Jack Ross Crooks Jr. describes himself as corporate finance guy. He got his early experience trading stocks and gravitated to futures, trading currency futures in the pit at the Chicago Mercantile Exchange back in the 1980s. Now, his primary market is spot forex. “I love trading in leveraged markets, I just like the action and after trading stocks, futures and forex make stocks look dull,” he says. “I like following global macro money flows as opposed to the nitty gritty of reading balance sheets.”
His first big win was back in 1992 or 1993, he says, when he was long the Japanese yen. Luckily, the trade went his way and he kept adding in. “It gapped more than 300 points one day,” he says. “It was a big win and I proceeded to give back every penny over the next three months.” In retrospect, he says, he learned the importance of managing his risk. “When you make money when you don’t understand why, you are going to give it back.”
Crooks says that before traders place put on a position they must thoroughly define the risks and, rather than focusing on how much they could make, consider how much they could lose and whether the trade makes sense from a probability standpoint. “It’s just about longevity. If you can stay in the game, sooner or later you are going to catch a trend and staying in the game is about risk management.”
Retail traders should focus on fundamentals and position trading, he says. “When you are trading intraday, you are trading against the best traders in the world: the guys at the money center banks that have to close their books at the end of the day,” he says. “If you are new to this game, don’t put on three, four, five positions at a time. Put on a couple that are your highest probability trades and let them play out. Trade smaller size and less leverage. Give yourself some opportunity for the technical noise to flush itself out. Look for a real trend. I know it’s sold the other way, but it’s sold the other way because it is to the advantage of the retail forex houses. The more trading you do intraday, the more money they make.”
Crooks trades his own account using the recommendations that he publishes to his subscribers, and the company also has a small managed-money division. “We do our homework and we are taking the positions every day that we give you. If our customers are losing money in the spot forex market, we are losing money right there beside them,” he says. Crooks’ patience and position trading methodology recently paid off for him and his customers. In early August, the U.S. dollar was near all-time lows, then surged over a two-week period to six-month highs and Crooks pulled off 1100 pips. “We were short the pound for most of the move and short the euro for a decent portion because we believed they were the two most vulnerable currencies against the dollar,” he says.
Black Swan has been incorporated for more than four and a half years, and while they serve several institutional traders, most of their customers are international traders. “It is still the case that international investors are more attuned to trading spot forex. U.S. investors are coming along as far as realizing the potential, when it’s done right.”
