John Goodman got started in trading right after finishing school and never looked back. His trading career spans 20 years, and he has been managing other people’s money for a little more than a year as the director of Trend Capital Limited, a managed currency program in New Zealand. The program has produced strong returns, earning more than 100% since inception, according to the Barclay database.
Goodman learned about the currency markets through commodity trading. After graduating from university, he landed a role as CFO of a commodity trading company that dealt with animal by-products and non-hazardous oils. The company traded on the Singapore and London exchanges and physically delivered product via chartered oil tankers around the Pacific. Because all of the products were traded in U.S. dollars, which wasn’t a currency of any of the trading countries, currency management and risk control were important to ensure the original margins on the trades were preserved. “Once we established that the currency management was under control, we started to ride the long-term trends of the currency markets by only fully covering trades that were likely to be eroded by adverse currency movement,” he says.
After the leaving the commodity concern, Goodman did consulting work and built algorithms and also worked for ING New Zealand. He started Trend Capital in 2006. The first few years of the company were spent in computer development. The program began trading in 2008 and now has five clients. Trend Capital is “along the lines of a CTA,” Goodman says. Each client has their own brokerage account and they give Goodman capital authority to trade that account, and they can have access to the money at any time.
Goodman trades spot forex in the Australian dollar, Swiss franc, Euro, British pound, yen, New Zealand dollar and U.S. dollar. “A lot of what I do is volatility breakouts. According to recent volatility in the market, I’ll place orders in the market and wait for one side to get filled and sit on that until it hits my exit strategy,” he says.
Trend Capital Limited uses a systematic trading strategy that consists of several components to capture market moves. The complete strategy includes components that help manage risk, size positions, and manage positions. There are no profit targets to existing positions. Exits are based on a combination of trailing stops and duration. All positions are entered based on changes in price over time.
Goodman’s trading philosophy is based on the synergy of all of the components of trading. He says that long-term wealth creation from trading is created by the balance of entry, exit, trade size, risk, reward, frequency, diversity, money management and portfolio management. “The understanding of each of these elements and how they interact can produce exceptional returns so it is imperative that you can assess your trading strategy and know what it is capable of achieving both on the downside and on the upside. Only once this is known can you correctly start to assess the weighting and use of any particular strategy within your portfolio,” he says. “It is about long-term wealth creation rather than exiting within a certain time frame.”
Goodman says he was inspired to trade because it “allows for financial rewards far in excess of hours worked.” He enjoys the profits earned through careful risk control and compounding of returns. “The most interesting aspect of trading is that the rewards are immediately realizable,” he says.