Peter Davies, founder of Jigsaw Trading's Interview with Ilan Levy Mayer

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https//www.cannontrading.com

• Peter Davies Interview with Ilan Levy Mayer

Cannon Trading
JigsawTrading.com
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• Peter Davies began trading in the mid 2000's.
  After suffering a 30 drawdown at the hands of
  'financial advisers', he decided to manage his
  own money. Peter eventually settled on Day
  Trading with a heavy emphasis on Order Flow. A
  by-product of this process was a set of tools he
  created to organize Order Flow information in
  what he thought was a more logical manner.
  Friends convinced him to take these tools
  commercial and Jigsaw Trading was born.
• Peter trades every day and recently received
  Journal of the Year from futures.io for his
  Pre-Market Prep that he posts daily.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan Tell us a little bit about your trading
background and how you got started trading.
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
4

• Peter In the mid 90's I was a self employed IT
  Consultant and ended up living in Knoxville, TN,
  then I moved to Netherlands, then Denmark, then
  Japan and finally Thailand, where I ended up
  starting up an IT firm servicing the client I
  worked for in Japan. During this time, I managed
  to save a lot of money which was just sitting
  there. I ended up having my portfolio managed by
  a firm of financial advisors. After 3 years, they
  had lost 30 of the funds. Basically they got
  into everything that was hot the year before, a
  terrible strategy in hindsight. At one point, in
  a meeting with them, they told me they would get
  back the losses by leveraging my money. They said
  that all they needed was a 10 gain and the
  leverage would mean I recouped my losses. I asked
  them exactly how they would make that 10 gain
  and they said to me "Well, anyone can make a 10
  gain given enough flexibility". I politely
  re-determined them that if 'anyone' could make
  10, then they wouldn't have lost 30. I withdrew
  all my funds and figured if I was going to lose
  money, I might as well do it myself rather than
  paying them to do it for me.
• I started out longer term investing but found
  that hit and miss and while I do still trade on
  mostly oversold stocks, it was day trading where
  I found techniques I was really comfortable with.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
5
Ilan Who were your mentors, and what did you
learn from them?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
6

• Peter Being an expat means that if you go to a
  networking event, you are rubbing shoulders with
  other expats, most of whom are at the top of
  their field. I met a lot of Traders from Hong
  Kong/Singapore who were more than happy to share
  the way they trade. They weren't giving me
  entries and exits but rather telling me the sort
  of trading they did and the data points they were
  using to make decisions. On trade I met retired
  at 35 and spent his time heading a team writing
  barrier options on Forex in Singapore. Another
  was day-trading stocks on news/earnings events.
  Others were prop traders, most of them spreading.
  None of these traders were using the technical
  analysis techniques I'd been reading about in
  books. When I mentioned specific indicators, I'd
  generally get a blank look and a reply of "never
  heard of it".
• I ended up getting trained buy a guy called
  Richard Joyson and spent a few years trading
  news/earnings stocks. This was good but a lot of
  hard work because part of the job is finding out
  what was likely to make a move on the day. The
  trader I met doing this in Singapore employed 4
  full time researchers doing this for him. A lot
  of the time, you'd pick out 15-20 stocks before
  the open and half of them would be flat as they'd
  put in their move in the pre-market session. I
  eventually came across the work of John Grady and
  that was instrumental in me moving to the futures
  markets. The order flow concepts were the same as
  stocks but futures moved well every day and so
  that's where I stayed.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
7

• Ilan At CannonTrading, we give traders the
  ability to create and back-test trading
  strategies. How important is back-testing to your
  trading process? How do you approach this?

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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• Peter For me - not at all. I am a discretionary
  trader. I would not trust a computer to do it for
  me because my trading is too nuanced.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan There are so many markets to trade today,
it can be overwhelming. What markets do you trade?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
10

• Peter eMini SP500 futures and of late some
  trading in Crude - but that's very short term.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
11

• Ilan Do you have a preference between day
  trading, swing trading and/or position trading?

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Peter I swing trade stocks and day trade futures.
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan Cannon Trading offers a number of ways to
place orders and customize order-placement
tools/software. Once you are ready to place a
trade, what tools/software do you use to place
orders, and what type of orders do you place?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
14

• Peter I use the Jigsaw Trading tools for my
  orders. On entry I am probably 50 limit orders
  and 50 market orders. It's just down to how the
  order flow looks. If I think a market is about to
  break I'll go in at market. If I think I can get
  a fill on limit - I'll do so for the extra tick.
  On exit I'm about 90 limit orders.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan How do you approach trade management -
setting profit and exit levels, trade size and
account-level risk management?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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• Peter In terms of trade size, I don't use a
  'percentage of account' setting.
• My account is effectively my pension, so I use an
  income driven approach. Presuming 200 decent
  trading days a year and an approximate average
  per day. I will generally scale out of a position
  with the exception of fast one-way days where
  I'll start small and then build up as the market
  moves my way.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan What was your worst trading experience?
What happened and how did it help you , if at all?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
18

• Peter The day Goldman Sachs were charged with
  fraud and I thought I'd play that event and make
  a killing. I think that was back in 2010. Big
  mistake, it was all over the place and I lost
  chasing the market down and chasing it back up
  again. It's just not my style. In fact, when the
  markets go crazy, I just sit it out now. I like
  the markets to be fairly dull. I know other
  traders love trading news events but at the end
  of the day it's just not my thing and there's a
  lot more normal days that massively volatile days.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Ilan Finally, if you could give some key advice
for the aspiring traders out there, what would it
be?
Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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• Peter Don't try look for someone to teach you
  how to trade. Start out with the goal of learning
  how the markets work and then making money from
  that.
• If you go to a prop firm as an intern, they will
  not really be telling you where to buy and sell.
  They will be getting you to do drills, like the
  "cut and reverse" drill https//www.youtube.com/wa
  tch?vj1Yhfk3QbjA. This is what teaches you, your
  own experience. I know it seems a scary thing to
  be deciding where to get in and out yourself but
  if you set that as a goal, you will get there
  much faster. There's nothing wrong with getting
  educated but that education must be about how the
  markets work and WHY they do what they do. Too
  many traders look for red light/green light
  solutions or fall in love with educators claiming
  to have a 95 winning 'systems'. They aren't
  interested in WHY the markets work just HOW to
  trade them. You can't have one without the other.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Disclaimer

• Trading Futures, Options on Futures, and retail
  off-exchange foreign currency transactions
  involves substantial risk of loss and is not
  suitable for all investors. You should carefully
  consider whether trading is suitable for you in
  light of your circumstances, knowledge, and
  financial resources. You may lose all or more of
  your initial investment. Opinions, market data,
  and recommendations are subject to change at any
  time.

Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.
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Disclaimer There is a substantial risk of loss
in trading commodity futures, options and
off-exchange foreign currency products. Past
performance is not indicative of future results.