About Mr Phil Newton

Phil Newton Stock Trader

I’ve been trading full time since 2000 when I was 23. Prior to that, I had been dabbling since I was 15.

I was hand drawing charts between the many and varied distractions of any teenager and I did manage to place my first ‘trade’ 3 days after my 18th birthday.

I purchased some shares outright and got a nice pretty certificate through the post. The shares were bought at £0.54.

Looking back, I was most likely suffering from very minor panic attacks daily as the price went from £0.54 to £0.48 almost immediately.

Maybe two weeks later it was £0.58 – then £0.61.

When it went past £0.70 – I was in a different type of panic.

The next few months were fitful and I don’t recall sleeping or doing anything other than rushing home from college to phone my broker (pre internet days).

Eventually, I caved at £1.12 and closed out using a complicated system most likely involving levers and pulleys. A pigeon may have also been involved. I was filled at £1.09.

That’s when it became real and that’s when I knew I had to do this all the time. That’s also when I realised I didn’t know as much as I thought I knew and that I needed a more solid plan of action.

Trading – the early years

As alluded to above, I got into this around the age of 15. I was visiting a neighbour, dropping something off for my parents.

The neighbour was on the phone talking what seemed to me like a foreign language. Gold was being discussed, as well as prices and some big numbers.

After asking what it was about, I had a two minute crash course in what investing was and that it wasn’t just some prissy city boys club.

Anyone could do it so long as they had the cash.

Beyond that two minute conversation, which basically just made me aware of what it was and what would happen if you invested right, nothing further was ever discussed and he outright refused when asked.

That was my first hit of trading crack and I liked it.

That short conversation started a journey to find out more about it which, for me, involved a train ride to the city centre and the start of my weekly adventure to the bookshop.

I would stand in the aisle reading a book I couldn’t afford and take a few notes. Like most people, I was looking to pull that ‘one secret’ from the pages that would, magically, suddenly make sense of it all.

I was eventually gifted ‘McMillan on Options’ for Christmas, a £60 anvil of a book, along with ‘Schwager on Futures’ the following month for my birthday; another sledgehammer sized read.

From spending some time flicking through similar books on the bookshop’s shelves, I realised that the content was not very different from one book to the next. Plus, for a then 16 year old, they were way too expensive.

The next several years were spent dipping into this world on and off and hand drawing charts using 20 minute delayed data from teletext.

Fast forward several years and I finally made the decision to go to London and seek my fortune as a stockbroker (I still didn’t realise that I wanted to be a trader not a broker, but hey ho.)

This was right at the time when things were going digital, pits were closing thanks to PATS and other new systems. Barclays alone got rid of around 900 pit traders in the move to digital trading. Not unsurprisingly, trading remained just a nice idea as well as my trip to the big smoke also going up in a puff.

It was also around this time (turn of millennium), that I found a more local job trading index futures (a very brief stint), but this allowed me access to a computer, real time data and charts.

The small group of us that were there were glorified button pushers.

The owner – or guy whose cash it was – was a nervous wreck when it came to trading.

I couldn’t understand why, as he had a system that would make money regularly. Looking back it was just his personality.

He would stop us from trading almost daily and I would end up sitting there, taking notes on the markets and putting all those things I had in my head and read in books into practice.

Very quickly I thought I could do better and opened a small account of my own. I learnt immediately why ‘the boss’ was nervous all the time.

It was so different when it was my own money, but I willed myself not to be like him, and continued to follow my methodology.

The drive to doing it full time was not my decision.

I became unemployable due to poor health (Crohn’s disease) and received one of the most amazing motivations to get my shit together in the form of the hospital chaplain standing over me, asking me if I wanted the last rights.

Not this time thanks, I’ll catch the next bus up.

That was pretty much what motivated me to give it a shot; I had no other choice as being housebound limits choices somewhat.

I became good at trading fast because I had to make it work. People asked me how I did it, so I showed them how.

That’s what I did for the next 12+ years.

Trading now

In 2002 a friend asked, “Do you trade currencies?”

“No” I replied.

He said, “You should”.

So I did.

I got a data feed the next day and moved from trading indexes to almost exclusively forex within 2 weeks. He had identified a coming shift in the markets that, back then, I was too inexperienced to see.

In 2010, I saw that the forex ship has sailed and there were better things to be doing with my time. I no longer wanted to day trade and neither did I want to sit at the screen all day.

These days I spend maybe 60 actual minutes under the title of trading.

The opportunity I viewed as being the next thing was to be back in stocks and stock options.

This is mainly due to the artificial bull market we have seen which is particularly emphasised in the U.S. markets. We are also due an expansion in volatility and, using options as the vehicle, I plan to take advantage of this.

That aside, I quite enjoy the greater free time I have from not day trading and the on-entry defined risk strategies that allow me to sleep regardless of what may or may not happen.

My current method is to exploit what I refer to as ‘trading normal’. I’m not looking to ‘knock one out the park’ for a 20% stock movement. 3%-5% happens every week and I take advantage of extremes of movement to help with timing which, on my trades, increases the probability of success to above 63%.

Using daily charts I can take my time; find 3-5 hot stocks every day and swing ’em for 7-12 days taking regular small profits.

Future plans

My future plans are factored in to what I’m currently doing now which I envisage will take up the next several years and, potentially, is the way I plan to trade for the foreseeable future.

I will continue to develop myself and my skills while enjoying the new luxury of more free time to explore other business interests.

The setups that are currently in use help me to identify opportunities fast – without hours of procrastination or dithering.

I plan on keeping this aspect of my trading entwined with any future developments.

Tips to pass on

Trade small. There is nothing more stressful than having all your eggs in one basket hoping this is ‘the one’.

The reality is that unless you are really really good at it already, that type of speciality doesn’t work in 95% of businesses, and trading is no different.

The big dogs are making an average profit over lots of occurrences utilizing modern technology and the plethora of ways that they can trade.

Even so, the little guys with smaller sized accounts can complete with them and, in many cases, outperform them. That’s because they are small and don’t have liquidity issues or regulatory restraints.

Use a simple and solid strategy; you do not have to reinvent the wheel.

Know that everything works some of the time.

Find something that you are happy using that suits your particular circumstances.

Day trading, forex – or whatever the current buzz is – is not the holy grail.

There is no such thing.

Just be smart about the way you conduct business and it will all work out nicely on average at the end of the month… just like every other business that does well in the world (funny thing eh?)

My current method utilises daily candlestick charts & Bollinger Bands.

I look for price at the upper or lower bands – that is also at previous support or resistance (in last 12 months), and has shown some sign of exhausting the previous move to that level (e.g. hammer/shooting star).

That’s it, that’s working for me right now.

Finally . . .

I’ve seen a lot of aspiring traders over the years, trained some of the current leading coaches/mentors, worked with some amazing authors/hedge funds and seen a lot of people make this work.

The ones that don’t make it work are often the ones that think too much and try to reinvent the wheel – or be / think they are – smarter than the markets.

Stop trying to hit a hole in one and start treating this like a business and look to make an average profit on a consistent basis.

This will work for you, whatever and however you decide to do it.

22-years later, I’m still learning and improving . . .

Production Line Trading

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