he is highly detailed. He has to see it in black and white before he does it. He’s had multiple business ideas that never amounted to anything, then five years later sees somebody else on Dragon’s Den doing the thing that he thought of.
I think I rebelled against that, and also because they gave me the room. The one thing I say about my parents even though their faces often showed it, they never tried to pigeonhole me.
They never said right, you must go to university, you must get a job. They were very much as long as you’re working doing something I don’t really care what you do. I remember I had my first A-level report and I basically just been so pleased with myself I got into the college I basically sat around doing fuck all for three-months. He came back to me and said I don’t care what you do, but you are not doing nothing and he literally threatened me with being kicked out on the street.
Can you imagine many parents saying that to their kids these days? Probably not.
Did that affect me mentally, was I scarred? Who knows, it certainly made me realise the rules of the game.
The rules of the game if I wanted to be at home, whatever I’m doing I had to do it and put the effort in.
Dr Ro: I’m really glad you’re sharing this Ali because part of the message we have here is often there is an underlying message underlying the underlying message, there will be parents listening to this saying my kids have said they want to trade and I’ve said no it’s too risky.
But actually there might be a message here to say there’s a safe way to allow them to get into it without losing money. But not restricting them because parents are now driven by this polarity of what we see on social media.
The fear of failure, so you’ve got two extremes.
Harms: In addition to that the lack of tough love that exists whether it’s from, teacher, school education to the child and also parents to the children as well. There’s a sensitivity around me. I just want to make sure their feelings are okay. So they don’t get that tough love, I got it as well and you must be doing something there can’t be that passive behaviour.
Ali: When somebody says to me, trading is risky I say you’re absolutely right because the stats show that it is risky. Chances are you’ll go online and find somebody who is talking about it but not doing it.
The second thing is you’re not mentally equipped at the start to do it. there’s too much information out there, so you can get confused. So when somebody says to me my kid wants to do it but I think it’s too risky I say it absolutely is.
That’s the response they’re expecting. I talk about polarity like that people like to be in camp left, right, progressive. But here’s the irony: to be a successful trader, you have to not only understand nuance, you have to be able to live in nuance. Because 80% of the time the trade is not going the way you want the markets going sideways.
If I’m a black-and-white thinker I’m only trading stocks or I’m only training long or I absolutely think this is going to lose, trading has actually taught me an element of nuance.
Nuance is not valued in today’s society.
Harms: Social media actually rewards polarity. It is not attention grabbing and the media love extremes.
Ali: I think if there are younger people listening to this and their parents think it’s risky don’t try and convince them it’s not and certainly don’t show them some of the guys driving around in Lamborghinis.
I know two guys in South Africa that literally have got shots of them outside an airport and managed to get into the airport to get a picture next to a private jet. That’s the lengths some people will go to so when a parent gets concerns they’re absolutely right to have those concerns, or anyone.
If you are a person who is in the mid-20s thinking I managed to save up two grand I want to do something I can’t buy a house because I’m priced out the market. You’re right to have concerns.
The challenge comes if the concerns you have mean you freeze and you don’t take any action. I say to people whatever your biggest strength is will become a weakness at some point and vice versa.
Whatever your biggest weakness currently is will become strength at some point because the market is just a reflection of what people are thinking. It is the bit I think people don’t get, they either want to control it.
A classic one is when business owners come to me and say I think I’ll be really good at trading because I’m good at taking risks.
You’re a control freak, you’ll start out being one of the worst people you’re used to having a problem in your business, picking up the phone and sorting out, you can’t do that in a trade.
So people tend to either say I’m good at this so this will mean I’m good at this or I’m not good at this, so I won’t do it when in fact that risk-taking skill set or attribute that the entrepreneur has will be a benefit but not if they can’t let go and let go of control, so there’s the nuance right there.
People want to take something that they’re good at and say that’s why I’ll be good at trading. That’s why I can’t do it.
Dr Ro: Your dad and mum aren’t entrepreneurial by nature but are not holding you back. They wanted you to do something your natural sportsman wanted to make money, what happened next?
Did you go through a normal school academic route?
Ali: 17, 18, got my A-levels and did very well at my levels because I was doing subjects I enjoyed, I did physical education, business studies and got to A’s. I had to do human biology and ended up with an E in that.
I had an amazing business tutor. She smoked about 60 a day hanging on by a thread, but she literally was right on retirement but every time she walked into the room talking about business she lit up and she was a business studies teacher that was entrepreneurial.
She was selling stuff out of her garage. I went to Uni and did sport management and was doing really well during it, making the most of Uni life being involved in sport going out drinking just doing fun stuff and I managed to nail a placement at Nike.
I wanted to work in sports marketing as I liked sports. I beat about a thousand students from six different universities to get one place and it was at the time the worst thing that happened to me but looking back probably one of the best. I was 20 years old.
Dr Ro: Did anything happen in those 20 years that had a significant emotional impact on you, something that shifted your thinking?
Are you aware of anything that you saw in your parents or around you that you feel that if you’re brutally honest that changed my perspective on the world, that has carried forward to who you’ve become today?
Ali: I think there were two things from a family point of view.
I’m very different to my brother and parents so the joke is when we meet up we spend 10 minutes with my parents and they look exhausted because they’re like what have you been up to? and we’re like this, this, this, and I’m like what have you been up to and they say we’ve been to the shops.
They live very differently from me.
I think if I’m honest, at the time I was like I don’t want to end up like them. I want to be rich. But actually looking back now, there’s a lot of attributes in my parents that I’ve now taken. I think I was driven not to be like them and I’ve said this to my mum, I realise that was just a kind of tunnel vision I went into.
The second thing was working for Nike was going to be the utopia and suddenly realising that I don’t want to work in a corporate and that was the shift. What’s interesting is even though some of the guys at Nike were quite entrepreneurial they all went out together.
They worked together. They were being paid less than the guys working at Adidas at the time because you got paid less because you were working for Nike. They all socialise together and what I thought would be what I wanted to do was the complete opposite.
This is a cult I don’t want in and I realised that I’d probably been more entrepreneurial than I’ve given myself credit for over the years with the paper round jobs, the other jobs I’ve done.
Dr Ro: You’re lucky that it happened at such a young age some don’t have the realisation till their 40s and 50s.
So that’s a young age to have that insight.
Ali: I remember I came away from university, and the job came up at Nike and I had three of the guys I was working with in the marketing department, they said you’ve got to go for this job and I got a job cleaning cars because it was an opportunity to start a business.
You can imagine my parents like he’s finally got the security but even then you could tell they were like what the fuck is he playing at but they never pushed it. I think that as much as I didn’t want to be like them I think not having pushy parents was good.
I had been offered 25 grand and back then was a lot of money and I turned that down for an hourly rate washing cars and they were still okay with it, or at least if they weren’t okay they weren’t telling me. I would say it was the two things. It was not wanting to be like my parents and then thinking that a career in marketing was it. The boxes ticked, I’m done I’ve got to find someone to get married and sorted and then suddenly realising and I was on for first class honours and ended up with a two, two.
I finished the degree and I just felt lost and I was going back into lectures and I’m like you’re a leisure centre manager that’s the best you did and you’re telling me how I should be successful and I became quite lost, quite aggressive.
Because I hadn’t gone right I’m going to be an entrepreneur. I’m going to start my own business. I just went from thinking this is what I wanted to do and then realising it wasn’t and then flicked through Uni, job came out and then somebody said to me are you going to do that?
There was something in me at that point saying I don’t want to fall into this trap, which for me felt like a trap.
Not everybody working in a job is not always a trap it’s only how you see it and that’s how I saw it at the time so I had the benefit of going through all of these ups and downs like you said, without kids, without a family, without a mortgage and without parents trying to push me.
Or going to a dinner party saying to friends we’re so proud of Ali because he’s working for whoever or doing whatever. I still speak to young people like my parents say I should be going to university and I’m like how they are? Are they happy and that’s nothing against university? Like my stepson James is doing a masters in finance he should be at university.
That’s the perfect roof for him but I don’t believe that for Katie and we won’t stop Katie going, but we are not going to push her down that route.
Harms: It’s interesting that you’re still seeing people in today’s age who are feeling lost or being pushed down roots that may not be right for them and what’s interesting is now we are living in an age where this term being an entrepreneur, entrepreneurialism is available. It’s like a role. It’s like a title that you can own nowadays but Ro rewinding time when you had this kind of pivotal moment that wasn’t a term.
It wasn’t the sexy thing to do.
So now kids are having the title I’ll be an entrepreneur, start my own YouTube TV show, whatever they decide to do but back then it must have been a different feeling because you just felt like I don’t belong in whatever these people are doing. I don’t belong there. So where do I belong? Is that fair to say?
Ali: That sums it up because the access to a different world was smaller. You had to step outside your front door so what is interesting is I think when it started to shift was around 1999, 2000.
What you had then was the.com bubble and people setting up businesses, venture capitalist throwing money at stuff stupid ideas good ideas, but even those guys usually only got funding for their idea as they’d done five years at Price Waterhouse.
You’ve got these people now sitting in their bedroom and suddenly actually worth legitimate amounts of money or the first business they try online is successful or vice versa there are people that try stuff and are not. I think it’s the speed and I imagine it was something similar for our parents looking at us.
Whereas I look at it and go wow things can go and that’s the other challenge that I face. I think we underestimate how we subconsciously, especially young people, but even when I go on my phone I want something. I order it. It turns up the next day.
I say as a trader if you’ve got all the things you have when you want, you start a business online but when you actually come to learn to trade the challenge with trading is you can place a trade with a heartbeat, but to actually become a trader you have to act like a kid 30, 40 years ago learning to be a plumber, you have to have that level of mindset it will take me a long time to get good at.
I still see this with young people and actually, to be fair, it was a lot easier for me because I didn’t have access to as much information.
Part of the problem is that they go through work then they get bombarded with another advert.
Dr Ro: Let’s go to the other side of who you were at that time.
What were some of your biggest challenges as a person?
Did you have any fears, any personal negative beliefs, limiting beliefs that you’re aware of now that maybe at the time didn’t know you had?
Ali: I’m not smart enough and I’ve turned that into you are not smart enough. My dad used to call me a clown and parents will say things to you and I think somewhere that sat.
Dr Ro: You will say something and you don’t realise that the child will hang the whole word on their being.
Ali: Totally, I think there is that but I think the big one was seeing people with average intellect doing really well and then seeing people with high intellect not doing as well if we’re measuring success how I was measuring success back then, which was money, freedom and time.
I was also fortunate enough to be a little bit naïve, I would say the thing that I struggled with the most was most of my friends from Uni had got jobs in business, in sales some were working in the city, which is something I’ve never done. What I do is very different from what the guys in the square mile do. I think what I suffered with the most in my 20s was comparison.
So I spent a lot of time comparing myself to people, which is good on one hand because it can force you to get on. I don’t think there is anything if you have a peer group you work to and aspire to.
But I think I put undue pressure on myself and I thought, well, the guys from Uni are all earning 40 grand a year, 50 which back then was a lot of money. I’m still doing part-time jobs, so if I look back I think if I could tell my former self something it would be to spend less time comparing myself to your peer group.
And ask yourself a simple question even though they might be earning more money do you want the job that Steve has got? No. Then don’t waste the energy comparing yourself if they’re living the life you want then look at it and see what it is they might be doing that you’re not.
But there was a lot of wasted time comparing myself to people that I had no interest in actually being like or having their life and lifestyle. I didn’t want a job in the city. What I really wanted was freedom and choices.
Dr Ro: That certainly wouldn’t have happened being stuck in the city. That’s an honest reflection. Take us forward now, what got you into the trading process?
Ali: The trading process was completely by chance, it wasn’t some grand plan. I went to that car wash job because it was back working with a guy I used to work with in the summer doing cleaning and summer jobs.
We set up a hire company where we were hiring out four-wheel drives and land Rovers, so he was basically the money I was sweating labour so it was a perfect combination. I didn’t know what I was doing but I worked hard, hustled, I picked up the phone, got vehicles hired out, sent them out. It was great and he went off to be a pilot with British Midland that doesn’t exist anymore.
So I was running the business and then we had 911 so that had a massive impact. He came back and said I want to sell the business, it is doing okay, but I want to consolidate the business. I’ve no longer got the income coming from being a pilot at the moment so as 50-50 shareholders we sold that and I walked away with £130,000 pre-tax which back then was a lot of money.
So at the time I got from this comparison framework of myself not having any money with suddenly this lump sum of money and I think I’m Richard Branson. Unbeknown to me at the time he was the brains and the money I was just sweat labour, but I thought I know what I’m doing so the next business I went into threw all of that money in two years later, I’m about 50 odd grand down in debt.
We set up an online health and fitness set up. It was a system that you put into the gym. Some of you listening to this would have seen the techno gym key system, where you can plug into a machine it sets the weights for you, we had an alternative to that.
I was in business with a friend of mine at the time who was a very, very high level PT, so he was the front man. I was the operations guy thinking we can build this thing and we did alright.
I remember we were very close to taking it nationwide. I remember the day that we stood outside Bermondsey tube station and David Lloyd told us they weren’t going ahead and we threw everything into this business, absolutely everything. He re mortgaged the house three times.
All of that money was gone and then it got to the point where he said that I’m going to walkway and I was very angry at the time because I felt his wife was calling the shots and she had enough, and rightly so. And the reason David Lloyd didn’t take us on, they said we actually preferred your system and your idea but you haven’t got enough backing behind you and that’s when we pitched to Duncan bananadine and he said no.
The first business was more of a job where it happened to be a 50-50 partner. The second thing was the kind of entrepreneurial right we are going in, to create a product, try and bring it to market, get it built and I look back now and some of the things we used to do then and just cringe.
The level of naïveté that we had at that time, but then if we didn’t have that naivety we probably wouldn’t have done so. Ironically, I would have carried on if Lee had said to me right let’s keep going, fuck David we’ll go to the next one I’d been in and gone far in debt that I possibly could because back then all that mattered was building off the success of that first business and I put so much value into that.
I didn’t see that I wasn’t an entrepreneur. I was basically in a job and the other guy was the brains I thought I’d do once I can do it again. Throughout that time I’d always been what you call the fringe guys. I want to do it all as I’ll make more money.
Back then I was a part of an investment club which met once a month, 20 of us and for two hours, discussed or tried to discuss what share we’d buy that month. Imagine my leg at the table twitching.
Imagine the personality styles in a room like that. There was one guy there Tim from Australia he actually worked at Microsoft at the time and we used to be in Reading and we had this meeting room in Microsoft and he was trading part-time so I would sit next to him and think I’ll get a bit more out the couple of hours and then eventually he went full-time as a trader and I spent the day with him.
He wasn’t a trainer or someone that could teach it and picked up quite a bit. I just thought this was great and what was really interesting. I think back now I think the reason why trading was so appealing was because it felt such a contrast to the previous failure.
I was still angry with Lee, with David Lloyd, I was still angry with all the people that let us down and I was like if I can learn to trade I won’t have a boss, a business partner and don’t have customers so I was looking at trading not this way of I can sit in my bedroom not talk to anyone.
It was just this complete control. How naïve I was. This complete control that I didn’t have over here. So for me, that was everything that got me trading was pain driven. So when people come to me and they’re all like I do this it will be great, I’m like what is your pain?
Especially the younger guys if you’re out there putting in there’s usually something that is driving you towards that. Back then there were no courses in the UK, it was option training in those states.
So I came home and remembered saying to my partner at the time, Lucy, I’m going to do this course in Las Vegas and that’s when she decided she was leaving. Imagine this poor girl. I’ve made all this money and we don’t even put 20 grand of it down as a deposit on a flat.
She didn’t want much. It was a classic Dell like a classic Del boy moment, I was like this time next year I’ll turn that into and I can’t believe she stuck around as long as she did really. Again, that wasn’t her personal.
Dr Ro: Is it healthy or unhealthy to have pain? Is it a healthy thing to have a driver and just be aware of it so you can manage that as you go into trading?
Ali: I don’t say when someone comes through what’s your pain? I’m looking for it, there’s a guy going through one of our programs and it is essentially our cornerstone program.
It’s a little bit like a try before you fully commit as I like people to see what trading is all about before they spend a decent chunk of money with me.
We’ve got a guy in there at the moment and it’s so obvious what his pain is to me, it’s even obvious to the other people that message me within the telegram group but it is not obvious to him and he’s over analyzing. He thinks if I analyse more I’m safer.
Dr Ro: I love the fact you’re creating a space for people to test their own behaviour patterns and also how and what type of trading is going to work before now you go to another level.
Ali: They get the experience of coaching not like in the trading room where it’s live and they’ll submit homework and I’ll coach them on the homework. If you think of it like a pendulum the pain is too far.
So the pain is stopping him from doing things. I relate it to an actor when they go on stage. The old saying is if they go on stage and they’re no longer nervous it’s the time to retire. I always imagine you’re constantly shifting from fear and greed like a pendulum.
I need some greed to get me hustling and get me out. I need the fear to keep me in check. But if the pendulum for greed swings too far, and for some people that could be winning six trades on the trot and now they start getting too loose with the rules and messing up, or if the pendulum swings too far that fear can paralyse them. What I’ve noticed is with all these hours it will swing to fear and swing to greed. And you might lean towards one or the other. But when that pendulum is too far there will be a reason for it.
For instance, what I used to do because I was action orientated I was type A personality. I’m going to solve this by working harder and doing more when I start losing. I would over trade.
That is still fear but my mode of operation was to attack and trade more somebody else if they go into that fear space they have three losing trades that morning or three losing trades that month they’ll go into the opposite. They’ll go back to the spreadsheet and start optimising what they’re doing so self-awareness is key.
To answer your question if you think it’s not there, you’re kidding yourself.
What I think happens and what I do see and we have had this with my stepdaughter is do I believe anxiety is real?
Absolutely but I think sometimes the language makes things worse. I’ve got anxiety sometimes is the same as when me and you speak to an adult Ro. You just felt a little bit anxious not on all of the occasions. I think sometimes people trading go. I don’t want to trade because it feels painful.
There is a difference between that and ignoring the pain and then not trading over trading. The pendulum is swinging or its one-sided too much and if that’s paralysing that kid it might be they don’t have enough life experience, so the thought of speaking to an adult going to a job interview is paralysing because they haven’t had to do it because they can access pretty much all they want online.
I think trading appeals so much to the younger generation because a lot of them feel disenfranchised, they can’t get on the housing market, they’ve got all these options, but in the same breath they’re so used to getting what they want quite immediately and easily that it can be a bit of a shock to the system.
The speaking thing was I never went. I’m going to learn to trade so I can teach it was never that way. I think what shifted it for me was actual boredom.
When I finished university I’d not decided to take that job at Nike, I had a part time job at the gym and I tried to option trade without any experience and back then that was on the dial up. I can remember placing trades where it would come up saying your orders were part filled.
So I lost that money and that’s when I got a job but there was a five year period where if you’d asked me about trading my response even as somebody who is positive and outgoing, entrepreneurial would have been, no it’s risky.
Dr Ro: We meet people my age and yours Harms who have tried it before and don’t want to go back there.
Ali came lost, but came back and revisited it and I want to get that message across as fear at the moment is literally as you said several times. Ali is putting people to the point where they’re not doing anything. My message would be don’t let what’s happened in the past happen in the future, create your history and you can change that.
Ali: I’m fortunate that my second business failed and the reaction was to go and trade. If I had a successful second business, I probably won’t be trading now. You fast forward 15, 20 years and part of what motivates me when I teach is we often see people who have tried and failed.
I almost thank the other education companies because they get to market to the people that I’m not going to market to but we end up seeing some of them and in a way I’m the person that was there that maybe wish I had.
My first mentor was great, very different to me. Very calm but that trip to Vegas was pivotal. To give the younger guys credit I didn’t have the information, I had to pluck up courage and do the course because once you commit to that it wasn’t like I was sitting on the plane getting an advert for another trainer coming along.
I think what makes it quite hard for people today is the trust issue because they can get screwed over six times for £100, so why would they then trust me? But back then I could get screwed over once for five grand.
There wasn’t another option, you had to go to Vegas or New York, the price was I lost my partner at the time, but even when she left, I was like something felt right at that moment.
I was devastated, I just lost my business. We were living in a one-bedroom flat. I had no money. I was in debt but when she went, I felt even this tiny sense of relief because I think what it meant is I can crack on myself.
Dr Ro: Do you think that your core values were misaligned?
There obviously was a connection between the two of you, but I don’t want people to think okay just go and pursue it fuck up a relationship.
Was there something deeper there that actually just became a magnifier?
Ali: Lucy wanted to settle down and have kids. I didn’t feel I could provide, she had a good job I didn’t. I didn’t feel I matched up.
Looking back I should have said this is what I want to do but I didn’t understand core values back, I hadn’t read Robbins at that point. I actually think the reason I probably felt relief was on some level I knew it was the right thing.
Most stuff works actually if you give it enough time and I think that’s what some people are not doing and at that point if I said Lucy I’m going to get a job it would have ended anyway.
Dr Ro: Your values would have been conforming to a behaviour.
Ali: When I talk to people who want to learn trade or start a new business at 45, 50 with two kids I applaud you. I had no commitment. I didn’t see it that way, I was like I’ve messed up here, but at least I can move here.
I haven’t got to put food on the table for two little people so anyone that does anything entrepreneurial or trading property business they’ve taken way more risk and I’ve seen way more courage than I had because I didn’t have those responsibilities.
You can end a marriage, you can sell a house, but once you’ve got kids the game changes so I was very fortunate that all this stuff happened and all these ups and downs happened without kids being at home.
Dr Ro: Just to clarify you have clients that come through either single or with kids, so it is just managing your own time to assist in the trading that works for you. Is that fair to say?
Ali: Yes and I would say that back then I was a whirlwind.
I was trying to find something that I could do. This is what I do and this gives me the freedom I want. You can do this as a side hustle very, very easily, but the challenge comes when your expectations are a certain point.
What was interesting was that all I wanted to do was not get a job. It wasn’t leaving my job, it wasn’t leaving the 80 grand job with the mortgage and the kids, it was just not getting a job so actually when I learnt to trade I had quite low expectations. I had no responsibility.
I can remember the day I stayed in the flat Lucy went back to her mum and dad and when I came back from Vegas and traded about nine, nine, 10 months later, I covered the rent and the bills.
Not the food, I was still going to my mum and dads. The first month I covered the rent and bills. I was like, a shitty city one-bedroom flat on the west side of High Wycombe didn’t bother me.
There’s a new guy on Dragon’s Den and he said when he sold his business 300 million it didn’t feel as good as when he was literally dirt broke and hungry he was in a pizza shop he put his hand down the sofa and found like six quid or £13.
Sold his business for 300 million he was actually more elated the day that he could put food on the table. I could relate to that it wasn’t about the cars it wasn’t about the lifestyle just actually now I’ve got a choice.
Then what happened was I went into that position where I then became a little bit bored because to be a good trader there aren’t highs and lows. If you’re consistent over 20 years, you’re actually measured.
So trading over time actually became a little bit boring for me.
Harms: That’s interesting because often people who are in their flow, they’re successful they’re making money day-to-day is boring for them and I’ve have heard people talk about once they are in a bored state things are working, systems in place, they’re making money it’s impressive to stay in that state because often some people get bored literally and then go seek some excitement.
I think that’s the challenge youngsters of my generation are having.
Dr Ro: Did you fill that boredom by going then on to teach it?
Ali: This is where the teaching thing was by chance and again there were contrasts.
My next partner, interestingly, was very different from Lucy. Clare, a highflying business person. Quite aggressive in a nice way. High achiever.
So imagine me at home I’m trading doing alright she’s bringing good money and she’d come home on Friday I’d ask how was your week and she’d say, I flew to Luxembourg and I did this and did that what have you done? I’ve placed a few trades and done the washing. You talk about contrast frames. I had a massive contrast frame going. What am I doing?
So trading became very boring, but at no point did it become boring to the point where it wasn’t challenging and it didn’t become something I didn’t want to do and that’s the difference.
I see a lot of the younger guys and girls once they get into that mechanistic place where things are working they almost want to ditch that thing, it’s like why not just build around it? Why not look for a different way for trading to challenge you?
Why not look at another business?
The teaching thing was literally before I met you Ro was completely by chance. A friend of mine got a call from a guy that you were doing some training for and he said come down for an addition.
This is when it hit me down. I went to London for this audition. I didn’t know what I was doing but I went along. I stood outside. It was like the queue for X Factor. There’s a guy behind me from Spain and I said do you trade? He said I’ve done some of the guys’ courses, but I’ve not done anything with it.
Then I walked in and literally I had to stand on an X.
I got asked questions and then I got the email saying can you come down to London you’ve got a hotel room booked, you’re going to be there for three days and then that’s when I walk in and you’re at the front doing your thing and I’m like this looks fun.
Dr Ro: I tell you he bounded up with absolute enthusiasm right down the central aisle and instant connection, but full of beans and I still remember that.
Ali used to speak 100 miles an hour with complete passion with every single word. Here’s what’s interesting: my trading went downhill for the next five months. Because I was day trading and then coming down for three days four days to do the events.
Ali: And these were rooms of 100, 150 people and they wanted every ounce of you.
What was really interesting was I was also practising for the slot at the expense of my trading. So for me now it’s different because I trade in a completely different way back then classic Ali, all or nothing.
Ultimately when the speaking opportunity came along and I had to give the energy to be able to deliver at the level that you were expecting me and I expected of me my trading went downhill because I wasn’t swing trading.
I was taking two days out of the week to practice which affected my trades, so that’s something I see with people as well as. They like the idea of day trading because it’s sexy and you can make more money.
But I’ve worked with a lot of people that have traded and then come to me and say, I don’t want to day trade anymore. What can I do?
Number one, lower your expectations because you probably will make less money as you’re trading less but you might be putting in an hour a day, maybe even 20 minutes a day, a day traders there for hours out of eight.
Dr Ro: So a swing trader it would be over days, possibly a couple of weeks whereas a day traders literally out in an hour in the day. The energy and the focus is very different.
Ali: Most of the day traders that I coach because I don’t day trade anymore they may play six or seven trades in the day, so that requires a lot of attention and focus they might be in multiple trades a day.
They might end up at the end of the week 30 trades in, in and out, in and out they’ve been in the market 30 times. I might only be in the market three times as a swing trader so it is a big difference, but you then manage that expectation.
I didn’t manage the expectation, so I’m coming down putting the energy into here thinking I can still deliver it at the same level as my day trade.
So teaching was a blessing back then because it made me realise that somebody that has got a job who wants to trade and it is a big thing at the moment people saying we all have got the same 24-hour in a day.
But the average person is saying fuck off you don’t have three kids you’ve got a nanny, we haven’t got the same 24 hours and I used to be the person that said we’ve got the same 24 hours.
We haven’t, we’ve all got 24 hours but not the same 24 hours and it’s made me a better teacher knowing that people have got kids, a job that takes 12 hours of the day and they want to maintain some level of health and fitness.
Whereas when I first started coaching people I’d like to find the time. Just make it happen.
Dr Ro: I think that’s still a misconception people have. So fast forward you’re now at a point where you manage funds. Was that a big step over for you to make that decision?
Ali: It was something I’ve been dabbling with because there is a very close friend of mine who trades and we’re both in the education space and we see ourselves sounds a bit crap, we see ourselves as the guys that do it.
There is only one other education company I’d recommend and that doesn’t mean there aren’t other good ones out there, and that doesn’t mean that there aren’t good educators, but a large percentage are not trading and you don’t have to declare your results.
You don’t have to show your results, you can train people and do a fairly good job without actually delivering. But for me the reason why I think we do so well with students over the long haul and get people to full-time is because they see us go through the ups and downs and they share it with us.
That’s on the inside and part of the reason I did the fund was because the company came up in London who said we want to make good retail traders create a mechanism where other people can invest into it.
The challenge with that is that as a trader you don’t necessarily see what and how that trader is trading so they could be taking high-risk and then getting high reward. So you try and copy their trades and then you haven’t gone risk makeup so I would rather be in a space where I teach people what I do, but then the fund was really another stretch for me.
I had to have a three year track record so I had to show and deliver a three-year order to even get a look in the door and then trade live through their mechanism for a period of time before I could launch the fund in June 2020, and that’s where we are now. So for me it’s like if it’s getting a little bit boring maybe do something that is in line with what you’re doing and stretch yourself.
As I started to have a greater appreciation for what my clients go through so I started experiencing some of the emotions I no longer experienced because I’m now running a fund that and it’s got six figures of my money and it’s got other people’s monies, that’s a very different ballgame when you place a trade and you know the faces behind the money.
I started doing the things because suddenly in a way my ceiling has shifted. I’m not regressing but I’m now behaving a little bit more like a novice and it’s been brilliant because I’ve had a newfound appreciation. But I’ve really appreciated what some of my clients go through when they start.
That level of attention has resulted in such a great result so far in the fund, which is fantastic. I said it’s 20 to 23% up in about 18 months and again that’s done in a certain way. There will be people that go. I’ve made 20 times that on the crypto investments, but that was a lucky guess.
This is a systematic trading process. It’s a different mindset and the challenge again if you think about the melting pot you were talking about Harms, you’ve got instant gratification overwhelmed with information, you can access information about crypto, stories about people making millions.
They’ve made unbelievable returns in a short period of time, it actually makes what I do almost the traders got to go away and screw up before they come to me. If you come here consistently you might do 50% putting in two or three hours a week as a day trader, my mates made 9000 on crypto so in a way they’ve almost got to go away and get hurt.
I’m not suggesting people do that but I’ve had conversations with people and two years later they say I you should’ve listened to you in the first place. In a way they had to go and lose and experience it because they’ve got too much greed.
Dr Ro: That’s the pain conversation again.
Ali: You don’t have to do that, but you do see that with people and the crypto space has been beneficial. I’m working with a guy now that is literally about to go full-time and he made money in crypto but realised that he got lucky.
He’s like I don’t see this happening again because of a lack of consistency.
Dr Ro: So what is trading and what is it from Ali Crooks?
Ali: It’s not a get rich quick scheme. However, it drives me nuts when other training companies say that and then they advertise a product where you’re going to make this much money.
It is fundamentally pure capitalism in a nutshell, the market doesn’t care what school you went to, what grades you’ve got, who you know, your social circle, if you can do two plus two and you’ve got dedication then you can do it, so it’s pure capitalism. It’s really the ability for you to make money on the fluctuation between different assets.
If you go down to the bookies and you bet on a horse you can profit from the result of that horse without ever owning it. whereas if you want to make money as the horse owner, you’ve got to put the horse up, you’ve got to train it, you have a jockey.
Yes, you might make a bigger return long term because the horse might cost you 10 grand and you sell it for 10 million, but the effort and time commitment you’ve got to do that whole time.
Whereas as a trader you come and say I see the value in the horse I’m going to buy into it and come out of it and then I go to a different race and buy and come out. It is the ability to step in and out, pure capitalism it’s liquid asset and it’s a really, really great way of supplementing income.
Dr Ro: Or replacing an income potentially.
Ali: I’m always wary of that as it’s a minority of people and sometimes by being wary of that I give people more hope. Sometimes people come to me and think I’m going to get them making two grand a month and they’ve got two grand in the trading account and they haven’t stopped to think that 100% return on the money.
If I said to them if you stuck around for five years and learned the system then maybe you could go full-time further down the line.
I have worked with people that have started with very small amounts of money, but have got the time and patience to see that through. It’s exponential, I’m only actively in front of my screen five hours a week.
Yet I’ll average 65% a year on my own trading account. It’s lower in fund because I’m taking the risk, but I don’t know where else you could take five hours out the week and create that return.
Dr Ro: When we talk about assets we talk about buying and selling stocks, but it could be trading currencies.
Ali: Essentially anything that fluctuates in price. I think back to when you used to trade the housing market. You profit from a fluctuation in price and this is the important bit whether prices are up or down.
The fundamental difference between a trader and investor is an investor makes money as the value of the asset goes up over time.
So the investor has got to be in potentially for longer and if the value of that asset falls, they have to sit through that value falling to make money. If they bought into the asset it needs to go in an upward direction but they have the option to make money when the asset goes down, so they don’t need the price to always be going up, they just need some fluctuation. It could be the price of Vodafone shares going up, going down or it could be the difference between the exchange rate of the pound against the US dollar that fluctuates.
It could be the value of the crypto currency against the US dollar and it could be the price of a barrel of oil. I trade oil a lot because I understand that market and it makes sense to me. Gold fluctuates in price so as a trader you’re driving a vehicle that doesn’t matter where it’s going there’s the potential to make money, whereas an investor overall the asset if you buy Uber shares unless they go up over time, the value of your assets down now.
With that is risk because you are essentially just like the horse scenario you are not owning the asset you just get a ticket when you go to the bookmakers. You’re not owning an underlying asset, so if the trade goes against the value of your contract, your ticket can diminish and it can cause you to lose all of your money. The counterargument is what investors will say the reason you need to invest in the stock is if the stock goes to zero you still own the asset.
The difference is you have to be in something longer. So what I trade is time liquidity risk. What I want to do is be in and out of something relatively quickly and by that I might mean two weeks, two days, I may make a 5% return during that period. But I’m in and out and I’ve got access to my cash at any point.
My primary asset if you were to sit down and audit me, my primary asset is cash, so any asset that is liquid you have the ability to spend it or transfer it very quickly.
For me I’d rather have £1 million cash than £10 million in property because I value that element of liquidity and I’ve got a skill that can make that cash grow, but somebody else might not either value that liquidity or need that liquidity so they would be better off having it stuck in what we would call hard assets.
I’m a soft asset guy. I own some crypto’s and some gold and silver, but gold and silver is really hard assets, not liquid. I can’t take my gold coins in the safe rundown and use them to spend money. But tomorrow I could take 50 grand out of my trading account and buy a new car.
With what I do I’m in the business, even though I don’t control the market I’m in the business of going owning nothing and controlling everything. I choose when I get in and when I get out and whether I want to stay in the trade and I set the parameters which is if ABC happens great I might make 2% on that trade if it doesn’t, and XYZ happens then I lose 1%.
I’m willing to take the risk of losing 1% to make 2%. That’s the difference between that and saying I like the look of Uber. I think it’s going to be worth 10 times what it is in 10 years, I’m going to own those shares.
There is nothing wrong with that but it’s a less cash generating strategy. The way my fund works in my account works. I say, I’m in the business of generating cash and the return you see could be more or less than a crypto has made but the advantage you have as an investor in my fund or advantage I have I can get to my cash very quickly.
Harms: So who is trading right for because people often come to the table with preconceptions.
For example, somebody listening to your introduction about trading may say that sounds scary or there’s words Ali is using which sound alien to me therefore I must be rubbish at trading.
So who can become a trader?
Ali: I would say this answer again. I almost don’t want to say it, but everybody, everybody or anybody can become a trader.
That doesn’t mean everybody will get there, but it doesn’t really discriminate, you don’t have to network. It is available to anyone, but I would say that comes with terms and conditions that anybody has to be willing to take risk. Has to be willing to take continued risk.
You’re not necessarily taking one big risk and saying I’m going to buy a house and take a year to find the one and then get a deposit and put it in, you’ve got to keep taking small risks. I use the word so much that I’m comfortable with it. I have a pre-frame about what risk means and two it’s all managed.
I think that the challenge people have is that they’ll have heard a horror story about Joe who bought a load of shares and they went to 0.
When somebody hears that phrase everything goes to 0, and as humans we generalise.
And they attach that to the word trading. I ask what size was your account? They say I had one thousand pounds and how much cash did you have at the time? 50. So you lost 2% of your total cash but you’ve turned around and said all of it. Yes you were probably managing that thousand pounds incorrectly to lose all of it but you haven’t lost all of your money. Robert Kiyosaki used to say, savers are losers.
Now I will caveat that with the trouble that somebody who spends all their money will go I’m not going to bother saving then, it’s if you save it and then don’t invest it. I talk about money to different groups, so I work with a guy at the moment who runs a course on helping people budget and do better with their money.
One of the questions I ask is, are you here with your partner? Are you a spender or saver? If you’re in a relationship are there two spenders, two savers or is there a spender and a saver in the relationship?
The idea is trading will often attract people who are good with money from the baseline level, which is they save money and they budget well because trading they think is about numbers and it attracts them. But where they struggle is as a saver and I’m generalising a little bit.
The saver is less likely to want to put their money to work, otherwise they’d have invested it by this point so when you say right, you’ve got to basically place this trade and you might lose 1% or 2% of the pot that actually works better for the spender. When I place a trade I don’t hope it will. I’ve already spent the risk so if I’ve got £1000 and I risk £10 of that on the trade that money is gone. I’ve spent it.
Spenders actually do quite well as long as they’re not reckless because the reckless spender will overleveraged. You have to be able to accept some level of risk and again that’s why I will get people that come through that have gone through three training companies and paint the picture that this is almost risk-free and it’s not.
Dr Ro: Explain the concept of risk reward and win loss ratio.
Ali: Imagine your trading account is like a bag of gold coins so Ro you’ve got a bag of gold 100 coins and Harms has 100.
When you place the trade you take 1% one gold coin out of the bag harms your account is 10,000, Ro yours is 1,000. So you both risk the same percent one gold coin out of the hundred, Harms yours is a higher cash risk because you’ve got a bigger pot. You play the percentage game not the cash game.
If you see trading stuff on Instagram with people they’ll show you how much money they’ve made but they won’t show you how many points or pips they’ve made or what they’ve risked to do it. when I go into my trading room I don’t say I’ve made a grand on that trade as one that will demoralise the guys and if Joe has only made 20 quid, Joe’s made the same percent return as me. I can’t submit FCA fund performance and say look how much money I made. It’s done in percentages so you play the percent game.
Both of you have risked one gold coin in 1% and essentially what you’re saying to the market is I’m going to get in at what we call a pivot point, so your personal pivot point you say right I’m buying or selling based on which way I think that market is going to go.
As a result of that without going into the complexities of stakes, if the market goes the way you want, and travels up a certain distance if it reaches that point Ro, you get out of your trade and you will get your gold coin back, and two more gold coins. Your bag now has 102 in and Harms yours is exactly the same, it’s just that yours was a bigger bag. So what you’re saying is, I’m going to risk 1% of my account on this particular trade and the goal is to get 2% back but that’s not guaranteed, which is why when I place the trade in my mind I’ve spent the 1% because sometimes I’m going to spend that and not get a return.
If you relate that to your life, some of us will buy stuff and we don’t buy it because we don’t get a return, we buy it because we like it. We all spend money on stuff we don’t want to spend but we don’t see a return on it, but we buy it, so as a spender I can spend money in the market as long as enough times it comes back being greater.
It’s still the gold coin but as his pot is bigger each gold coin is a great size. I get this a lot, if you’re so good, why would you only risk 1% why not risk 10? What most don’t realise is if you risk 10% of your account I’m simplifying the maths, on the trade and you had five losing trades your account is now half the value it was before. To get you back to where you started you need 100% return on your investment just to get back here.
This is where somebody can come along and say, trading is risky, but the challenge is that it’s not trading that’s risky, it’s you can’t manage risk.
I was doing an event and this guy went home on Saturday to a dinner party with his wife and he was like, I’m really excited about learning to trade. This is what I’m going to do. There was a guy there, an ex-hedge fund manager from Barclays.
He said don’t do it, it is gambling, and the guy tried to explain what’s going on. He said, don’t do it, I lost 30 grand in two weeks.
So of course this guy’s wife was like, what are you thinking don’t do it, but then as the night went on, the guy who was at my event was chatting to this hedge fund manager and what he found out was this hedge fund manager was using exactly the same trading mechanism, he’d gone from being a hedge fund manager jumped into the retail space, but he risked back when you could, he was risking 20% of his account on one position.
As a hedge fund manager you don’t trade this way. He was taking skill that he was successful at trying to use that as a retail trader lost all his money and of course all the wife could do is go, why would you listen to this bloke you’ve been to a seminar on when this hedge fund manager lost all his money?
He is risking a huge chunk of money on 150 grand.
Dr Ro: How does that translate to somebody’s real life? If I buy a buy to let property that buy to let property might make me £200 a month income now how I treat that is that’s £200 income that goes towards my electric bill does that work the same way in trading?
Ali: It depends on the person. It’s like doing a sport. There is a series of basics that if you don’t get that and at the end of the basic process we’re working out the person’s next step forward. I say what’s your goal, how much time do you have and where your skill set is?
For example if you were somebody working an eight hour job and you had two kids you’re not going to have the time to be a day trader, so the chances are you’re going to be a swing trader.
You’ll be placing trades either in the morning or in the evening. You place less trades because you can’t be in front of screens all day.
Let’s say this person wants to make £200 a month to pay the electric bill. If you want to make £200 on that thousand pounds you’re making 20% per month. I’m good but I’m not that good, because that’s moving from swing trading into day trading. That 20% a month consistently I probably won’t be able to do from day one.
However, if you make say 5 to 10% per month so you make a hundred pounds you’re not paying your electric bill but all you do is you keep the money in the pot, because eventually when you compound up that same percentage return is now going to pay your electricity bill. If you think about you, you don’t go out on day one say I’ve got my buy to let there’s my £200.
You’ve got to find your area, put adverts out, put in 100 offers to find the right one.
So you as the trader can get cracking earlier on the element of actually trading, but it might be that you actually work out that you get to the same £200 pot about the same time.
Dr Ro: Arguably with less cash because of the deposit on a house. Yes, you can refinance which would increase return on investment but you’ve got another six to eight months down there.
So that capital plus the time to prepare to do the one deal so the liquidity of the money is slower.
Plus you don’t have to drive 250 miles up north.
Ali: You don’t have to be sociable, you don’t have to talk to estate agents, you don’t have to do that.
Dr Ro: It’s an active versus a semi-passive income that is also a counterbalance to that as well.
Ali: There are different approaches.
There is a mechanistic approach which requires less skill, which means you can be in the market more quickly. So somebody could spend half a day with me and I can give them one specific strategy that means they’re in the market very quickly, but as a result, the potential return on that strategy is slightly less than if they took three months to really learn the craft.
Let’s say they learn that strategy that I can teach very quickly. They learn that strategy in month one that makes 3% great, but that strategy is mechanistic and it’s probably got a framework if you look back at the data that says it’s only ever going to get to 25% a year.
So short-term you can make more money in what we call a mechanistic framework which is less skill just more paint by numbers.
If you learn the skill of trading like learning any skill then in the first year, you might not see a massive difference because you might end up with 40% instead of the mechanistic trader that is making 20, 25%.
But then you’re going to make potentially 60% when the mechanistic trade makes the same amount. One of things I say to people is that I’m shit at maths but I’m really good with numbers and understanding the power of numbers, the two are separate.
That can be something that stops people moving forward but understanding the power of numbers is really helpful because if you get compound interest the difference between a mechanistic return of 20% versus a return of 50% over a five year period will blow your mind. There is a direct correlation between the amount you put in and the amount you get out. The challenge is so many people want to put in eight, nine hours a week, eight, nine hours a day but don’t want any guidance. I say to my clients you’ve got to learn, apply, feedback, reapply.
The trouble is, a lot of people are learning at the moment and they’re applying it, but missing that vital bit in the middle which is feedback.
Dr Ro: Around the topic of crypto and my knowledge around this is extremely limited but the reason I wanted to ask Ali is you said you aware of this is how do we protect the listeners who may be been sucked into this crypto, there is also NFT and a bunch of things happening out there that have been sucked into this and also by the incredible percentage returns being shown by certain people.
What is your perspective around crypto?
How does it play a role within trading?
Ali: I can speak from experience because I’ve been involved in crypto’s since the last we wave about 2017, 18 so I’ve seen it develop. I’ve seen it back when just opening what you would call a wallet was you needed a degree it God knows what to do. It was very difficult to do.
Whereas now it’s a lot easier.
Are you asking if I think there’s value in trading them? Are you asking if you think they are a safe asset? I can answer multiple ones, but for me I think cryptos are not going anywhere.
Meaning they’re not going away.
The easiest analogy is about the.com era and you back then it was dial up and if you wanted to go on the Internet you had to stick a disc into a computer with AOL written on it. Google didn’t really exist and you had these kinds of guys in the Internet space. I can remember using the internet at Uni in 94 and one of my friends Louise went to email her sister in Australia and we were like what’s an email?
So it is still a relatively short time frame. If you think about the late 90s, we had the birth of the Internet all these companies with stupid ideas, some good, some bad. None of them making any money , we had the Internet, we had search engines, why would you want to search anything when you’ve got the Yellow Pages?
So what we’re seeing right now is, why would you want some fangled online money when I can give you cash?
Dr Ro: Ali and I used to share an office in the original grounds of where they used to print CDs and that whole business fell on it’s knees.
Ali: We are seeing a pattern so money is cheap. Markets were high back then, in relative terms and we had this new thing called the Internet and what’s happened if you fast forward 10 years is the companies within the Internet space ruling that domain added value and that’s the key thing. Imagine your life without Google so the value in Google is that they’ve been able to deliver at a level that I don’t search on Yahoo.
You couldn’t have predicted five years down the line, which Internet companies were going to be running the show, so I look at crypto currencies in a similar way. In five, six years time the crypto currencies that people will use will be what people will know will be the ones that have somehow found a way to add value.
So if that crypto currency can’t find a way to deliver real-world value it will disappear or have no value. A bit like NFT’s that’s like the crazy business ideas that got £50 million or dollars’ worth of funding back in the late 1990s.
Some of the NFT stuff is just going to disappear. Some of it is a Ponzi scheme so as somebody that is looking at it and thinking I’ve missed out, what have you missed out on?
You’ve missed out on an exponential return that happened. If you’re thinking like that your mindset is already in the wrong place. If you look at the crypto space and say okay what is it, where is the value and what do you think is going to happen over the next 5 to 10 years, then that can be something you invested.
The challenge is a lot of people are trying to trade crypto’s very much like some of the stocks back in the 90s that were highly volatile because the market is new, uncertain and they’re trying to trade Crypto’s so they’re trying to bet on the horse because they heard about somebody who has made 9000% that didn’t bet on the horse, they bought the horse.
If you look at my performance on pure percent return over the last two years my best performing asset class was crypto’s, no skill involved. It wasn’t a repeatable mechanism. I just took a percentage of my cash pot and bought some basically ABC.
No actual skill.
The reason I’m cashed out at the moment is because prices have dipped.
I’m not treating it as an investment at this point because it’s still relatively early and if I treat it as an investment I’m not going to be looking to make 900% in three months, I’m looking to make the same level of investment that Apple, Google, the stocks have made over the long haul.
That’s how I try to explain it to somebody, maybe not the cool kids because they’ve got a better understanding about how it works than I have, but the guy or girl in their 30s, 40s, who kind of feels like they should be doing it.
You have to caveat what I’m saying to the listeners is that I’m not an expert in that space. There are certain mechanisms where you buy what are called the alt coins, they stand for alternative coins.
These guys are buying up coins for the sake of argument, they’re taking $10,000 and putting one thousand on each coin at one cent per coin.
All they’re hoping is two or three of them will shoot up, if that’s a legitimate strategy that you’ve researched and you’ve got fine, but most people will hear about the guy that did that, who made 40,000% on coin number four and then goes to try and do something similar or uses a different methodology. You get it in forex trading.
People see the guy online who has made X number of points or X amount of money and then then try and replicate what he’s doing in a market that doesn’t give them that.
One of the things I do with students is I ask them, what do you want and does that market have the capacity to give it to you? For instance, I want 50% return as an average of my own personal trading portfolio but the strategies I trade have to have the capacity to make a hundred on paper as then that means I can underperform or allow for market fluctuations in those markets and still hit my goal.
The challenge most people have is they see a market that’s done an exponential curve and see that they’ve missed out 9000% and want the same.
There’s no risk mitigation here. There is no system of risk.
It’s like just chuck it in there and hope whereas with trading you can actually go through a structured approach where you risk a certain amount for a given reward knowing patterns.
I’ve got clients that I’m working with that have come over to forex and indices they were able to mitigate risk but what they couldn’t deal with is the fluctuations emotionally wearing them out because they actually said I’d rather forgo that level of percent return and be able to sleep at night because the swings within the crypto market are so big, they weren’t willing to pay the price.
So even if you can mitigate the risk from a financial point of view you might not want to go through the emotions. It’s almost the worst market to get into if you haven’t got the ability to understand risk or the emotional muscle that gets built from applying it.
Dr Ro: Ali, any final words before we see you in part two?
Ali: First of all, thanks for having me on. I would say the most important thing is that there isn’t one way to trade. I have some people that I work with and trade half an hour a month.
Yes, the returns are less but that fits in with their goals and profile. Other people spend eight hours a day and that fits in with their full-time job.
Don’t put a limit on it at this point there’s no hard sell in our process, if it’s not for you it’s not for you. But I would explore it because I know just if I look at my client base the difference in people you’d be surprised there is no stereotype.
Don’t stop yourself thinking that you can do this because you aren’t good at maths, or you don’t fit the idea of you’re not a cool kid or a guy or girl from the city, so don’t let it get in your way.
Dr Ro: A huge thank you Ali and thanks for being honest about your journey and opening up that
So for the listeners that’s Ali, Ro and myself signing off. We shall see you in the next episode.
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