Chris Capre is the founder of 2nd Skies Forex and KronosFX. Chris sat down with Huzefa Hamid from DailyForex to discuss his journey into the markets from Yoga, to working for FXCM and then a hedge fund, and now running his own fund and providing educational tools for traders.
[Huzefa Hamid] What was your professional background prior to trading?
[Chris Capre] I was a yoga teacher and yoga therapist. I worked with people who had injuries and they wanted rehabilitation type techniques to deal with that. I taught yoga for a total of 7 years but I’ve been practicing for a total of 13 years now every day. [HH: That’s quite a different field.] Some people think it’s kind of the opposite. Most people start off in finance and then they have an “aha” moment and ditch the suits and go on some sort of a spiritual quest. I did it the other way round.
[HH] Why did you decide to be a trader? What was your journey into the markets?
[CC] In late 2000 / early 2001, I realized I wasn’t going to build the financial career that I wanted to and do all the things I wanted to do through yoga. I started to look at other options and opportunities. I started investing and I got involved in mutual funds and the equities markets. But I was disenchanted with the fact that you can only make money so many hours of the day. At the time, I was working with a particular client of mine who was a doctor and who had cancer; he wanted to do some yoga therapy to make his body feel better. We became very good friends. He had invented a patent that Kodak had bought and had retired at 40 a deca-millionaire. One day, he came up to me, looked at me and asked: “When are you going to get a real job?” I was shocked by the question and asked him what he meant. He gave me a book about an American that goes overseas and becomes a currency trader and ends up doing some very interesting things in the markets [the book is “Ugly Americans” by Ben Mezrich]. He then told me he had a strange feeling I should learn currency trading and to read this book. After reading that book I signed up for a demo account, and after a month of demo trading I went live and never turned back. I had a very short incubation period. I found trading something that naturally made sense to me. I felt like I could look at the charts and get an understanding of what was happening and where I wanted to position myself. Technical Analysis and trading takes time to refine your technique and skill, just like hitting a golf ball or archery, which is something I do. And that is something that’s ongoing. But the initial part of it seemed intuitive to me.
[HH] What are some of the early mistakes you made as you found your feet as a trader?
[CC] Managing risk and emotions and the psychological aspects of it. Managing risk was something I had very little understanding of in the beginning so I was way over-leveraged in my position sizing. I started off trading standard lots on something that should have been a mini-sized account: it was a $3000 account and I was trading standard lots right off the bat. If I had lost my first few trades I could have been wiped out completely. Luckily I won my first 8 or 9 in a row so that helped to beef things up. About 6 months into it I experienced my first big loss. I had taken my account from $3k to $83k, but then I lost $10k in 5 minutes and then $25k in 15 minutes. So those big losses gave me my first psychological check which I hadn’t experienced up to that point. For that next 3 to 6 month period, I really got a first-hand experience of what were my psychological limiting beliefs, thoughts and conditions around trading, losses, success and failure. That was something that took a little bit of time to deal with and digest.
[HH] Why the name “2nd Skies” – what does it represent?
[CC] I was with a hedge fund after working for FXCM. I was with the fund for a year but I felt that it was time for me to go private; I had been working for other people for a long time and making them wealthy. Instead I could have been building my fund, which I had been trading with private funds very early on, along with my track record and client base. But leaving the hedge fund felt like it was a new horizon or a new sky that was opening up. That’s why I called it 2nd Skies.
[HH] Tell us about the hedge fund – how you walked into that and your experiences there.
[CC] I had been working for FXCM for about 2 years and I had done many presentations for them at expos and shows. There was this hedge fund that was going around scouting talent and I’d met them a couple of times but I was really enjoying my time at FXCM – it was a great environment to work in and they’re a great company. [HH: What were you doing at FXCM?] At FXCM, my work with them was as a broker, and eventually I built up a large client book, top in the company. I was also doing sales, audits for trade executions, working with gold clients, and education – both internally and externally. I did everything you could possibly imagine inside that organization as I wanted to absorb as much about the industry as I could. After leaving FXCM, I wanted to see what hedge funds were about (I had my own private fund at the time). So I got into contact with some of the people who had tried to recruit me in the past and one of them hired me pretty quickly. I stayed with them for a year before starting 2nd Skies.
[HH] In a nutshell, what does 2nd Skies offer your customers?
[CC] 2nd Skies is really about teaching people how to trade the markets – not just the Forex markets, it can be stocks, futures, or commodities. We offer all kinds of tools for that. I have free articles and videos, daily signals and setups, and weekly market commentary. We also have online courses that are designed to teach people how to use the same systems that I use on a daily basis. These are same techniques that I use to build a successful trading psychology and risk management profile, and we help traders interact with other traders in a large community to share their trade ideas and setups every day. We have a pretty strong success rate: our reviews our consistently positive across the board.
[HH] Talk to us about some of the emphasizing points you lay out in your Price Action module.
[CC] I approach Price Action from a slightly different perspective than most out there. Most of the Price Action you see out there is pattern based, for example Pin Bars, Inside Bars etc. Those are useful patterns but those patterns are the result of Order Flow, not the cause. So those patterns are reactive, not responsive. I teach people how to look at the Price Action and read the Order Flow behind it. The bottom line is that there really are only a couple of facts about the markets. First, as long as there are buying and selling orders, the market will move. And second, the Price Action is a full manifestation of the Order Flow which is the sum total of the buying and selling orders out there. With my models I employ quantitative based data and strategies to understand the market. For example, how does something statistically hold up over time? How does this particular Price Action formation result in this being an extreme statistically? There are all kinds of things you can measure from a quantitative perspective, even a particular pattern’s effectiveness in a particular environment. So I approach it both from a quantitative perspective and from understanding the Order Flow behind it. Most people are just talking about patterns which keep people reactive and not responsive to the market. They think the pattern is the cause of the move and they don’t realize it’s the result, not the cause.
[HH] There are lots of trading concepts out there. What’s made you pay attention to Ichimoku Cloud in particular and offer a separate course on it?
[CC] I discovered Ichimoku in 2004 when I was working for the broker. Back then, working for a broker was a huge informational advantage because the broker had a lot more information than was available publicly. At the time, there was very little information on the Ichimoku Cloud and most of the information was limited to coming out of Japan and one translation and that was it. I started to explore and I really liked the trend trading concept behind it. It’s designed to give a lot less signals but it filters out a lot of false ones. It’s designed to capture trending and momentum type moves, discover future support & resistance levels and underlying reversals in the market. To me that sounded very interesting. Of course, Price Action is fantastic but somehow I naturally gravitated towards Ichimoku. The funny thing is that when I taught an internal class at the broker about it back in 2004, they all laughed at me and thought it was the biggest joke. Now at the same broker, FXCM, one of their largest forum threads is on the Ichimoku Cloud and they have it in six languages. It’s something that’s definitely expanded and hopefully I’ve been able to help bring that out into the world and give it some more exposure.
[HH] Do you teach the Ichimoku Cloud in the standard way that you discovered it or have you modified it?
[CC] For some strategies I’ve modified it but not the settings on the Ichimoku Cloud because the settings are based on a particular theory, the Ichimoku Time Theory. And the person who invented it, Goichi Hosoda, had spent 4 years studying number and time theory and he came up with some particular numbers that he felt were crucial. All of Ichimoku is based on that. So I didn’t want to disrupt those numbers and use alternate settings. I feel that his 4 years of study on number and time theory is far more intricate than mine. So I trust that. But I’ve made modifications to certain types of entries.
[HH] Do you trade Ichimoku in a discretionary way or a rule based way?
[CC] Most of my trading tends to be more rule based rather than discretionary based, so we have rules for all of our Ichimoku systems. When my students take the trades, a lot of them are getting in at the exact same price which tells me that you can trade Ichimoku in a rule based way. It does help to have some quantitative data and we’ve started to expand our analysis on Ichimoku, and I’ve employed some people who are very good at financial modelling to help me do that.
[HH] Pivot Points are very well known. How do you treat PPs differently from what’s already out there?
[CC] When I first started looking at Pivot Points I couldn’t find any quantitative based data or strategies out there. There was nothing and I searched everywhere. So I went out and built my own quantitative based strategies solely on Pivot Points. To build those types of things you just have to ask the right questions. I worked with a programmer and I would ask a bunch of questions, have him run the tests and see what data came out. When I found some interesting data points I spent time studying them to see if there was a system embedded in there, and in many of the data points there was. So if you’re able to interpret the data correctly and understand what it’s communicating, you’re able to find patterns and thus systems to trade.
[HH] You have a mix of discretionary price action strategies and rule based systems. How do you know which of your own strategies you’re going to trade on any given day?
[CC] It’s not that I am going to focus on one or the other and say, for example, this week I am going to do only Ichimoku; I have 4 charts per monitor and 6 monitors and that is more than enough to cover the instruments and systems that I trade. So when I turn on my monitors every day, I look at my charts and can tell if there’s something that looks interesting to me based on the Price Action or Ichimoku structure. I know my systems because they’re rule based. So I can see, for example, if there’s an Ichimoku setup coming up today.
[HH] What timeframes do you enjoy trading personally?
[CC] I’m looking at 4 time frames per instrument: Daily, 4-Hour, 1-Hour and 5-Minute. I can see right away at a glance if price is in a trend versus a range bound environment and then make decisions about which tools I’m going to use based on that.
[HH] What trading hours do you keep?
[CC] I get up every morning at 5am Central Time, do about 90 minutes of Yoga and meditation and then I’ll be at the screen 30 minutes before the New York Open and any major announcements. But before I do any chart analysis or trading, I actually donate to some non-profit organization or project around the world. I do this because I am grateful for what I have in my life, and definitely want to have an impact on others with the resources I have. To make money is one thing, but to have an impact on another person’s life is a completely different thing. So I give a donation, feel grateful for what I have, and then start preparing for my trading day by getting in a trading mindset using certain techniques. I spend the first 30 minutes familiarizing myself with what happened overnight. Most of my intraday trading is done from New York Open to London Close. New York Sessions just aren’t as volatile as they were back when I first started trading. Back in my early days the New York session used to be more volatile than the London session is today. And the London session was even more volatile. There’s a lot less opportunities in the New York session today; sometimes it can be really volatile but not as much. So at London Close, my trading phases down and at that point I’m usually just doing set & forget type trades or letting my current trades run. I then come back around the New York Close to see what patterns may have emerged on the Daily chart, and look for set & forget type strategies to take positions overnight and make money while I’m sleeping.
[HH] Do you favour any particular pairs?
[CC] I like AUD/USD, Gold, Silver, Oil, EUR/USD, EUR/JPY, GBP/JPY along with the European indices which have been offering some great setups lately; those are the ones I trade on a regular basis. Every now and then there are opportunities in other pairs that I like to take.
[HH] Tell us about your physical workspace.
[CC] I have a 400 square foot office in my home. We have two separate internet lines in case one goes down because if the internet goes down it costs me a lot of money. I have 6 screens and 2 separate CPUs: one for charting and one for trading because the bandwidth of the charting platforms can consume a fair amount. I have everything I need here so I trade from home. Of course, if you’re not doing any intraday trading, you don’t need a whole lot of monitors.
[HH] Do you trade by yourself or do you have partners?
[CC] I trade by myself but I have a trading team for my fund. They’re based in Europe: a few traders in Germany and one in France. We communicate but I trade my own personal accounts on my own.
[HH] Tell us a little about your fund.
[CC] The fund is called KronosFX. Its track record goes back to 2002 which is when I started managing private funds for family offices. I had some traders that I’d already been working with and after a while we decided to partner together in building the fund. About 2 years ago, we opened up KronosFX to go public and started attracting public funds. The typical investor we’re looking for is minimum $250k. We have just a little bit over $10 million under management right now.
[HH] What things in life has trading enabled you to do?
[CC] The biggest thing aside from financial freedom and time is that it allows me to pursue my philanthropic goals and visions. There are a lot of projects that I can support through the abundance that I’ve been able to create. In third world countries, they mostly need resources more than anything. And in second world countries, they probably have some resources but they don’t have the education per se to help them build that into opportunities. Statistics are out there that if in a second world country or in Latin America people learn English their upward mobility increases by 70% and that’s significant. By providing education and resources, that allows me to have impact. For me, making money at this point is not difficult, being financially successful is not difficult, but having an impact on people’s lives is something that’s completely different. Hopefully with the success and abundance that I’ve had I can make an impact in people’s lives. [HH: What are some of the philanthropic causes you go after?] In second world countries, there are these programmes called Access Programmes that are done through the governments and consulates where they teach the local residents in say Argentina and other countries to learn English. They sponsor students for 2 years. There is x amount of dollars per scholarship per student and we try to contribute a handful of scholarships every year. Another is Kiva.org: they give microloans to various people that have businesses in second and third world countries; Vitanna is another one we support that focuses solely on education. There are some other projects as well that get clean water to villages in Africa. And then I donate to various other organisations such as to a monk who has an orphanage in northern India, his name is Lama Tenzin. So those are some of the areas that I’ve gotten involved in.
[HH] What are some of your ambitions going forward?
[CC] I studied neuroscience in college and my specialty was human learning and memory – how could I accelerate the learning process basically. A while back as part of one of my research projects I’d invented a “neuro-suit” that would help improve learning, feedback and performance so that we could optimize the central nervous system. The problem was this was back in 1998 and the technology wasn’t there. Now the technology is available and there are these great neuroscience labs that are building neuro-feedback suits that can look at your brain patterns, understand when they’re in optimal performance stages and then help provide neuro-feedback so you can repeat that process. I’m working with a neuroscience lab in the US that has the technology and we’re working on testing traders so we can enhance their learning curve, performance, and we can help them reduce risk so they don’t get into these situations where they get massive billion dollar losses on trades. Also for beginning traders, if they can start off with a neurological edge by training their brains in the right way from the start I think we can change their learning process. It can change a trader’s life. My original device was a physical suit but they’ve now got it down to a headset. So that’s a big project for me that I’m working on right now. Outside of trading, I want to have a big impact in the philanthropic world and get more personally involved: go to the sites, meet the people and get to know them. And I want to have an impact on improving the quality of the environment and the food we eat; there’s lots of information out there that the food we eat is highly toxic because of things such as the quality of soil we have today. Again, it is all about impact.