Redundancy - an 11th hour reprieve

Faceless Bureaucrat:  At 4.40pm today, the 31st March, I received my fixed term contract extending my NHS employment to September 30 2011 on my current terms and conditions.  An 11th hour reprieve if ever there was one.        
The champagne will be flowing tonight.                          

Faceless Bureaucrat has worked her magic, shown infinite flexibility and adaptability and taken a role as "Training Lead" for a new commissioning tool built by the private sector and now being flogged by the NHS with FB in the forefront of the flogging it seems.  My role will be to train GPs and Practice Managers in this new toy which will apparently help them to manage patients at high risk of hospital admission (to keep them healthier longer and keep them out of expensive hospitals) and to check the accuracy of the bills coming from hospitals.

My CV now really does look like it's been in free fall since 1999 when I acquired the job title of Chief Executive.  In a reorganisation of 2002 I swapped "Chief Executive" for "Director" and was happy to do so as my pay increased by about 20%.  In 2006 I swapped "Director" (and sitting on the Board) for "Assistant Director" and was willing to do so as my pay did not drop and I left a lot of organisational politics behind me.

Since then my job titles have no longer had any reference to "Chief", "Director" or even "Manager", instead I have been a "Partner" or a "Consultant" and now, the finale...a "Lead".  And still on the same pay scale as I was when I first became a director...

And in the Alice in Wonderland world of the NHS my pay is 33% higher now than when I took that first director post.  Inflation has eaten about two thirds of that but still, I'm not complaining.

This new Lead Trainer role is probably the kiss of death to my CV but who cares if it keeps me in the NHS past that special day when my redundancy pay eligibility is triggered?  The role is not challenging, will leave me with the head space I need to trade and I will be able to work flexibly and keep trading in the mornings.

Am I ruthlessly exploiting the NHS or has it ruthlessly exploited me?

Escaping the Axe

Faceless Bureaucrat:  It seems that Bad Assed Trader has taken over our blog with her boundless enthusiasm for trading the Forex, but she's forgetting who is supplying her with the money to keep her in trades right now.  After all, she hasn't yet turned a consistent profit has she?  Hm?

So I'm back to update you on my progress in seeking to escape the axe of Great British Public Sector cuts.

Just to recap: we were told in December that our NHS organisation was likely to close at the end of March 2011 (yes, Thursday).   We went through the obligatory 3 month consultation period required when an organisation is making more than 100 people redundant.  We thought that our team might be able to survive by becoming self funding but within a couple of months it became apparent that the NHS commissioners of London no longer wanted to pay for training - at least not from an NHS organisation.  The Strategic Health Authority of London instead signed a contract with a consortium of private sector organisations to provide training and development support to the new NHS commissioners now emerging - the GP commissioning consortia.

The work of our NHS organisation is now being privatised but most of us it seems are not eligible to transfer to these organisations because of the way the work is being commissioned.  They've made sure it isn't a simple case of the work transferring, this allows them to make us redundant and get lots of public sector workers off the national public sector balance sheet.

So I duly received my letter at the beginning of March telling me that I had one month to find other work in the NHS or I would be served notice of redundancy.

Regular readers will know that I'd rather not be made redundant just now.  I did rather agonise over this as it looked like I'd get four months' pay and that this might be a once in a lifetime opportunity to get paid without having to work.

However, over the last couple of months it has become clear that this is not a once in a lifetime opportunity and if I can hang on in until September time I may get the opportunity again - and by then I will be eligible for a much bigger redundancy cheque - one that will allow me to trade unhindered by paid work for at least a year.

I have watched many NHS managers taking voluntary redundancy cheques worth tens of thousands of pounds - some of them more than £100,000.  Many of these people are really talented managers with a great deal of experience, able to turn their hands to many different management roles and challenges.  And the NHS is paying them to go.  It seems incredible.  I never would have believed it until now, witnessing it first hand.

But it has persuaded me that I too may get this opportunity.  I just need to stay in until September.

Well, I admit I've taken things up to the wire a bit, given my redundancy notice is due later this week.  However, I've had to be careful not to end up landing myself with a job that does not preserve the unusual working arrangements I currently enjoy.  I work 27 hours a week, 3 of them from home, and I'm able to work them flexibly on the days that generally suit me.  And yet I get a very good salary for this.

Also, as my career coach, Ciaran, pointed out a few weeks ago, if I want to succeed at trading I need to do a job that allows me the "head space" to trade, rather than one that consumes all my mental powers (not difficult).

So I've had a bit of a balancing act, needing to secure something which would keep me in the NHS for another 6 months but, preferably, no longer and provide me with these specific terms and conditions.

Now I don't want to tempt fate because I have not yet seen a signed contract.  So I'm not going to tell you anymore yet.  Only to say that I do expect, this week, to receive a signed contract for 6 months more work in the NHS on my current terms.

How I have done it God only knows.

They say it's not over til the fat lady sings.  Well I don't think of myself as fat but this lady will certainly be singing once this is in the bag...

The Secrets of a Successful Multi-Millionaire

Bad Assed Trader:  Sometimes when you're struggling with something in life you find that the message you need to hear is repeatedly thrown your way - as if fate is trying to tell you something.

In reality I suspect that when we're struggling with something we're more receptive to the message but so it has been for me this week.  I keep hearing of instances where discipline and consistency have led to success.

The latest instance was from MoneyWeek magazine, of which I am a regular reader.  An article by Tim Price, director of investments at PFP Wealth Management was so relevant and timely as to appear like a supernatural adviser urging me to continue with my trading strategy and giving me reassurance that it will succeed.

The article is about Jesse Livermore, born in 1877 whose fortunes peaked in 1929 with a net worth of $100m (equivalent to over $1bn today).  He used his own money and his own system of trading and said "The game of speculation is the most uniformly fascinating game in the world.  But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer.  They will die poor."

As Tim Price says in his article "Consistently profitable trading - following Livermore's rules - is perfectly possible.  The reason why it is not more widely achieved is simply because it requires significant mental discipline, and not much else.  The prevailing human tendency today is to look for quick wins and to avoid hard graft or any form of psychological pain, or effort."

Livermore's approach requires no market forecasting, no analysis of fundamentals (such as economics and politics).  He says you should never trust your own opinion or back your judgement "until the action of the market itself confirms your opinion" - it is purely technical analysis.

Livermore's strategy is based on trend following ("The trend is your friend" as traders like to say).  It is also based on risk management which means always knowing how much of your overall capital you are prepared to risk on any given trade (like the 1% rule I always follow) and knowing precisely when you will get out.  If you do not have an exit strategy, you do not have a strategy, full stop.


Livermore himself admitted that he lost money whenever he failed to follow his own rules (during his career he made and lost several fortunes).  I was amazed to read how similar to my rules (I claim no credit for them - I was taught them) Livermore's rules were, such as:

• Stick with the trend
• Don't trade when there are no obvious opportunities
• Wait for the market to confirm your opinion before trading
• Cut your losses but let your winning positions run
• Don't follow too many markets
• Never average down into a losing position

I didn't understand what that last rule meant so I googled it to find out.  It basically means don't add to a losing position - don't buy more of whatever you've bought that is losing value.  Apparently people do that because by buying more it means the average value of their initial investment is decreased (buy 5 apples at £1 and the average cost is £1, if you then go on to buy 5 apples at 60p then the average cost of your 10 apples is 80p, which throws a better light on your overall investment: 10 apples at 80p each looks better than 5 apples at £1 each).  I had never thought to do such a thing and so will have no problem sticking to that rule, I have never been tempted to add to a losing position - in my eyes that definitely looks like throwing good money after bad.

I reflect that some of his (and my) rules are easier for me to follow than others.

I have had no problem sticking with my 1% risk rule.  I have had no problem cutting the losses, only once did I move my stop loss by 2 pips and cannot imagine doing such a daft thing again.  But I understand from listening to other traders that this is a common failing.

I don't follow too many markets - at present I am only following the Euro and only trading the five minute time frame, so I can't be more discerning than that.

The rules which are most difficult to follow are the others.  Not trading when there are no obvious opportunities.  This is something which I think becomes easier with more experience as a trader. When you're a novice none of it seems to be really obvious and you have to do quite a bit of analysis to find the trade that meets your rules.  So if nothing jumps out at you then a common mistake I've made is to think that you just haven't looked hard enough and you will see one if you keep looking.

Of course you then do find a trade because you make one.  I am still working on this rule.

Letting the profit run is a rule I am able to follow to a degree, but I have come to learn that I need to set a target which is reasonable and technically justifiable and walk away because trying to manage a trade when you're in it is very tricky and your mind plays games with you.  You ignore the warning signals that show price is moving against you because you want the trade to keep going your way - a symptom of greed.  Or you believe that price is turning against you before the technical signs are apparent - a symptom of fear.

Fear and greed are the main drivers of emotional trading and both wreck your trading strategy, your trading record and your trading profits.  Best to set the target at a time when you are objective (ideally before you place the trade) and stick to it.  I find writing it down as part of my plan for that trade helps.  But to be quite frank, I'm still struggling a bit with this rule.

Sticking with the trend.  Well I like to think I follow that rule but when I review my trades after the event I sometimes find that this has not been the case - so clearly I do unconsciously break that rule. It was a mistake I made more as a complete beginner, particularly trading the Forex when you have four different time frames and may think you are trading with the trend but, if you look at a higher time frame it is apparent that you are not.  Price can be going up on the hourly and five minute charts but down on the four hourly and daily charts - it's all part of the inevitable cyclicity of price action. Learning to trade the Fx is all about getting the time frames aligned so you are going with the trend in all four of them - and my trading strategy is based on spotting the moment where price on the five minute chart is just turning back to follow the same trend as the other three time frames.

One of my trading tutors, Chris, explained it brilliantly.  He said you have to imagine that the four time frames are like a family going out for a walk in the park.  The daily chart is the grandfather, he determines the direction of the walk (or trend). The four hourly trend is the father and he also strongly influences the direction (of the walk/trend).  The hourly chart is the big brother who you want to see walking alongside his father and grandfather.  The five minute chart is the little, rather wayward, brother.  He's only 2 or 3 years old and he keeps letting go of his big brother's hand and dashing off in a different direction to the other three.  He's only allowed to do that for a short while before they grab him and pull him back into line.

So my strategy is about spotting when that little boy has dashed off and then, most importantly, the moment when his family tug him back into line.  When they do he swings back into their direction and of course being a keen and energetic little thing he starts to lead the way, sometimes with quite a head start. This is reflected in the price going from a sharp or gentle movement against the trend to a sudden whiplash back into the trend and a hearty price movement in your favour - if you catch it.

And then I come to the last and most difficult of Livermore's (and my) rules - Wait for the market to confirm your opinion before trading.  Traders always say "Trade what you see, not what you think" and this is what they mean by it.  And it's so hard!

When you've done a bit of analysis and you can see that the trend is up on the daily, four hourly and hourly time frames and it's down on the five minute time frame then you believe it's only a matter of time before price turns back up and you're watching every movement on the chart expecting to see confirmation of this change.  And because you're expecting it you read into it, you start to think rather than just see.

Successful trading is about not thinking but just seeing and accepting that.

Tim Price, in his article, strongly recommends the value of following the trend.  He says "you would be surprised to discover how many professional investors have no interest in Livermore or in following these few essential rules".  I am surprised to hear that as it seems pretty basic but then I guess someone has to set the trend and if not the professional investors then who?

In the meantime, I agree with Tim and Livermore, and would only say in my own Bad Assed Trader way, that the most difficult part of trading seems to me to be waiting for the market to confirm one's opinion. If you can get that right then I reckon you have it made.