For as long as he can remember, South African trader Henk Grobler has been fascinated by markets and their movements.
"Even as a little child, I was always listening to the news, following politics and economics, and watching the way the market moved in response," he says. "Then, in high school, a local brokerage sponsored a trading tournament and I was hooked."
He even developed a board game that simulated market events, but his father, a bank accountant, steered him in a different direction.
"He was conservative by nature, but also had gotten burned in Krugerrands in the 1970s," Grobler laughs. "That turned him off on trading for life, and he convinced me to become an engineer."
But one year after starting his job, he opened an account and placed his first trade — long gold stocks. He then moved on to stock index futures and then agricultural commodities on the Johannesburg Stock Exchange’s (JSE) Commodity Derivatives Market.
"There are too many variables when trading individual stocks," he says. "I found that, in commodities, if you understand the crop cycle and keep an eye on supply and demand, you can get a good feel for the trend, and then you can use technical analysis within that."
He developed his strategy while trading part-time and keeping his day job. Then, in late 2002, he began taking time off from work to sit in his broker’s office.
"Watching the market in real-time, seeing the bids and offers on the screen, it only fueled my fascination," he says. "I realized quickly that I’d been trading on too-short of a time horizon for the distance I was away from the market."
Grobler understood this wasn’t a part-time job. Then he studied options, focuing on the JSE markets.
"We don’t have farm subsidies in South Africa, so farmers have to hedge," he says. "That means the commodity options on JSE are a lot more liquid than the ones on the European exchanges. You see the bids and offers coming in; you see the volatility increase as hedgers come in. You have a real market."