Marek Chelkowski grew up in Poland and went to University there but even though he came of age in a communist system, he always knew that he wanted to trade and speculate on markets. “Somehow I knew that is what I wanted to do,” Chelkowski says.
He was able to learn what was available regarding commodity trading while still in Poland before moving to the United States in 1974. A fine tennis player, he worked as a tennis pro in Florida before becoming a securities broker in the 1980s. He started out trading options.
Chelkowski has traded stocks, stock options, commodity futures and financial futures but found his niche when he began trading forex in 2003.
“I find the currency market better to trade because it is more fluid,” Chelkowski says, adding that his experience in other market has benefited his trading. “I am fortunate enough that I have traded in different markets. I look at the whole picture. Forex is a fundamental part of equity markets.”
He is principal and sole proprietor of commodity trading advisor Marek D. Chelkowski, which operates a discretionary fundamental spot forex program.
Chelkowski says the interconnectedness of markets has never been as apparent as it has in the last year. “When financial markets began to unravel, the first thing people would look at is the currencies. We know what happened to the yen,” he says, referring to its major rally this fall due to the unwinding of the carry trade. “Currency markets became the center because they are so international.”
Chelkowski describes himself as a contrarian trader but not just for the sake of being contrarian, noting the old saw that: “markets can be irrational longer than you can stay solvent.”
“The crowd can be right for a considerable amount of time. Where they are wrong is at turning points,” Chelkowski says. He follows the psychology of the crowd and the behavior of the markets to look for clues of tops and bottoms. “I smelled the top in currencies (low in the dollar) early on a year ago.”
One of the best signals he looks for in terms of large market reversals is “ridiculous statements” from so-called experts. They often are evidence of traders defending a move that has been overdone.
One example was a story he read in the Wall Street Journal that defended $150 crude oil on the premise of dollar weakness. While there was a negative correlation between the two, he saw this as a sign the move was overdone. “At turning points in the markets you start hearing things that make no sense. If you are a student of the markets you have to look at that stuff and say, ‘that doesn’t make sense.’”
When Chelkowski hears strange comments like these, he will broaden his trading perspective. “I am a short-term trader [holding positions] a couple of weeks at most, but [at times like these] the markets are telling me to be more patient.”
The best example of this was the dot com boom and bust. Analysts pushing stocks with unbelievable P/E ratios where telling us that we were in a new paradigm where typical valuation models just didn’t matter. There were calls for Dow 40,000.
Of course there were many fortunes lost waiting for sanity to prevail. “The markets give you plenty of time,” Chelkowski says, adding he waits to hear what the market is saying.
Chelkowski looks at the technicals because he says forex is perhaps the most technically driven sector, but only for confirmation and timing. He forms an opinion on a global macro perspective and then looks at the technicals.
He trades from a short-term perspective in the direction of the longer-term trend. When a currency pair has a correction or a move counter to the longer-term trend, he will take that opportunity to establish a position.
He studies 15-20 currency pairs and will enter with a small position and look for the market to confirm his opinion before he adds to it. “I will average up and down — even though they say that is something you should not do — but I will never let a positions destroy me. Risk management is important; I will throw in the towel when I am wrong.”
He doesn’t think news drives the market but it will provide opportunities. “The market will tell you where it is going. There is nothing more beautiful than when the market gets bullish or bearish news and doesn’t react to it [the way it should]. The market tells you where it stands and where the strength is.”
