This article is based on a conversation with Omar Hussain. Conducted by Owain Higham.

 

Can you tell me about yourself? Who are you and what’s your background?

 

For me business was my first love. Ever since I was a child, I’ve always gravitated towards entrepreneurship. I would often find myself in high school, 15, 16 years old, skipping the classes that were being taught because they weren’t intellectually stimulating enough for me. I couldn’t really see the utility in learning about the history of the provinces of Canada or art , you know what I mean? Plus I was looking at my teachers and I was like: “Hey, I don’t really view you as very successful in terms of a top-tier earner.” I’m not knocking teachers. Teachers are extremely important, especially in trading. But I just wasn’t being taught what I wanted to be taught, so I would skip classes and go to the library to pick up books on business. I’d learn sales, I’d learn psychology, I’d learn marketing and economics. As the months went by, I would start to gravitate towards certain industries. Mind you, I was 15 or 16 and I didn’t really have any real, tangible skills, so I’d mostly find myself working part-time jobs over the summer and maybe over the weekend as well, saving a bit of money and buying courses from people who were currently successful in industries that I wanted to venture into. 

 

Around 17 I got into Amazon FBA and dropshipping. I did that for a bit, I gave myself 3 years to try  different businesses. I thought: “I’m gonna try everything. I’m gonna see what really lights my soul on fire.” I made a bit of money with Amazon, but I quickly realized it didn’t really speak to me. I kinda liked consulting, but again I realized I was a bit too young to be consulting anybody. I was like, “Hey, I need some real, tangible skills”. Long story short, eventually I started a merchant service business when I was 19. It was a great stepping stone business for me. It taught me a lot of valuable skills.for example sales, negotiation, marketing, organizational  structure. Now as far as the business went, it was relatively simple. I would place ATMs in business, By approaching business owners and convincing them to switch their business model to cash-only. So I would basically convert their traffic into my traffic. If they had a couple thousand customers, I had a couple thousand transactions as well. I did pretty well.The timing for that business was perfect. I don’t remember the exact year, but weed dispensaries were illegal, they were still kind of operating in the gray market because they were waiting for legislation to make them legal. So what I did was, just before the legislation passed, I went to all the weed dispensaries and I sold them a contract to allow me to place ATMs on their premises once it became legalized. I was able to capture an untapped market relatively early on before I faced any competitors, and it really allowed me to grow. 

 

Eventually, I outgrew the business. I realized it was a bit of a saturated market. So at 21, I sold the business. Mind you, I didn’t have a university degree, because I decided that from my perspective, if I was going to spend the same 4 years as the person to my left and the person to my right, studying the same cookie cutter materia and have the same amount of debt as my peers; what competitive advantage do I really have? That was my perspective. So I decided: “You know what? I’m gonna learn through the hard knocks of life and try making myself successful in business.” Thankfully I learned quite a few valuable lessons. I made quite a bit of money when I sold the business, but I was kinda left with: “What do I do now?”. I didn’t have any job I could fall back on, I didn’t really know what else I should pursue. 

 

How did you get into trading?

 

Ironically, when I was running my business, I first got introduced to trading on Instagram. I didn’t really think much of it, but I saved some sort of trading video online, and I actually saved it for my younger brother who was thinking of going to university. I was like, “Hey, maybe this is something you can pursue too.”  After I sold my business, I was like, “What do I do?.” Scrolling through instagram one day I stumbled across the video again and thought: “This is kinda interesting. Maybe I’ll pursue it.” 

 

The video was the classic trap: Someone showing their PnL of a few thousand dollars, and I was thinking: “Hmm, how’s that possible?” I’ve never seen someone earn that type of money in a day before, so it caught my attention. 

 

So what was your trading style in the beginning?

 

I set aside about $20,000 when I first started. My entire life I’ve always been a very calculated person, I always took my time and did my research. Call it a lapse in judgment—I spent only a couple of days before I pulled the trigger on a course. I won’t mention the name, but I got into penny stocks. I spent $10,000 on my first trading course, hoping that it would provide me with all the tools necessary to become successful. I didn’t realize the statistics of trading when I first got in. only 3 to 4.5 of percent of traders make it over the long-run, and turn it into a career. 

 

So here I was, a little young, a little naive, thinking trading was this holy grail, as if I am going to learn this for a couple of weeks and start earning money. The course provider ended up not teaching me anything that I needed to know. No technical analysis, no fundamental analysis. It was mainly just: “Buy here when the move goes parabolic”, MACD,RSI indicators, and generic chart patterns. The fundamental learning blocks that were necessary to develop into a successful trader just weren’t there in that specific educational provider. It’s a common theme in the trading world, unfortunately. 

 

How has your trading style evolved over the years? What’s your style now?

 

As mentioned above, I started trading just like every other retail trader out there,using every indicator under the sun and looking for chart patterns. As the years progressed I’ve become a rule based discretionary intraday day trader. I target setups that offer an asymmetric risk to reward ratio and only enter when I spot trapped traders on the tape. Let me tell you a little story before I continue. So basically, let’s say someone new wants to learn trading. When they Google “trading”, they have these resources saying: “Trade this wedge, trade this channel. If you see a double top, a double bottom, get in over here.” There are quite a few trading chart patterns. Take a look at the flip side where there are hedge funds and market makers. They don’t really look at chart patterns the way we do. These guys are multi-billion dollar firms, and they run their businesses day in and day out. Why would a company that’s making money allow you to access free information online that allows you to extract money from the markets easily? Why is it that you can open a brokerage account with no degree and no minimum experience? It’s to attract new and naive traders into the market and use them as liquidity. They are being taught something that, unfortunately, is being used against them. It’s only when you gain a thorough understanding of reading the tape and orderflow where you’ll be able to distinguish between a misleading chart pattern trying to entice you into a predictable trade. A valid trade setup needs to have the right buying/selling composition to support a move to the next zone of liquidity.

 

Traders try using historical price patterns to predict future price movements, right? When someone sees a double bottom that’s worked in the past, that is the byproduct of the price transactions between buyers and sellers. They look at that at face value and think: “This is gonna happen again and again and again.” When in reality, the double bottom that they saw yesterday—the form (chart pattern) might be the same or very similar, but the contents of it are going to be very different. You’re gonna fail to understand the market sentiment, you’re going to fail to understand the real strength of buyers or sellers. Because all it really takes is one little sweep of the order book at a key level to tick the market up before the candle closes, and hey—you’ve got a hammer candle or an engulfing candle, or some other form of historical chart pattern that will entice you into a trade 

 

You have to come from the perspective of the market searching for liquidity, new traders are being taught something for free, why would you be taught something for free that enables you to make a significant amount of money? That’s just not how the world works. New traders are taking technical analysis as the be-all and end-all. They think just historical patterns predict future market direction, but in reality it’s the thorough understanding of the players behind the scenes, what’s really going on behind the candles. That’s something that Bookmap really helps with. For me personally, I wouldn’t be able to be a successful trader if I didn’t have Bookmap or understand order flow. 

 

So you’re not trading market patterns, how are you formulating trade hypotheses?

 

So technical analysis is the predominant language used to interpret the market, but I don’t make trading decisions solely off of chart patterns. I need volume to confirm my trade hypothesis. I personally view the market in terms of liquidity zones and engineered stops around previous market structure.. The market is a storyteller that advertises price and entices retail  traders to get into a position, right? The market makers are basically in hunt of liquidity. They want to find or engineer areas of high-liquidity (accumulation) that they can eventually use to harvest stop losses  and execute their large size at a discount. Unlike retail traders, they can’t just hit the market and get in. They have billions of dollars that they have to size into, they almost always need to average into a position. 

 

The market entices retail traders into traps on a daily basis whether it’s breakout traders or retest traders there will always be winners and losers, the market is a zero sum game. Now as far as developing trade setups, I leverage people’s stop losses. I’m sure many traders have experienced a trade where they entered a setup only to see it come and hit their stop loss before going in the direction that they initially assumed it would go. So now I mainly look at the market in terms of liquidity. There are stop zones and only once the liquidity has been taken and stops have been triggered do I enter. The purpose of a stop hunt is for liquidity, so if the liquidity has been taken, there is no reason for the market to return to that level, because the liquidity pocket has been taken most of the time. So that’s pretty much what I do: Trapped traders and liquidity zones.

 

How do you think about your stops? Are you using wider stops so that you don’t become victim to those moves? 

 

That’s a great question. What I do is wait for the market to paint me a picture. The market tells a story. Everything is similar, but never the same. One thing that’s constant is the retail education of trade entries and trade setups. 

 

What I do is use Bookmap in conjunction with market structure. Let’s say there is a head and shoulders pattern or a key area of support and resistance. Inevitably, the market’s gonna go there. It might come back and retest, so what I would technically do is wait for the market to do a deeper test and entice breakout buyers into the trade. Then when price closes back below the range, what I would do is target the other side of the liquidity that I can see on Bookmap, and that would be my target zone. Sometimes I still will get stopped out, obviously. But it won’t stop me from getting back into the market, because if the market traps a lot of breakout buyers and closes below, more often than not it’s gonna move to the next zone, because the market moves from zone to zone. 

 

What would you say your biggest weakness is that you’re currently working on?

 

Consistently showing up everyday would be my number one, as well as emotional regulation. Every single trader has dealt with crippling fear and anxiety in trading, you really need an ironclad grip on impulse control. You need to make sure you can really control yourself, and trading doesn’t make it easy. Just simply based on psychology, when you have money on the line, the risk of financial loss triggers your fight or flight response, blood leaves your prefrontal cortex and goes to your motor functions, so you can move and react quicker. But it kind of leaves you in a vulnerable state, because when blood leaves your prefrontal cortex, it affects your ability to make sound, executive decisions. When you’re under a lot of stress, you’re prone to making a lot of mistakes. 

 

Trading isn’t just about looking at chart patterns, you have to be a risk manager, you have to be your own physiologist, and you have to be your own data scientist, you know? It’s a really interesting endeavor. Out of everything that I’ve ever done, trading has been the most intellectually demanding and emotionally tough feat that I’ve ever had to go through. 

 

How are you managing your emotions in trading?

 

What I would recommend for beginner traders is to firstly read books like those by Dr Brett Steenbarger—he’s one of the originals in the trading space. The amount of traders he has helped through issues that they didn’t even know they had is just unbelievable. He has quite a few books: The Daily Trading Coach and Trading Psychology 2.0 are two I would recommend everyone read.

 

I personally tag my emotions during the day and create corrective actions. So whenever I feel fear, anger, FOMO, greed, I have a way to combat those emotions. A lot of people will try to suppress it, to bury it. But your mind doesn’t speak to you in English, it speaks to you in emotion. So when you’re looking at the chart and you feel one of the big three (FOMO,Greed,Anger) . It’s really important to tag your emotions and understand the reason why you’re feeling a certain way. For example, there is a car metaphor: If someone has never driven in the snow and comes to Toronto where I’m located, they’re going to feel fear when they’re driving. Instead of repressing the fear, you’re supposed to ask yourself: “Why am I feeling this? My body is warning myself about something. I think I might be in danger. Why do I feel in danger?” 

 

The way it’s applied to the markets is like, “Hey, maybe I haven’t seen this before. Maybe this is a new chart pattern that I’ve never seen before because I’m still new.” Or maybe there is news information coming out, or I’m in a trade and I see something happening in the price action that I’m unsure of. How are these emotional responses affecting my trading? A lot of people really need to focus on emotional regulation and emotional control, because more often than not, you’ll find that it’s not hard to read the charts—it’s more difficult to manage oneself. 

 

Any final comments?

 

To conclude, I’d recommend aspiring traders to learn from established trading organizations that have a track record of success spanning over 5 years.Trading is a performance sport that demands you stay on top of your game every single day. Trading will punish you if you fail to adapt to the ever changing market environment. It’s absolutely vital that you choose an educational provider that has stood the test of time and develops self-sufficient traders. For example Investitrade, SMB capital and Axia.

 

Good luck on your trading journey.