Mahoney: Trading from the ground up

Michael Mahoney learned forex trading from the ground up and has been successful despite not having the fancy academic pedigree of some traders. “I’m probably one of the few traders that does not have an MBA or a PhD. All of my education has been on the ground. When I got in the business, you left too much behind educationally on the ground if you went back to get an MBA,” he says. He’s now a forex trader at Union Bank with six years of forex trading and four years of interest rate options trading experience under his belt. “Starting trading wasn’t really my choice. I just kind of fell into it and loved it,” he says.

After earning a BA in economics from Franklin & Marshall College, he started his career in marketing, working in the investor strategies group at Merrill Lynch. After a brief stint at Nations Bank in capital markets origination, he became an FX prop trader at First Union in 1996, trading their currency options book and all of their non-dollar derivatives.

From First Union, he worked in FX marketing at Sun Trust for 10 years. He went on to run the interest rate options book and Sun Trust. From there, he moved to his current position at Union Bank, where he was hired to grow its options capabilities. At Union Bank, he focuses on fx spot, forward and cross currency swap trading.

To place his trades, Mahoney uses multiple platforms, including EBS, a multi-dealer platform for fx spot forward, Reuters, a multi-dealer platform, and single-dealer platforms. “I’ll have 15-20 providers up at one time, [so] I can see the best price,” he says.

To develop a trade, he starts with a fundamental idea and then looks at all of the different technical indicators and “find[s] where nine things out of 10 point to the direction that I see it going,” he says. Then he puts the trade on and looks for a place to take profit and a place to put a stop loss.

Flexibility is a huge part of his trading philosophy. “[In] trading, you’re going to be wrong more than you’re right. That is a tough pill for people to swallow. Most people don’t like it or don’t excel at it because they have too much pride. You have to be the kind of person that’s readily able to change their mind. You have to watch a lot of things at one time and be cognizant of all of the different factors that impact a trade,” he says. “[You have to be] able to admit very quickly that you’re wrong and get out of a trade, and when you’re right, know [when] to leverage it up.”

The complexity and excitement of the market both fuel his interest in trading. “It’s a complex marketplace with so many moving parts. It’s almost a race to try to get as much information at your fingertips as possible. When I started in the fx business in 1996, we still used voice brokers. There’s now automated platforms. Seeing the evolution of trading and technology and the development of the business has been really amazing,” he says. “I’m a risk-averse person, but I love trading because it’s never dull. I never have a boring day and there’s always something going on, there’s always excitement.”

For Mahoney, one of the most exciting things about trading is having a big gain on a trade idea. And he embraces the ever-changing nature of the forex market. “If you’re into game theory and you can keep your eyes on a lot of different news at once, it’s a very exciting career, especially foreign exchange because there are so many moving parts. It’s almost impossible to keep your eyes on all the different things that are going on in the fx market, and it’s a very challenging job.”

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