Monday, November 29, 2010

When the Last Sword Is Drawn

You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody. This is the life of a successful trader. - Alexander Elder - Trading for a Living

I don't write about my job very much; it's usually not relevant to my Korean experiences I document here. Occasionally though, the two worlds do become intertwined.

I've worked for myself as a derivatives trader for the last six years. An oft-repeated statistic is that 90% of financial traders lose money, which makes me one of of the remaining 10%. By that measure you might say I'm good at what I do, but the hours are long, and I'm not so good that I've made enough to retire. Traders often have to work hard to perfect their art, but there comes a time when you have to accept that you might be doing well enough by a lot of people's standards, but 70-hour weeks are not conducive to having much of a life outside work, and for me, those extra hours cut into time that could - and increasingly should - be studying Korean.

So three months ago I finally decided to try and make a transition into something called automated trading – where instead of actually trading I'll code my trading rules into a program called a 'bot' (from 'robot'), and then it will trade for me. Then I free up around 8 hours of my typical 11-hour work day to do other things – such as studying. At least, that's the theory.

Trading is about choosing your weapons as much as it is about yourself - and trading with 'bots' requires a different sword - specialised tools such as MetaTrader and specialised accounts, so you can only do this if companies in America and Europe will do business with people in Korea and the problem is that a lot won't.

For example, one of the world's largest retail forex brokers who I suppose I shouldn't name – it's FXCM – refuses point blank to do business with anyone living in South Korea. Others notionally allow it but make opening an account from here so tortuous that you know they really aren't keen on the idea. Fortunately one of FXCM's large rivals - Alpari - has no such policy and a relatively streamlined (though still far from straightforward) account opening process [edit: see my footnote]. But while this good news, potentially it gives me only one sword to choose from rather than many, and it may not be the sharpest blade. So while it's all very well for Mr. Elder to think you can be free and work anywhere in the world as a trader, clearly he didn't have to put up with trying to be a trader in the modern world outside the US, and certainly not in Korea.

The Korea location problem doesn't just effect trading - try ordering some vitamins from outside Korea and see what an odyssey that can turn into (that blog entry will turn up eventually). And beyond the worlds of trading and vitamin supplements – two areas which I can tell you from personal experience are inextricably linked - lies the pedestrian world of longer-term investments. Just before I moved to Korea I transferred a large portion of my investment holdings from one broker who wouldn't let me be a customer in Korea to HSBC, that said that I could, and two months later HSBC wrote to me in Korea to tell me that after all, they couldn't hold my investments while I lived in Korea – leaving me scrambling to find a broker to move back to – the situation was so dire for a while I thought I might have to completely liquidate my portfolio which would have caused all kinds of tax complications.

Statistically it's unlikely that my foray into the world of automated trading will be successful, but the potential reward justifies the risk and that's what trading is all about. So right now I'm trying to open trading accounts with specialised foreign exchange – or 'forex'/FX – brokers, and because I'm living in Korea I'm hitting the same identity problems here that I have before - I needed my passport and a bank statement stamped and witnessed. The passport may not be a huge problem but my prospective forex broker has no use for a bank statement in Korean – of course it has to be in English with my Korean address on it, which is more of a challenge.

It seems inevitable that I will continue to work at the tenuous sufferance of brokers who treat their support of international customers as a seasonal activity. But to be fair I'm sure the Korean Government don't make it easy for them, because for all their lofty notions of being an 'Asian Financial Hub', the psychological scars from the Asian Financial Crisis mean that they aren't terribly keen on the idea of the free flow of capital, which is a bit of a problem given that - whether you like it or not - it's quite an important aspect of modern global capitalism, especially if you want to be some kind of global financial centre.

So it's true to say, that one way or another, Korea constantly gets in the way of me doing my job. Every day I go out there and do battle on the global financial markets with some of the brightest and dumbest minds this Earth has ever created. Which one am I? Victor or victim? I control my own destiny, financially I live by the sword and die by the sword that are the tools that I use and the way that I wield them. In Korea, that's a fight which I undertake with one arm tied behind my back and the only sword they'll give me. That's the life of a financial trader here.

[edit: I take what I said about Alpari back. After I'd gone through all the document verifications I finally reached the point where I was ready to fund my account. And that's when I found out this wasn't possible electronically because I was in Korea, even though my credit card and bank were in the UK. Alpari hadn't mentioned this small but really quite crucial fact during my emails and phone conversations about opening an account while residing in South Korea, and this would have been bad enough in itself, had they not managed to notch up a first in my many years of trading with many other companies - one of their staff sent me an impolitely worded email. Why it is that Alpari staff think they can vent their frustrations on the company's customers this way is unclear, but I don't have to take that sort of behaviour, and that was the end of my plans with them].


Chris in South Korea said...

This will sound like a stupid question, but I ask your indulgence: why won't well-respected places do business with South Korea? We're not in Cambodia or some other second-world Asian country, and there's more than enough wealth to go around. Is it a simple matter of ensuring your 'address' is in the US / Canada, or do they have some way of tracking that?

Mike said...

I think it's a combination of factors. The irony with HSBC and investments is that they don't support customers in South Korea, but it's no problem if you're living somewhere like Krzygstan and a variety of other unlikely countries. When you look at the list of supported countries I think South Korea might be the only G-20 country which isn't supported - which might tell us a lot about the difficulties of doing business in South Korea - presumably because of Government regulations. It's also government regulations that really make importing vitamins and cosmetics more trouble than it's worth.

But yes, some companies just don't want to deal with customers in South Korea and it isn't always obvious why. There are ways of using US addresses and faking a presence in a country but it's often more trouble than it's worth - and a lot more expensive from what I've seen.

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