Interview with Goldman Sachs ex-trader Lex Van Dam

Last Wednesday was the first webinar of a 5-part training series with Lex van Dam, a former Goldman Sachs trader. On next meeting we invite you this coming Wednesdayand in the meantime, we encourage you to read an extensive interview with Lex.

Lex van Dam - interview

1. Is it true that you are considered one of the best hedge fund managers in the UK?

I did not know that there is such an opinion, it's a bit fear to imagine. And seriously, I never think of myself as the best - vanity is inadvisable in this profession. I'm just trying to do my job the best I can, and the fact that my job is also my passion helps me a lot. During various trainings, I always tell my listeners that if you think that you are great in trading, it's time to take a break. You have to keep emotions in check, because in one moment you can lose control over everything. I am obviously grateful for the recognition of the industry and my clients, but I do not look at myself this way. I believe that the financial sector can do more by working together, exchanging resources and knowledge and experience to create better opportunities for investors and traders - and I try to concentrate on that in my work.

2. What is your experience in investments? Can you tell more about your career and how did you get to the place where you are today? 

I studied econometrics in the Netherlands and also worked on various investment projects. My professor worked at the insurance company Aegon and offered me a summer internship with his company, which ended with a two-month stay in London at Goldman Sachs. I was doing well and in 1992 I joined Goldman Sachs. I learned a lot there, for example, I learned that the prices we see in London or New York are not necessarily real prices. After the London period, I moved to the GS office in New York for the self-employed operations department. There the pressure was enormous, but it was quite easy to grasp the plot - we basically traded in stocks, futures and a little derivatives. It was easy in the late 90s, now in the age of technology and computerization, there are more barriers. 

After my adventure with Goldman Sachs, I started working at GLG, then the largest hedge fund in Europe, where I managed 2 funds - the European Opportunity Fund and the Global Aggressive Fund. It was a huge challenge because we managed the money of clients with whom we are constantly in touch. Every day you are assessed in the external and internal context, and you do not have a great organization around you (like GS) that makes life easier. People who have been trading as long as I know that regardless of experience, trading is always a challenge. I never have the definitive conviction that I already understand the market. And when this feeling arises, chances are I will lose a lot of money in a moment. I always say that individual investors who trade from home are in a similar situation to me because we face the same challenge - the market! It doesn't matter if you have a university degree, where you come from, where you live - in the end it's only you versus the market. This is what it all comes down to.

3. In your "Million Dollar Traders" TV show, you've been able to train 8 total novices who have achieved amazing results. Is it really that simple - can everyone become a trader? 

The show showed two very important things. First of all, he proved that there are many smart people, and secondly, he proved that you can achieve much more on the market than is usually shown / described. You don't have to be born in the City of London or near Wall Street to become a trader. Of course, the program also showed that trading is not for everyone. Trading is primarily preparation, but also the courage and ability to take risks and accept the responsibility of your actions, knowing that we cannot predict everything. A lot of people don't want that stress and will never be traders. The answer to this question is therefore not simple. But if you are not afraid of responsibility, ready for the ups and downs, ready to spend your time learning and growing, then you have the most important qualities of a trader.

4. Apparently, success in financial markets is a myth. However, you show that you can achieve great results. What is your secret? 

People often ask me about it, but it's difficult to answer it clearly. I would say that common sense is key, but in such a complicated environment it is very easy to get lost. I think that long-term trading settles in your head. There are many psychological elements that I have noticed in myself and other traders all these years and I think that these elements make a difference. Apart from the process itself, a lot depends on your motivation, character and perseverance. It is always my attitude to my students during the online courses that are offered under my Trade Academy. Psychology is probably my favorite 5 step that I present to my students.

5. What is the Lexa Van Dama Academy and why did you create it? 

I love trading and have been trading for so long that I decided to share my knowledge and experience with others. After the Million Dollar Traders program, I noticed that there is a lot of demand for education at the institutional level among individual investors. I felt that my experience could be useful to other traders, especially individual ones, and the internet is currently the best way to transfer knowledge. Over the past few years I have spent many weekends writing and recording the courses / lessons that are now offered as part of my Academy. Recently, we also started Trading Club meetings, where every month we discuss and analyze markets in real time. Every day the Academy is led by a team of professionals who devote a lot of their free time to helping other traders. Seeing how we help people through knowledge so that they can improve their finances, I want to devote more time to it.

6. Do you have any "golden rule" that you are guided by in trading?

Avoid Losses ... and Expect Losses! Especially when you are an individual investor. You don't always have to invest, cash is also a valuable asset. It's such a common belief that stocks will always go up in the long term, so there will always be a correction. However, the reality is that there are frequent declines and in the meantime many firms / companies go out of business. So it's good to have a long-term approach to investments but with proper risk management when the market scenario is against us. 2009 was a perfect example of the fact that while some indices recovered from the huge stimulus wave from central banks, unfortunately not all stocks performed well. It is worth remembering that the markets operate in cycles and the winner of the last cycle may not be the winner of the next. Additionally, people are often surprised that the average life of an average S & P500 company is around 50 years. "Buy and hope" is not a good strategy if you want to avoid irreversible losses.

7. How do you keep your focus when there are so many distractions around? 

One of the steps in my methodology "Trading in 5 Steps" is investment psychology and I always say that the right mental attitude is the key to achieving success as a trader. The "Million Dollar Traders" course available through my Academy shows that you should trade only when you are calm, control, energy, you are focused and confident. It should be. I call it "Million Dollar Mindset". I know that when I do not have this status, I should not take for trading. Of course, we would all like to be in this state as often as possible, but life always writes its scenarios. Generally, when you feel that none of the criteria I'm talking about is being met at the moment, it's best to wait. It is worth continuing to observe your mental state before the start of trading. Be honest with yourself and you will gain a lot.

8. Can you tell what people will learn during 5 course of webinars organized exclusively for XTB? What strategies will you present?

A lot of material will be processed during these 5 hours. In the first lesson, I will present a daily approach to markets, using the "Scorecard" system, which helps me to identify bullish or bearish trading circumstances. The system includes a range of short-term and monthly indicators to assess the conditions and market sentiment. 

The second lesson provides an affordable method of analysis of currency markets based on the "Scorecard" system, which we developed at my Academy. I will demonstrate how to use this system to develop our own ideas for investing in major and exotic currencies. By the way, I will analyze the US dollar, the British pound and the euro, as well as the Brazilian real, the Russian ruble and the Turkish lira.

The third lesson is a continuation of the second lesson and I focus on presenting the same processes, this time with regard to stocks and raw materials, focusing on crude oil and gold. I will present factors that affect the analyzed markets and my decision-making process so that listeners can apply these tips to their own investments. Finally, I will analyze the situation on selected instruments from the technical analysis, using the charts. 

Lesson four will focus on technical trading and strategies that will help you identify your entry and exit points while controlling your emotions. I will analyze this using an example from Turtle Traders that shows how these strategies can achieve amazing results. I will also cover risk and position management, also using my favorite methods taken from Turtle Traders.

During the last fifth lesson, I will try to summarize previous lessons from the perspective of the current situation in global markets. Together with my main investment strategy, James Helliwell, we will analyze each of the markets that were discussed during all the lessons and other markets that seem important to us in terms of earning money and generating profits. We will look at the most important technical levels and trends, both in the short and long term, and analyze my favorite chart, which I analyze when I want to make the decision to conclude another transaction.

9. What is your most important advice to all traders who read this interview? 

Invest in yourself and support yourself. Without understanding the financial world, fundamental and technical analysis, risk management and investment psychology, you will be just a gambler in the world of trading. In addition to knowledge and skills, you also need to improve mental / mental resilience to successfully invest, and it comes with experience. Even if you have the best trading strategy, there are still factors that will decide about your failure or success. To achieve this you must first learn to risk small sums. My last advice is: be always curious and learn, get as much knowledge in your field as possible. Only this can help you succeed. Good luck!

10. Let's go back to it investment course with XTB. If you had to choose a fragment or part of the lesson, where you demonstrate the most important elements of your strategy, what would it be? 

Difficult question. Being a trader is a heavy piece of bread and many skills and traits are key. But I think 4 and 5 are the most important lessons. Because in the second part of the course we show how to combine the foundations with technical analysis and apply it in relation to real markets and money. Personally, I think that the key is to skillfully connect and use fundamental and technical analysis. Of course, you can not forget about risk management, which I discuss in the 4 lesson. The right analytical process and risk management can help you succeed in trading.