Commodity Traders Club NewsÔ
"The Commodity Futures Trading Knowledge Network"Copyright© 1993-2013 by Commodity Traders Club News & Webtrading.com
Click here to go to--> Webtrading - CTCN Website Home Page
Could "Doc from Kirkland, WA" Be Another "Successful Trader " ... Who Lost For Years But Is Now Profitable, Daytrading the S&P, Perhaps He Is Even Using Similar Methodology!
I suppose it's about time I contribute to your publication (after all, got to get that discount).
I am a full-time S&P daytrader, trading from my home office (i.e., my cave), using TradeStation and Signal Cable feed. They both work peachy, thank you.
Fortunately, I have been able to devise a trading plan which suits my style and provides an adequate income for me and my family. This was a long time coming. I have been trading futures for over 10-years, up until the last three, not too successfully.
I fell into the same traps the everyone has, i.e., relying on experts, systems, being psychologically not ready to trade on a consistent basis. The part about being psychologically not ready to trade consistently is the most important.
Without this ability, I found myself jumping from one system to another, taking some trades and not others, and never allowing the methodology to work. The mind-set necessary (for me) to trade successfully came from accepting the following beliefs:
1. Money can be made in the market (this while seeming elementary is most important - if you don't in your heart of hearts believe this -- you will be doomed)
2. My method makes money in the market over time. (You get this belief by extensive testing and working your method real-time in the market - by the way, if your method doesn't work you can be disciplined as a market wizard but you'll lose).
3. Each trade is but one of the next 1,000. It doesn't matter if it wins or loses. (This belief makes it easier to take that next trade, even if you've just had your head handed to you).
4. My method is well thought out in terms of money management. (My risk is small in comparison to my account size -- also well researched in terms of historical drawdowns).
Overcoming The Problem of "Pulling the Trigger"- Don McCullough
I'm still battling the common "pulling the trigger" problem. Rather strange in that I have had more actual guns and pulled more triggers than 10 typical people. Of course pulling the trigger in the market is considerably different than pulling the trigger of a gun. When your money is on the line, hesitation, second-guessing your signal, and then not trading occur just about like a law of nature.
Can see where (contrary to what most books say) having your back to the wall and having to trade might be just what some traders need to get them to execute in a serious and nearly I00% consistent manner. I've read where several pros said they started trading with money they could not really afford to lose, or they were forced to trade in a very serious manner in order to pay the rent.
Sometimes "having to" can make all the difference in the world. When young people are forced to become self-responsible and truly adult, they usually do. When an alcoholic is forced to quit his addiction and stop killing himself and those around him -- he often does. Without "having to" kids can stay kids and alcoholics will usually stay addicted.
Is trading every signal the only way to break the inconsistent trading habit? Mark Douglas recommends this as does trader Tony Saliba.
There's Breathless Excitement About Daytrading - A. F. from Australia
There seems in some letters the breathless excitement, almost akin to Gold Rush Fever once readers hear about daytrading.
Many readers seems to think all you need to do is lineup at the shooting gallery (computer screen) and hit a few trades. The thinking seems to be that there are several trades waiting to be done each day and if you're not popping the trades off you need to fund another system.
My experience has been over 7-years that on many days while there are trades, few of them are sensible low risk ones. In fact, after 3-5 days go by in a row without a solid/valid trade signal. So if you are there for the fun, thrill or gamble - fire away. However, after a number of years I found it very wearing being forever ready, but few low risk signals.
Now a lot of readers are going to correctly say I wasn't suited to daytrading, but it is so addictive and it gave me something to do and hope for, that I kept fronting up to the screen each day, for too long. I would watch the screen even when I knew it was unlikely there would be a decent trade e.g., a big gap up followed by small sideways moves.
Daytrading is also one of the most anti-social activities to do and in many cases causes family divisions, if not divorces. Telephone calls, I hated as they distracted me from the market and of course going out to lunch was totally out.
Editor's Note: One of the beautiful things about our Real Success methodology is the fact you do not take every signal. In fact, only a small percentage of the signals are taken. Also, you may go to lunch every day . . . for 2-hrs . . . in fact, that's part of the methodology. Overall the methodology is much lower stress (and lower-risk) than most other daytrading approaches.
Twenty-Five Facts, Topics & Aspects To "Successful
Trading" by Tom D'Angelo
These Are Some Topics I Covered in a Seminar on Money Management I Recently Gave in San Diego
1. 95 % of all Futures, Stock and Options traders are long term losers
2. The 5% that win will earn the money the 95% lose since futures trading is a zero sum game
3. You must master three disciplines to achieve long-term successful speculation: a. Trading methodology (long or short-term, technical versus fundamental analysis, type of trading system, etc); b. Psychological discipline (controlling emotions of fear, greed and anxiety); c. Money management (risk reword decision analysis for each trading opportunity - when, where, why and how to bet on a particular event)
All three disciplines are necessary, but not sufficient individually - only all three combined are necessary and sufficient to achieve success.
You must develop a trading personality which integrates all three disciplines to achieve long-term success in speculation. If you do not, you will fail.
4. 95% of futures traders concentrate on trading methodology and ignore disciplines two and three. If you only focus on trading methodology, you will eventually fail in speculation. The only question is when you will fail, not if.
5. Psychological problems are caused mainly by uncertainty . . . which creates fear, greed and anxiety.
6. Uncertainty can be significantly reduced if the trader has information and knowledge which creates certainty rather than uncertainty. Certainty reduces fear of the unknown, greed, anxiety, and creates confidence and success.
7. 95% of traders are totally disorganized as to analyzing their trading results . . . and have no concept of how to organize their profitable and unprofitable trades.
Practical organization of trading results is a primary prerequisite in mastering the money management discipline.
8. Brokers' statements provide absolutely no value or practical use in mastering the three disciplines.
9. To master the money management discipline, the trader requires information which is: a. timely; b. accurate and; c. practical. All three tests are necessary and sufficient. Each individual test is necessary but not sufficient.
10. Futures trading is just like running a business. If you do not approach trading in the manner of a successful business, (such as IBM, Sony or Apple Computers) you will. Probably fail in the long run.
11. All three disciplines are inter-linked. If you make progress in one of the three areas, the other two areas will automatically improve.
12. 95% of all traders play as customers in a casino and not as the casino.
13. You must play as the casino and not as a customer to achieve long-term successful speculation.
14. The customer in the casino will always lose and the casino will always win in the long run.
15. Long-term success can only be achieved by playing a game with a positive expectation - (or playing a negative expectation game which you expect to become positive - a more risky technique)
16. The best approach is to play a game where you have a positive expectation and make small bets (playing as the casino). The 5% of traders who succeed fall into this category.
The worst case is to play a negative expectation game and make large bets . . . Most of the 95% traders who fail are in this category.
17. Before you make your first trade, you must establish your risk profile approach towards trading (conservative, moderate, aggressive). You must know who you are. This risk profile will determine your approach to the risk./reward decision making process.
18. Before you make your first trade, you must establish monthly, quarterly and annual goals for each profit center. These goals should be both operating and financial goals.
19. Nearly every trader who is successful was a consistent and/or heavy loser when he/she first began trading (paying their dues), losing significant amounts of capital in the process. This is a situation which stems from the fact that traders focus on the trading methodology and ignore the other two disciplines.
Losing significant amounts of capital can be avoided if the trader is making a sincere effort to integrate the 3 disciplines into his/her personality.
20. 95% of traders do not know where they have been, where they are or where they are going in their trading. They operate like a plane in a fog trying to fly with no instruments. They are disorganized, uncertain, anxious, fearful and eventually are forced out of the speculation game. If you emulate this 95% group of individuals, you will wind up equally frustrated and you will eventually fail.
21. The more you trade (daytrading), the more sophisticated your money-management discipline has to be.
22. The less you trade (long-term positions based on fundamental analysis), the less sophisticated your money-management discipline can be.
23. You should classify any contemplated trade into one of the following five categories before putting on a position:
a. Entrance into congestion
b. A trade within a congestion
c. A breakout from a congestion area
d. A trend run
e. Trend reversal
24. The trader will have difficulty in formulating a successful and intelligent risk/reward (entry/exit) plan unless the trade is properly categorized before the trade is taken. The risk/reward parameters are different for each of the five types of trades.
25. Having timely, practical and correct information of trading results instantly available enables the trader to make rapid, unemotional and informed trading decisions.
Trading will then be less victimized by emotions and instead become more "scientific," unemotional and mechanical.
OPTIONS SPREADS: Raw Wind, Cold Iron,
Hard Bone - Greg Donio
A money-printing machine in your closet would be great except that it will attract unwanted guests carrying badges and warrants. Imagine instead a machine enabling you to write paper securities and sell them for instant cash, with the law on your side.
With spread strategies, option contracts beget other option contracts that sell instantly. They are the gold ingots that alchemy-like create other gold ingots, not for the vault or for maybe-someday sales but for same-day money in your account.
Risks? Yes, but the begetting is also a fortification. A fall in silver would, hurt less if silver bars bore offspring.
Fabulous thought: If owning stocks and bonds gave you the right to print and sell more stocks and bonds while still holding the originals. But no, spreads are the domain of futures and options, including my specialty, equity or stock options.
A few years ago, I took out a short-term trial subscription to Value Line Options and gave special attention to the page "Recommended for Covered Call Writing." I bought 1,000 shares of a recommended $10-a-share mining stock for about $6,500 plus margin. Each 100 shares entitles a stockholder to write (issue and sell) one "Covered Call" option contract which in turn entitles the contract-buyer to purchase the stock at a given "striking price" if the shares rise above that price before the contract expires.
Each month, I sold 10 Calls with short-term expiration dates and a striking price of 10. Each time I would receive a premium of between $750 and $900. The stock fluctuated between nine and a fraction and 10 and a fraction. Month after month, the 10 Call % expired worthless and I would sell another batch with the next month's expiration date. One month the stock price rose slightly above 10; the contract holder exercised' the right to buy my 1,000 shares.
Then the stock dropped to nine and a fraction. I bought back the 1,000 shares at a slightly lower price and sold 10 more Calls. Glad that the premiums rolled in one month after another, I nevertheless wondered: Who bought these options again and again, getting nothing in return? I realized that I was in effect a legalized bookmaker. Those contracts expiring worthless were losers' horse-racing tickets.
I mentioned Value Line and the "Recommended" stocks for a reason. A writer of Covered Calls should never, repeat never, buy a stock for option-selling purposes unless he would also buy it for its own sake. Another item apropos at this point: The selling of options, whether by a stockholder or a spread strategist, is to no small extent a "fleecing of suckers." It is for you only if you can manage a cynical chuckle at the sight of a pad & pencil roulette-player.
It is estimated that over 90% of all out-of-the money Puts and Calls expire worthless. As a spread strategist and with limited capital, you can skim an amplitude of that lost money. You can "be the bank" out of your desk drawer. You can run a de facto gambling house from your den and "gain the house advantage."
Of course, a strongbox-in-the-closet tycoon must know pertinent script and scrollery. When I crossed the Euphrates from stocks-for-covering to Put & Call strategies, the following was and still is the cuneiform alphabet. Spreading can be done with either futures or options. You buy one batch of contracts and sell another either simultaneously or shortly thereafter.
With options, the two batches must be either both Puts or both Calls. Both must connect to the same underlying stock (equity options) or commodity (futures options). When the batch you buy costs more than the batch you sell, the money you receive from the latter pays for part or better yet most of the former, depending on prices. You pay the difference or the "debit," hence the term "debit spread."
Let us say that the options or futures you buy have expiration dates farther into the future than the ones you sell. This positioning goes by the moniker of "time spread" or "calendar spread." Many "debit spreads" are also "calendar spreads" because time value makes the farther-into-months-ahead contracts more expensive than comparable shorter-term or nearer-in-time ones.
Let us say that you buy 10 equity Call options with a June expiration date and a striking price of 40, and you sell 10 Calls with an April expiration and a 40 striking price. That is a "calendar spread" because of the different months and a "debit spread" because June 40's cost more than April 40's and your checkbook must fill the gap.
What else? The identical striking prices make the above example a "horizontal spread" also. On a price & time chart, the two 40's with different months would appear on the same level with a horizontal line passing through both, and May forming a gap between them. The bought June's constitute the "long end" of the spread and the sold April's the "short end."
Getting to the XYZ of it, the short-end 40's are Covered Calls, covered not by stocks or commodities but by the long-end contracts. If the underlying security were to rise substantially and the April's were exercised, the spread strategist could deliver and fill the order simply by exercising the June's he owns with the money that the April contract-holder just paid.
Alas, this would wipe out the debit money that the spread strategist paid and would also require him to pay commissions. Never, repeat never, let the short-end stay in-the-money beyond the trading day that it happens. I took several of my best profits by buying back and closing out the short-end, whether Puts or Calls, while holding onto the fast growing long-end as underlying security continued deeper into the money.
The above is one way to make a profit. The other, IF the underlying security avoids the strike price, is by time decay. The difference in price between the batch of contracts you bought and ones you sold widens or "spreads." The cash you invested in the gap broadens. Molten nuggets in the soil. Also, if the April's expire worthless in the example given, the holder of the June's can write (create and sell) Mays. The securities-printing machine in the closet.
This article does not cover credit spreads, vertical or diagonal spreads, or uncovered options because, to state it plainly, I don't do none of them. Those interested should consult books on the subject. In fact, anyone considering putting any money at all into stocks, options, futures or spread strategies should read profoundly. More on books later.
So that the preceding paragraphs not be construed as a sunshine & roses portrait of spread strategies and the surrounding financial milieu, let us now shine a flashlight into the Black Hole of Calcutta. If you buy shares in Ford or Chrysler, investor money forms some kind of link-up with car-buyer money. From the latter comes gross revenues, operating capital, and hopefully, earnings, dividends and upward pressure on share price.
If 1,000 people place $1,000 each in a 10-year, 10% corporate bond issue, that $1,000,000 total brings back $2,000,000 -- the original investment plus interest. If those same people gamble one grand each at a casino, the $1,000,000 brings back only about $850,000 -- the original stake minus the house's cut of the pot. This is what makes gambling a loser's game: Too little gravy in the pot with everybody wanting plenty.
In the early 1920's, Boston promoter Charles Ponzi sold promissory notes which guaranteed investors 50% return in 90-days. Ponzi claimed that he used the money to speculate in foreign currencies and International Currency Coupons, then shared the gains with note-holders. The first folks collected, then subsequent ones. Soon people flooded his offices.
When federal investigators cracked down, they found no currency or coupon speculations. Ponzi had paid the first wave of investors with money from the second wave, and the second wave with money from the third. The few who got in and out early made a profit, but the rest? Federal authorities imprisoned Ponzi and disbursed his seized holdings. Note -holders received only 28¢ on the dollar.
Some investors refused to surrender their notes to the halls of justice, believing that the "financial wizard" would eventually make good his word. Everybody else was more cynical. During my father's 1920's boyhood in the Italian neighborhood of South Philadelphia, one kid would say to another, "What are you trying to do? Pull a Ponzi?" The essence of the Ponzi Scheme: No profit dollars added to investor dollars; the mere shifting around of capital among the participants. Robbing Peter to pay Paul.
Futures and options are zero-sum games. Somebody must lose a dollar for each person who gains a dollar. No car-buyer money seeping through to shareholders. No bond interest or C. D. interest making sure that more money comes out than went in.
More like in a casino. Like in a Ponzi scheme. Nobody calls it robbery, but Peter has to lose a dollar for Paul to gain a dollar. Actually, these are worse than zero-sum games. The casino gets a cut of the pot by paying out less in wins than it takes in. Ponzi skimmed and pocketed more than a few note-holder dollars. Nowadays, brokerage commissions, brokerage house expenses, exchange and trading floor expenses; Peter always loses more than Paul gains.
Is it any wonder that in turning to options or futures, so many people expect Lady Bountiful and meet Lucrezia Borgia? Analysis by basic arithmetic reveals plenty of poison in the cup. Plenty of prime cattle in the royal pasture, but not nearly enough to fill the banquet tables of everyone expecting a fill.
Numbers. What a person overlooks even when they stand as a stone wall he crashes into. For centuries, men built wings and flapped them, trying to fly like a bird. Overlooked were the plain mathematics. A one-pound bird has a one-foot wingspan and flaps those wings 72 times a minute to stay aloft. As for the needed energy, the phrase "eat like a bird" is misleading. A person eats two to three percent of his bodyweight in food per day, a bird 50%!
Thus a 150-pound man would need a 150-foot wingspan, and would have to flap those wings 72 times a minute. Try flapping just your arms 72 times a minute. For the required energy he would need to eat 75 pounds of food per day. Such are the absurdities that man gets into when he builds wings, but ignores mathematics. But is there any more good sense among the huge numbers of futures traders and options traders who expect a worse-than-zero-sum game to drop a million quickly and easily into all their bank accounts?
At New York University, I took a calculus-heavy course in finance and did all right but found the knowledge of little practical use. Fundamental arithmetic lights up the realities just fine. I am involved in spreads because here the numbers are far more an ally instead of a big-guns enemy as with most trading.
Case in point: The Options page of the Wall Street Journal, 1/19/96, carried listings for the previous day's trading. The section called "Leaps --Long-Term Options" posts Puts & Calls with expiration dates one to two years in the future. The IBM Put with the 90 striking price and the expiration date of 1/97 last traded at 5-¾. The IBM 90 Put expiring one year later 1/1993-2013 last at 8-5/8.
Do you need a neon sign to see the significance? Compared to the 1/1997, the 1/1993-2013 contains 800 more time, but costs only 50% more! I cite this as an "eye exercise" because the trained eye of a spread strategist should notice such things. He routinely buys the bargain and sells the overpriced. I do not trade long-term (year or more) options right now, but I may in the future, using Harrison Roth's fine book LEAPS: Long-Term Equity AnticiPation Securities.
The point right now is that an intelligently-planned spread strategy is number-friendly, with mathematics working for it instead of against it. Ergo, the spreader's privilege to "be the bank" and "gain the house advantage" while other people gamble certainly counts. Also essential to the formula: Bulk quantities of other people's money. That stacks the mathematical deck in your favor profit-wise; also makes great tank armor during a worst case scenario.
After repeated profits from Put spreads on software and semiconductor stocks, I gave attention to Cisco Systems with common shares fluctuating in the high 60's on the downslope from 89 and a fraction. Put options with strikes of 65 stood too close to the stock price; a bothersome no-trend twitch could put them in the money.
The ones with a 60 striking price seemed better. This was early January and the out-of-the-money January options had shriveled to fractions due to time-decay. Cisco had no March options so February and April took center stage, with an already existing spread between them of about 1-¾. I phoned the broker. "A spread order," I said. "A buy and a sell going in together, each dependent on the other. Cisco option symbol CYQ. Buy 10 April 60 Puts to open a position. Sell 10 February 60 Puts to open. Debit 1-¾ points. Day order."
On a 10 and 10 order, the I-¾ point debit translated to $1,750 of my investment capital. But the order was not executed, so the next day I raised my ante an eighth. I phoned in an identical fugue but with a debit of 1-7/8 points. Order executed, I bought 10 April's at 4-3/8 ($4,375) and sold 10 February's at 2-½ ($2,500) paying a difference of just under $2,000 with commissions.
This two-masted schooner sails under 3-names --debit spread, calendar spread, horizontal spread. The money that built it came more from other people ($2,500) than myself ($2,000). A banker's maneuver, one could say, or a dealer's card advantage.
One strength of construction lay in the time-decay that accompanies calendar spreads. After the close of the buy/sell day (1/16), the February Puts had 23 trading days until expiration and the April's 69 days. Time for eye exercise and basic arithmetic. The April's were richer in time than the February by triple, but cost measurably less than twice as much. Buy the bargain, sell the overpriced.
The moving mechanics of time-decay deserve scrutiny. When the trading day after the transaction day ended, the February options lost 1/23 of their time but the April's only 1/69. And 10 trading days before the February expiration, the February contracts will lose 10% worth of time in one day and the April's less than 2% (one of 56 remaining days). Thus the short end (obligation) of the spread shrinks more and faster than the long end (ownership), expanding both the gap between the two sets of contracts and the money filling it in.
An option spread strategist should also be a chart-watcher because of that moving asteroid, the underlying security going up and down. I positioned a Put spread under Cisco shares because I anticipated their continued decline. If they fell through the 60 line I was prepared to buy back/close out the short-end options and hold the growing long-end.
Days later -- surprise -- the stock climbed from the high 60's to the mid-70's. Not what I wanted, but it did serve to test the armor-plating and shock-absorbers contained in spread strategies. Whoever bought April Puts identical to mine but without initiating a spread was down slightly more than half in the stock rise. Yet worse, whoever bought those February, I sold was out 75%! The figures: Feb.5/8--Apr. 2-1/8. A 1-½ point spread and a minus to me of 25%.
Flesh wounds around the bullet-proofing and I could have bled worse. Spreads are protected strategies, relatively, but never totally risk-free. No more than one-tenth of capital per venture stands as a locked-safe-embedded-in-concrete rule. As with buffalo-hunting, spread strategies can bring wagon-loads of meat thanks to an inexpensive box of bullets. Yet we must also endure like the buffalo hunter -- the raw wind, the cold iron, the hard bone.
Reading Recommendations: The phone number for L&S Trading given in the previous issue of CTCN is no longer valid due to Colorado's change of area code. Updated: 970-586-6262. Still gold-medal among their wares: The two books by W. D. Gann in one hardbound volume -- The Truth of the Stock Tape, & The Wall Street Stock Selector.
Worthwhile option volumes at Barnes & Noble and Walden Books: Listed Stock Options by Carl F. Luft & Richard K. Sheiner, Option Strategies by Courtney Smith, How the Options Markets Work by Joseph A. Walker, Options--A Personal Seminar by Scott H. Fullman.
Comments on Swing Catcher System
Part Two - Michael Maldonado
I'm sorry to report that the "Energizer Bunny" finally came to a halt! My winning streak in the T-Bond market is over, but not before reaching 7 winning trades in a row and putting $5,600 in my bank account! I'm currently long one contract now and hopefully this trade will start another streak.
Education Received Answers Prayer - Keith Carr
I 'm writing in reference to Kent Calhoun and his 5VBTP methodology. The education I have received from the study of his material has made the difference between stopping trading and improving my win/loss ratio to greater than 60%. I expect to improve that to exceed 70%+ accuracy in the future as I develop in my technical analysis skills. I am basically a beginning trader, and had a hideous trading record before I stopped trading and learned to use the 5 vertical bar trading pattern that Kent discovered.
This approach to trading the markets has been the answer to my prayers. I feel that Kent maintains the highest standards of integrity in dealing with the public. I attended the KCI seminar in Dallas this year, and it was a learning experience I will never forget.
The money spent purchasing the KCI trading manual is definitely the best value of any trading material I have ever received. I should also mention the 5VBTP software that operates seamlessly within Omega TradeStation. Pat Raffalovich, who wrote the code for the software is extremely professional and always willing to help and answer questions.
In summary, I think that any other beginning traders out there who are serious about learning to trade properly would do well to acquire the KCI Stock & Commodity trading manual, enhanced by the Omega TradeStation and 5VBTP software. The initial capital outlay will be expensive, but compare that to the amount of money lost in the markets. The truth lies in scientific price analysis, which defines the structure of the market. When the student is ready, the teacher will appear.
Too Much Money is Spent on Black-Box Systems and Seminars - Don Twist
I'm amazed how many traders purchase these high priced systems. Does anyone realize that it takes only 50 holy grail found people at $2,000 per system for a mere $100,000 in revenue before expenses? I receive two or more mailings a week from these various vendors who offer outdated, back-tested, not real life trading systems for a limited number of traders.
I spent one afternoon developing a mechanical trading system for trading gap openings in coffee that made over $10,000 in one month and never looked at a chart! Traders, spend time using your knowledge and stop buying everyone else's ideas. You are making this too complicated.
I agree with many of the subscribers that system sellers gave up on trading because of the risk. Let's not forget the ever popular limited seating by special invitation only seminars for a day or two at a mere $1,000-$3,000 per person. Let's look at this quarterly cash cow seminar in more detail.
Just 50 attendees at $2,000 per person, less meals, refreshments, meeting rooms, materials, transportation and setup. It would appear the average 1-1-½ day seminar could net the promoters $70,000 or more after expenses based upon the initial entry fees of $100,000. Why would they need to trade when you have this type of income two or three weekends each quarter. We all realize there are other on-going expenses in development, systems, solicitations, etc. However, this can't be a bad living with the solicitations that arrive weekly.
Seminars sell systems, systems may require a seminar to understand how to use these more complicated vehicles. They feed on each other. Traders, please stop buying systems and do the work yourself. I have used MetaStock since 1987 and it has all of the popular overused indicators that anyone would need that seldom work regularly. Everyone must realize that most of these indicators are over used and simply can't work most of the time.
I believe one of the best indicators in use, but not widely understood is the use of trading bands. When these bands contract you can be assured there is a large move ahead. When the tightened bands are broken to the upside or downside it's usually fatal to fade this move.
Many times a breakout will occur but I will wait two more days for confirmation, because the day after a breakout there's a tendency to go in the opposite direction in a small way. (Trader's Fading the Breakout). The next day is the key if the breakout is for real. Stock markets tend to move forward and back and fill which gives many whipsaw actions and are difficult if you are not daytrading. Many of the soft commodities are true breakout and never look back markets.
In any traders' plan, one must be able to handle the daily rhetoric that the major newspapers provide trying to explain why the markets did what they did yesterday. Many times articles should be used for exiting or entering in the opposite direction of news.
Ask any floor trader and they will tell you they trade on the news and it is normally easy money for them. When a market has a large gap up or down on the open and fails to trade significantly higher or lower, you know who took the opposite side of the trade.
News reversals outlined in Nov. edition of Technical Analysis of Stocks and Commodities by Laurence Conners can give anyone a great entry point with a market reversing direction. In fact, you may enter the trade the next day and still have a nice move.
I was glad to see some articles on selling commodity options rather then buying them. The public has always been buyers of options, while the smart money has sold them and received a nice steady income. If you have never sold options try this. Take a market that has a good trend up or down and the sell in the opposite direction. Look at selling out-of-the-money Puts that are below support in up-trending markets. Do the opposite in bear trends.
Know the expiration dates as they vary with each commodity, look at selling out at least four to six weeks before expiration. In rising markets wait until the market pulls back, finds support and starts moving up again. Do not attempt to ring out the last cent before expiration if your striking price is within reach. Cover the option and walk away. Volatility is the key to option premiums especially when a market is driven by news and the public can't wait for the market to open so they can buy or sell. The premiums are over priced on the open and the smart money once again steps up to the plate and takes these overpriced options and gladly sells them to anyone. Once you have sold options and realize the erosion factor you will never buy them again.
Think of the soybean market of 1993 and the thousands of call options that were purchased in July for the November contract. With soybeans peaking in the $7.50 range and calls for November with striking prices of $8.00 to $10.00, who took home the premium? The option sellers of course. Will this Happen in 1996?
When being manipulated by the press and the shortages in grains this year, look back in history and you will find these markets will peak before planting or the latest in late June. This year will provide another golden opportunity to sell puts as the market rises and sell calls after it peaks. (All out of the Money Options of Course) You need to chart options the same way you do the underlying market you are trading. Trendlines, support and resistance and volumes will give you new insight in what the smart money is doing in options.
I have used various end-of-day data services since 1987 and have recently changed to Trader's Access. They offer low prices on everything you could possibly want to chart. When trading commodity options historical data, it's hard to find at a reasonable price. You can download 300-800 quotes on an 800 number in a couple of minutes for $14.95/month if you use less then 10,000 quotes. They have other plans for more data. I have had many of my friends change and find the service and support good. I have no affiliation with Trader's Access and you will find the ads in Investors Business Daily each week.
How "Inverse Charts" Help Me Overcome Bullish Bias - A. L. Brooks MD
I am a full-time S&P daytrader and would like to share some simple formulas that help me with bear markets. I am a optimistic person and have a tendency to always see markets as rising.
This causes me to bottom pick during the early phase of a significant sell-off, and occasionally to enter short trades later than I should. To counteract this tendency of always seeing the market as wanting to rise, I look at an inverse chart whenever there is a sell-off.
By an inverse chart, I mean one plotted upside down, with the highest prices on the bottom and the lowest on top. I have enclosed the TradeStation formulas that I use to plot the inverse of a bar chart, Bollinger bands, and a 17-bar exponential moving average. Incidentally, the 17-bar exponential moving average is absolutely identical to the middle line in a Keltner 9-bar channel. The Bollinger bands did not print, but they show on my computer.
I personally use an inverse candlestick chart instead of a simple bar chart, but there are some problems with the way TradeStation plots it, so I am not providing its formula. One problem with the inverse chart is that there is no price grid along the right margin (TradeStation just plots a series of 0's). When I look at the S&P 500 5-minute bar chart of 12/14/95, a day when the market made all time highs just after the open, I have a bias that makes me see the market as trying to form a base from 12:00 p.m. est to 2:00 p.m. However, when I look at the same price action on an inverse chart, I see that same area as a continuation pattern in the middle of a sharp rally (the rally is really a sharp sell-off, since this chart is the inverse of the true prices).
This makes it easier for me to short, especially in a very strong market that just hit all-time highs. I know it's a crutch and I know I should be sufficiently in control of my biases to be able to see a clear bear trend. However, I find this helpful in dealing with my bullish bias, and other readers may as well.
To plot the chart in TradeStation, create a new window with a multi-data chart. Choose SP H5 as the ticker for the first and only data (i.e., data 1). Have it plotted in subgraph "none," since you don't want to see the normal, right-side-up chart. Then select your indicators-the only one needed is the inverse bar indicator.
I also select the inverse Bollinger Bands and inverse moving average. I plot all three in subgraph one. For the "bar type," I select "left tick" for the open, "right tick" for the close, "bar high" for the high and "bar low" for the low. You can change the style of the inverse bar chart to obtain a width of bar that is appropriate for you. I use "very thin" width for the open, close, high and low.
(Note: Charts are not displayed here online edition but are in our print edition)
The Christmas Stop - P.S. from Alaska
For years I have wondered why the problem of Federal Income Tax on open profits at year-end never came up in either traders' newsletters. J.S. from California offered one solution in CTCN Issue #3. Stop trading. We have found another partial solution.
The problem is that if a long-term position trader has a large unrealized gain, he must pay tax on the entire gain at year-end even if the realized portion is subsequently diminished. For example on 12-31, our unrealized gain is $100,000. The realized gain in February turns out to be only $50,000. We owe $40,000 tax on a $50,000 realized gain.
Our partial solution is to put half of our position in tax free accounts (IRA's and Keoghs). After January 1st, as we scale out of the position, we use fast exits to lock in taxable account gains leaving slow exits (which may give back larger portions of the unrealized gain) for the tax free accounts.
If the trend continues, we have a larger gain in the tax free accounts (not a bad outcome either). If your trading size is small, you could do all of your trading around year-end in tax free accounts thereby eliminating the problem altogether. This strategy allows us to capture most or all of the taxable portions of the gain.
We are well acquainted with the other year-end problem, that of volatility due to thin markets. There have been some really great trends in progress at year-end, so closing positions have not been a good option for traders in our time frame. The only profitable approach we have found is to keep stops loose and take antacids. I wish someone knew a better way.
Editor's Note: My (limited) understanding from what I have been told or read about the US Income Tax rules is that commodity traders must "mark-to-the-market" their unrealized gains at year-end, meaning you must pay taxes on paper profits. Due to the great volatility of futures markets those paper profits could easily evaporate very quickly after Jan 1st.
For example, what happens if a trader has unrealized gain of $100,000 on 12-31 and the market suddenly goes heavily against him starting on Jan 2. Within several days he liquidates his open trades at say break-even, or even a loss!
Does that mean he perhaps has to pay $40,000 or so tax on his unrealized $100,000 Dec. 31st gain on tax day April 15, in spite of the fact he really had no profits at all on those trades? Is this correct? If it is, how is it possible such a grossly unfair taxing method could exist?
It seems to me it would be very prudent of the trader with year-end profits to liquidate his trades on Dec 31st, rather than take the chance of paying tax on unrealized profits. Is there an alternative?
Thanks to P.S. for addressing this very unfair issue. Perhaps a trading tax expert (like Ted Tesser) can address this unfair tax situation.
"I Like Tapes & Manuals Much Better Than A Seminar" - D. M.
Just finished reading the latest issue of CTCN. Enjoyed it as always.
The Real Success tapes and manual mentioned in the last issue definitely have my interest. I take it that the video will show daytrading the S&P at home.
I like this tape-manual idea much better than the seminar.
Editor's Note: The videos show Dave Green trading CTCN's Real Success methodology at his home office.
I like your new booklet format. This helps keep the pages in proper sequence and looks more professional. The Club 3000 newsletter was always a hassle to read due to the pages being folded to fit in a standard envelope.
Perhaps a more proper name for your newsletter would be Futures Trader's News. Club ???? Commodity ???? Now, as you know, many of the trading markets are not true commodities and that's the reason many people prefer the term Futures. Club? What's that supposed to represent? One big happy family?
Editor's Note: Thanks Don, it's correct, a number of markets, like the S&P for example, are not really Commodities but are more accurately referred to as Futures. Thanks to Don and several other member comments about our name, we are now thinking about using a sub-title, such as "Futures Traders Club". Can anyone out there think of a better sub-title name for our group? Any suggestions will be appreciated.
Make no mistake about it, (a Richard Nixon phrase) we are all indebted to you and your CTCN newsletter. You deserve our thanks and our money. If I ever start a newsletter (don't hold your breath) it would be exactly as I wanted it and I respect your feeling the same way about your newsletter.
I Both Lost & Made Money Without Knowing Anything About the Markets!
Mark Szymczak from Australia
The CTCN letters are very interesting and I enjoy them very much. I first started to trade Options on Futures on the ASX Index in Sydney Australia. The broker suggested I trade one contract. But when I started to lose money, I started trading two contracts and sometimes even six contracts to get the lost money back, but I didn't get the money back.
I started trading again, this time trading Sydney 10-Yr Bonds and I made back the lost money in a few weeks, and then I was $12,000 ahead and I have to admit I was a bit tired.
Today when I look at my trading, I can say I made money even though I didn't even know anything about the markets. Now I'm out of the market, but I still trade, this time on paper. I like to trade and I'm going to comeback to it soon. P.S. I'd also like to take advantage of the CTCN automatic renewal and save $50. I'm sorry I'm late in renewing my membership.
How Do You Enter The Market Successfully? E.B.C. from Dallas
I have a question that is important to many daytraders.
Some Traders have written that for a buy signal you wait for a pullback from the prevailing trend, wait for price to approach the mid-Keltner line and then waits for a reversal bar that thrusts back toward the trend. Then he enters two tics above that bar. I see only two ways to place the order neither of which have worked for me. What is wrong?
One way that such an entry is possible is to have a resting (market if touched) stop order at the level of those 2 tics. But when the S&P returns to the trend it usually does it with vengeance and a rapid advance. The close of the reversal bar is already near the 2-tick location.
I see the thrust bar completed, pick up the phone, dial, give the order clerk my name, number and order, the clerk reads it back, and then disappears to go to the floor. By this time the price is usually way beyond the desired entry level. The result Is usually a very poor fill.
On several occasions the clerk came back to report that the floor wouldn't fill my order because the price had already passed my order before they got It. Then the clerk said; "What do you want to do about It?" By this time it was too late.
Another way I could handle this is to wait until I see price touch the desired entry level. Then I can start the process with a market order. I am assured a fill, but same problem prevails; usually a very poor fill.
So, how do you enter on 2-tics above the reversal day? If knowledgeable daytraders can help with this practical problem, I will be very grateful.
Editor's Note: Details like those are explained in the hands-on in-depth series of Video Tapes showing Dave Green actually picking up the phone and placing trades, both real-time and hypothetical trades.
Using The Moon to Trade Pork Bellies - Dale Johnson
In reference to Harold Uney's article last issue on trading pork bellies by moon phase, I ran into this system a few years back. I checked it out again from 1/1/93 to date and except for the current 2/96 contract that Harold mentioned, it lost quite a bit. Once in awhile it will make good profits, usually on a February contract, but most of the time it loses consistently.
Anyone interested in different ideas of how to trade by the moon or other astro-trading ideas should investigate publications by Raymond A. Merriman, such as "The Sun, The moon, and the Silver Market", "The Gold Book: Geocosmic Correlations to Gold Price Cycles" and "Geocosmic Signatures Related to Financial Markets" and publications by Larry Pesavanto such as "Astro-Cycles: The Traders Viewpoint" and "Planetary Harmonics of Speculative Markets" and "Astro Harmonics."
I attended a one-on-one training session with Larry 3-years ago and it was excellent. Larry trades full-time using Elliot Wave, Fibonacci, Astro-Harmonics and other elements.
Frank A. Taucher, Market Movements, Inc., uses an astro based "Pesavanto Index" in his annual Supertrader's Almanac.
As John Pierpont Morgan reportedly said, "Millionaires don't use astrology, billionaires do."
My New Computer Needs More Ports & Many Systems To Investigate - Ron Chacey
I just set up a computer to start doing my trading and analysis via computer. I purchased the biggest and fastest computer I could find, but no one ever told me I might have problems trying to attach too many devices and should get the computer with a "Skuzzy Card." This would have given me more possibilities of sharing Serial Ports and IRQ Interrupt Results.
All together my power backup, internal modem, printer/scanner, and sound card require more IRQ than are available in the Windows 95 system. If I had purchased it with a Skuzzy Card, and purchased a printer/scanner that could run off a Skuzzy card, I would not have had to sacrifice my sound card and would have had room to add more devices.
I am currently investigating more than 40 different trading software programs, and hope to report on my results later.
At this time I would enjoy receiving opinions from others so as to the usefulness and comparisons of various IBM compatible software programs specifically for a trading desk/platform/station. A place to manage trades, portfolios, total equity, and data on a dairy, auto update basis, as well as to integrate various programs that perform technical analysis studies.
The Times They Are a Changin'- Robert Lahodny
Do you find your discovered head and shoulders patterns failing more often than not? Do your breakout methods seem more determined to break your bankroll? Reversals not reversing - Seasonals on vacation? In the world of commodity trading, I believe the times truly are changing, especially for those of us who employ technical analysis techniques in our trading methodology.
The use and value of time-held chart and pattern analysis remains a forum of great and fierce debate. I am not interested in this intellectual entertainment; I only want to win in the markets.
To this end, I am a surviving old school chart technician, who was a chart analyst back in the days when being a chart analyst wasn't cool. Back then, peers liked us to astrologers, and might joke "There's Bob, he's a head and shoulders with an ascending wedge rising!"
As I have suggested in previous articles, the commodity markets are fluid and dynamic, therefore the aspiring trader must strive to accommodate change. This article will examine some of our beloved patterns and offer some suggestions as to how a trader might wish to speculate on them.
To this end, let's hypothecate that some major patterns don't work like they used to. Further, let's assume the markets just don't seem as friendly (they are not!). It's never been easy, but now there's some real sharks out there, and they have very deep pockets with which they push and pull on price action, which often results in whipping the little guy out just before the real move. The fact is, these larger interests know what you're looking at and can relatively easily identify where your stops probably are both ways (in & out).
I could even proffer some debate supporting that they intentionally feast on our (little guy) stops. But that's not really the point. The point is, if we chose to speculate, then we better address today's realities, and always attempt to improve our results.
Let's consider some basic technical tools and their transcendence to current markets. For our purposes, we'll construct our methodological concepts on the hypothetical that the trading reliability of well-established chart patterns and technically based signals has deteriorated to a 50/50 proposition.
In actual terms, we'll assume a major trendline break, top or bottom formation, range break, or large symmetrical triangle pattern . . . whatever . . . has no better than a 50% probability of successful (trading) resolution. Further, we'll hypothecate that the other 50% of occurrences will result in miserable failure (as is often the case with a failed major signal).
Under this construct, it becomes clear that to profit, the model user must establish a plan that: 1. gets you in the trade once a signal is given; 2. gets you out of the trade at a reasonable loss if the pattern/signal fails, and; 3. enters you in the opposing position (reverses) upon confirmation of the failure. To net financial gains, the profits obviously have to overcome the 50% failure losses plus the cost of doing business (slippage, commissions and capital expenditures).
At this point, this scenario emerges as a trading equation resolute on trade and money management. No one in the business will argue against the importance of these issues. So, what can we do to capitalize on our theory of 50% pattern failure and the ensuing money management demands?
(Note: Charts are not available here on our webtrading Website but are included in th eprint edition of CTCN)
Let's walk through some strategies together as an example/suggestion.
1. Trading range breakout, buy original break
2. Pattern failure, loss of capital (break-even or worse)
3. Another breakout attempt, must buy again
4. Failure #2, loss of capital
5. Original pattern/signal - failure and converse breakout - sell at least 1-contract, but I like to double up at this occurrence - usually a much stronger move, and a road less traveled because of discouraged bulls
In this example, the trading range breakout fails twice; a common phenomena. But, to be on board early in the event of a potentially substantial move, the speculator must enter on each breakout. However, it's at this point when most traders lose faith in the pattern and shop elsewhere for another tradeable event. Their departure from this pattern (failure) is sometimes at the potentially greatest reward development . . . specifically, the pattern failure contrary move.
Occasionally, this is a greater move than the original projected move. A possible reason for this is the necessary covering of other traders who were also wrong footed. Beyond this, there always lies some perceived fundamental reason for prices to reverse.
Let's examine one more common pattern and I'll share what I like to do when it fails. My example will be a symmetrical triangle interrupting an established uptrend. Pattern recognition 101 instructs us that this pattern usually resolves in the resumption of the trend in the direction from which the triangle was formed. The ubiquitous "however" of chart analysis in this case is that the triangle can actually turn out to be a top structure in this uptrend and as such the area at which the trend reverses. Many traders ignore trading this potentially much more consequential event than the original triangle pattern. As an example, we'll illustrate the symmetrical triangle, and a normal breakout to the upside - but, we'll depict a failure (it happens!), and what I like to do about it. Here it is:
(Note: The Charts referred to are not available here on our webtrading Website but are included in th print edition of CTCN)
The triangle was formed in an orderly fashion and it is reasonable for a trader to enter a trade on an upside breakout (either side really). For our purposes, we'll illustrate the expected upside breakout, and failure as follows:
1. triangle upside breakout and long position established
2. breakout fails and we are stopped-out at a loss. At this point, many traders abandon the pattern - HOWEVER: now the failed pattern reverses and a downside breakout occurs.
3. on the failure, reverse breakout I like to double my original position (now short) - WHY? - because now the odds favor that this was actually a top structure, not a continuation pattern, and thus the potential exists for a much more substantial move.
This action places the speculator in an advantageous position of already being in as the crowd is forced to cover their existing positions (in line with the trend), thus exerting opposite pressure (long covering). In addition, you're positioned at the original area of the trend change which may be very fruitful.
For me, taking opposing action on failed patterns has proven rewarding. Part of the reason for this lies in the fact that it is a case of the most popular cliché of "contrary" action. Additionally, it must be done when you are already at a loss in that market with that pattern. This makes it very difficult, even offending (your ego), and thus most probably the right choice.
In closing, let me add that this type of trading behavior I've expressed in this article is also applicable to Seasonals and even common short-term patterns, like reversal bars.
In the case of Seasonals, it's pretty common knowledge that the most rewarding moves are contra-seasonal. Just examine coffee '94, cotton '94, or energies '95/96 to see what I mean. Taking advantage of one of those contra-seasonal moves can make your whole year.
I suggest developing a method or technique to reverse your seasonal trade may be warranted and prove worthwhile. All it takes is catching one of the monsters on occasion to more than pay for the inevitable hits we all must take.
In the case of the reversal bar or bars, the fact is a good many, if not the majority, of classic reversal bars don't reverse. Check it out, and if you agree with my statement, do something about it. Suggestions would include stricter standards for qualifying a reversal bar(s) , and a trading plan for failures. "The times they are a changin," and so should your methods as market dynamics require.
Education of A Trader - Kent Calhoun
There are two types of education: learning obtained from books and seminars, and knowledge obtained from the experiences that life teaches. Formal education may or may not teach an individual how to trade, but allows the trader to learn from the mistakes of others. This is a good learning experience, since it would take the trader a long time to make all the same mistakes. Education from real life trading experiences teaches an individual survival instincts.
The final step to achieve success is to apply analytical evaluation to the actions taken in step three. This places emphasis on repeating actions that produce the desired results, and carefully examine closely what does not work. Once the reasons are clearly understood why some technical actions do not produce desired results, they should be adjusted, improved or discarded,
This basic approach of how to achieve success may leave the reader with the false impression that trading success is an easy process. Not so. General George Patton stated, "a warrior's greatest asset is self-confidence." This demands knowing what should be done, and why it should be done. This will be presented later, when I will examine the reasons that prevent most people from achieving success, and what can be done about correcting them.
The importance of a positive attitude, the two most important psychological laws, and the four steps to achieve success have laid the foundation for understanding the nature of personal change, why most traders lose money, and actions responsible individuals take to correct losing behavior.
The Three Reasons Why Most Traders Lose - One way to change from a losing t reader to a winning trader is to change the thoughts that preceded the actions responsible for the losses. It is difficult to alter the habitual thought processes that have embedded themselves deeply in a trader's personality over a number of years, due to the powerful influence of three intertwined emotions: fear, anger and guilt.
Fear is an emotional state of anxiety due to the presence or perceived presence of danger. (Stress is often defined as anxiety from an unknown source.) Each newborn child has only two natural fears- fear of loud noises, and fear of falling. Most fears produce learned behavior to a specific set of conditions, called conditional responses. Pavlov pioneered this research with dogs in the 1920's, then B.F. Skinner with human beings and animals in modern times.
Fear often impairs the rational trade decision-making process by emotionally relating the possibility of past financial losses to the future. Fear often immobilizes the trader's decision-making process resulting in no trading decision, or a delayed incorrect trading decision response.
Fear will elicit a trader's "flight or fight" response when he is confronted with methodology's trading signals. The trader will either take actions as demanded by his trading methodology, or remove himself from the presence of danger. An acronym for Fear may be "false expectations appearing real." Attitudes determine actions. Traders with positive attitudes have positive expectations, and take decisive goal-directed trading actions despite fear.
The winning trader accepts the possibility of losses or mistakes, yet has the self-confidence to take action despite fear. Winners manage fear, and losing traders are controlled by it. The greatest mistake is to fear making a mistake. Trading success is based on knowledge of what works and what fails. Managing fear and accepting mistakes are an essential part of the trading educational experience that makes success possible. Winning traders learn from mistakes, losing traders repeat them.
Self-confidence naturally develops from self-discipline as a trader learns what actions should be taken from a given set of technical conditions. The more accurately a trader interprets price action, the better his trading results should be. Thought precedes both emotion and action, yet thoughts combined with emotions determine actions. Self-confidence comes from believing in one's abilities, assessing and accepting risk, then taking actions. The winning trader knows personal or financial growth is impossible without risk assumption, which is part of an educational process.
Only emotionally healthy traders can adequately assume risks, because losses must be emotionally and financially acceptable to each individual trader. Each trader must define their own thresholds of pain for each, and develop the self-confidence to accept them. Fear of being wrong may be more important to a trader's ego than fear of sustaining a financial loss.
In a similar manner, many traders can't accept financial success, because it does not conform to their negative self-image as a losing trader. There are various ways fear can be creatively used for financial destruction by the losing trader, but the one common denominator is allowing fear to control trading actions.
It is important to analyze fear and determine its origin to learn why it is being experienced. Most fear is based on irrational beliefs adopted years ago. If fear of losing money is causing anxiety or loss of self-esteem, the trader may wish to simply stop trading until this fear is understood and positively accepted as part of the trading experience. Traders should never borrow money to trade, or risk money they can not afford to lose.
While fear may immobilize the trade decision-making process due to financial losses that may occur in the future, guilt may immobilize the trade decision making process due to financial losses that occurred in the past. Guilt emotionally associates past financial losses, and any negative emotions experienced with them, to the present decision making process.
Guilt is a form of self-punishment, a recrimination today for something that happened yesterday. There are two common trading mistakes that the beginning trader makes that often lead to experiencing quilt:
Incorrect price action analysis before entry, and failure to adhere to trading discipline while the trade was active. These common mistakes often lead to an unacceptable risk-reward assumption before entry, a delayed incorrect entry price and/or protective stop placements, poor stop re-adjustments, and taking profits or exiting losses prematurely.
The most important technical aspect of trading is knowing at what price the initial risk assumption is incorrect. A trader who does not know at what price his analysis is incorrect does not deserve the profits even if his trade makes money.
Before a trade is initiated, an acceptable trade risk-reward ratio must be defined by the trading methodology. A protective stop loss order must be placed upon trade entry, then readjusted according to the trading discipline until the method determines the trade is to be closed.
A winning trader is a winner before the trade is initiated, while the trade is active, and after the trade is exited regardless of the result to the degree he adheres to his trading discipline. There is no logic-based reason to ever experience guilt so long as the trader has executed the actions demanded by his trading discipline. Once a trader psychologically and financially accepts the worst outcome that may occur and does all he can to prevent it, fear and guilt become intellectually useless emotions.
Anger is a hostile emotional response either inwardly directed, or outwardly expressed towards others. Anger may result from confrontation with the guilt or fear aspects of the trade decision making process, or negative trading results. Rational trading decisions are very difficult to make when the brain is processing anger, due to physiological and psychological reasons.
A trader may choose to ignore a signal due to a recent loss, fearing another loss will result. If the trade makes money, guilt and or possibly anger is experienced for not taking the trade. Guilt is a natural response after anger has been vented. If the trade loses money, the trader feels justifiably rewarded for not taking the trade thus making it more difficult to execute the proper trading discipline required for his next entry signal.
Does this mean there is no subjective aspect to trading? Burton Pugh, who wrote excellent technical analysis trading commentary in the 1930's, stated "forecasting prices is a science, but trading is an art." Only a master trader, who can technically justify reasons for ignoring a trade, should override trading signals. One of the Calhoun Four Automatic Trading Rules, "always look to buy a market oversold into support," is expecting a sharp currency move mid-Sep 95, and current system sell signals are not being taken.
Resolutions to Solutions of Fear, Anger and Guilt - Four basic actions allow traders to manage fear, anger and guilt. First, forgiving one's self for past losses. Second, forgiving others associated with past trading experiences. A person is mentally healthy to the degree he may forgive himself and others. Forgiving one's self for past trading losses resolves guilt. Third, asking forgiveness of others who may have been injured from the trading experiences. Lastly, vowing to take full responsibility for all past and future losses.
The four-step resolution process allows any trader to begin to heal emotionally. By intellectually accepting the past, traders may view their actions with a new positive perspective. The past can not be changed, but its perspective must be changed from a negative experience whereby the trader sees himself a victim, to a positive learning experience that will allow the trader to achieve success. Until a trader positively resolves his past, he will not accept important learning experiences yet believe he is a person unworthy of success. Resolving the past demands taking total responsibility for it, and personal commitment to not repeat the same trading mistakes.
Recognizing a problem exists is necessary before resolutions can be examined. Anger is a financially self-destructive emotion that exacerbates fear and quilt by obscuring solutions to them, while creating itself as another problem. There is no such thing as justifiable anger related to the trading process. If a trader can financially and emotionally accept losses, execute proper trading and self-discipline, the powerful negative emotions of guilt, anger and fear should not become part of or create trading problems.
The relationship of fear, anger and quilt is a very complex subject matter. The psychological problems of losing traders can not be expected to be adequately resolved in a cursory discussion of this nature, however all resolution to a trader's psychological problems must consider the key aspects presented in this work. Once traders make the critical adjustment from a losing to a winning trader, they often come to realize the psychological aspects of trading being equally important as correct price action analysis.
A degree in psychology may be more valuable than a degree in economics for a professional trader, because markets are value based yet emotionally priced. Understanding the psychological perceptions of market traders correlates directly to the what and how prices are recorded for any stock or commodity.
Preventing Future Psychological Trading Problems - There are many successful trading approaches, but all of them demand the trader develop a positive relationship with financial risk acceptance. Traders to whom money represents self-esteem or security suffer unduly when losses are sustained, because they see themselves as being punished by forces beyond their control. Professional traders do not spend time lamenting the money they have lost, they express gratitude for the many blessings they still possess. Again, a positive attitude makes the difference between winning and losing, or some cases even heaven and hell.
A samurai swordsman went before an esteemed Zen master and shouted in the temple he wanted to learn the difference between heaven and hell. The master looked at the samurai and shouted, "you mean they let a big, ugly fool like you become a samurai swordsman?" The samurai quickly drew his sword raising it high above the master's head. The master calmly raised his finger and pointed to the samurai's eyes, and said "that is hell." Slowly the samurai sheathed his sword, nodding his head as he knelt before the master, placed his hands together then bowed. "And that is heaven," stated the master.
Understanding and correctly analyzing price action is absolutely necessary before trading success is possible. Yet even with profitable trading methods, traders must develop a positive relationship with themselves, others and their trading environment before success may be achieved. The professional trader recognizes no one else may give him success, he must earn it by careful preparation, proper execution of trading discipline, and careful analysis of trading results.
Trading decisions based on scientific analysis of price action make statistically accurate price forecasts possible. Placing a protective stop loss order to exit the market at the price the initial risk analysis is incorrect is the best psychological asset. Even if the trade loses money, the trader adhered to his trading discipline. Statistically, a trade 60% accurate with payoff equal to losses may risk 5 percent of the total capital with only a 0.0085 probability of financial ruin.
Failure is a good teacher only to those who possess a positive attitude to learn the valuable lessons from their mistake. Accurate execution of trading discipline requires a protective stop placement on order to avoid failure, and diminish the negative psychological effects of fear and guilt. Self-discipline demands doing what should be done, when it should be done, whether or not a trader wants to do it. Self-confidence is born from self-discipline, and makes the risk acceptance process acceptable because potential losses are acceptable.
Developing a positive attitude is essential for human beings to successfully live life and achieve their maximum potential, since all other higher human values come from it. Respect for truth, honor, dignity, honesty, integrity, courage, loyalty, patriotism and wisdom is cultivated by an individual who recognize these values not only enhance the quality of his life, but the lives of all he encounters. His attitude states others are worthy of these values, just as he possesses enough self-worth to expect them to be returned.
The Green Bay Packers had three very basic plays they ran over 80% of the time. These plays reflected Vince Lombardi's winning philosophy and he expressed it very simply. "Son, the only thing you can do is to get off your ass and stop feeling sorry for yourself and do it! Work out your method. Work out your system, and execute it." Was Lombardi talking about playing football or trading? This simple philosophy inspired the Packers to two consecutive NFL Super Bowls. Not bad advice to conclude my "Psychology of Successful Trading."
Caveat Emptor (Buyer Beware) The Lessons Continue - R.E.H.
Being new to commodity trading, I was seeking some seminar/course to gain the knowledge to trade successfully. In my search, I subscribed to the trade magazines and noticed all the ads touting the systems, methods, gurus, software, etc. for me to trade successfully.
One of the ads which for some reason I can't explain caught my eye. It stated that this trader will teach ten top methods and even hold the seminar in a nearby town where I live to make it convenient. Well I sent my money to Mel Peddy and went to his seminar which also promised free software and a phone number you call to talk with Mr. Peddy to help you get started.
I got a binder full of systems, but no information on how to use them. I got no software and all my phone calls went unanswered when I had questions.
I now know and should have known to put the seminar money in my margin account. So if your looking for a magic seminar to get help or information to trade with don't go looking to Mel Peddy for help, cause it ain't there. Another adage comes to mind - "If it sounds to good to be true, it probably is."
An Improved Rollover Calendar - J.T. Byatt - Australia
I am enclosing for publication the Rollover Calendar I used in 1995. I found the Calendar suggested by Rick Lorusso (Vol 1, No. 2) useful, but it did not include enough contract months for my liking. I have included in my calendar all active months. My rationale is as follows:
I base my daily and weekly analyses on the prices of the actual contract I may trade eventually (for example February Gold). For monthly and longer analyses, I use a Rollover Contract built from actual contract prices, i.e., containing all gaps at the times of the rollovers.
There have been many arguments for the inclusion of these inter-contract gaps and for their elimination, e.g., by backward adjustment, forward adjustment, etc. (to produce what to me can only be contracts containing sometimes highly artificial prices.) By including all active months inter-contract gaps are kept to a minimum size.
I feel that for monthly analysis (as opposed to daily or weekly) these gaps then not only become less significant, but they give charts which show both true support and resistance prices as well as an idea of seasonality. In any case, my final decision to enter a trade will be on daily analysis of the actual contract (following favorable weekly and monthly analyses).
My rollover date is decided primarily as the date when the open interest of the current active month declines below that of the next active month.
However, I also look at the gaps between closes and the High-Low ranges for dates around this time and use common sense to decide on the actual date I will use for rollover. I then simply alter the contract code (via my Tech Tools program which, incidentally, I find excellent in every way) so that future downloads automatically update the continuous contract with data for the new active month.
As can be gathered from the above, I do not trade intra-day as this would not be practicable because I have a full-time job and live in Australia. Nevertheless I will be retiring, I hope, in about 18-months and may be able to do intra-day trading then. I wish all readers successful trading in 1996. Let's all continue to try to help one another via your excellent publication.
(Note: Charts and graphics are not available here on our webtrading Website but are included in the print edition of CTCN)
Must Pull The Trigger To Successfully Daytrade Play Time Is Over - Don McCullough
Here we are in a new year and my treating the S&P as a spectator sport will have to come to an end. I have watched more great trades go by than most of you could ever imagine. I have been receiving real-time data for about 10-months and now have (and should have) a very clear picture of what I must do in order to succeed.
Although I have done little trading over this period of time I have learned a lot. My biggest surprise was how hard it is to take my daytrading signals. I have known about my major signals for about 3-years, but it has taken a tremendous -- and I mean tremendous -- amount of time and effort to become totally sure of these signals. I have found that you not only have to know enough -- you have to be enough!
I can now more fully appreciate why it took many pros 8-10 years before they started trading successfully. There are several conflicts I have had to overcome (still working on many) and there's probably more to come. Some of these conflicts are as follows:1. Fear of losses vs. trusting the "system."
2. Second guessing signal vs. decisive execution.
3. At-the-market orders vs. limit orders.
4. Single time increment chart vs. several charts on the screen.
5. Probability of long-term success vs. individual trade loss.
6. Action vs. fear and danger.
7. Comfort vs. positive aggression.
8. Take every signal vs. being selective.
9. Probability vs. certainty. Probability=trade -- Certainty=hesitation.
10. Too late to trade vs. find a place to enter.
11. Trade one market vs. 10-20 markets.
12. Stress acceptance vs. comfort.
13. Accepting losses gracefully vs. trading little and inconsistently.
14. Confident feeling vs. fearful feeling.
15. Feeling worthy of keeping the money vs. giving it back -- and more!
This is not a complete list and somewhat repetitive. My main point is: Conflicts Disable! Ridding oneself of conflicts Enables! I have a good sense of how the top pro is free to act. Free of most disabling conflicts and free of disabling fear. What a great feeling that must be! Actually these truths apply to life in general as well as to trading.
No doubt the above list of conflicts (and more) have been experienced by most successful traders sometime in their careers. Not only does one have to rid themselves of conflicts, but also of a great amount of B.S. obtained from books and the like.
In order to successfully day trade, I will have to put fear aside and, quite likely, take nearly all, if not every signal. In fact, taking every signal may be the only way for most beginners to begin trading consistently. I expect being selective, and hence, refusing to take some signals (even reversing) belongs to the more experienced trader. I can see where even an experienced trader might decide to take every signal simply to escape the agony of second-guessing each and every signal. If the signals usually come at optimum points on the chart and the stop loss is close, this might be the most stress free way to trade. No hesitation, no doubts, just trade in a relaxed, big money coming frame of mind.
(Note: Charts are not available here on our webtrading Website but are included in th eprint edition of CTCN)
Up 46% Thanks to My Scale Trading Method - S.F. - from Europe
I have been following Scale Trading methods for over a year, and am thrilled to bits with the results. Did you ever read Robert Wiest's book? Nothing has appeared in CTCN about it since Vol 3, where I agreed with much of what Terry Davis wrote.
I am quite sure that I will one day be tested, as he was, with a large drawdown, but I have seen enough of this system now to believe that I can survive through it, and maybe even come out the other side stronger because of it. We'll see!
Like Mr Davis, I have been irritated by Wiest's creation of scales in his newsletters followed by ignoring them completely in the future. This has happened several times this year. However, this has had the effect of making me think for myself (never a bad thing) and work out my own scales rather than rely on someone else to do it for me.
Terry Davis is also correct in pointing out that Wiest will blame anyone on this planet for drawdowns in The Guarantee Account, and he is also correct in pointing out the blame for losses should stop squarely with him. It is no use blaming "grey aliens" for losses. However, it is also no use me blaming Robert Wiest when I suffer losses, so I have learnt to analyze why scales do or don't work, and improve accordingly. (The Guarantee Account is an imaginary account, which Wiest guarantees will return 25% over a year, or subscribers to his newsletter get their money back. As I understand it, he has been forced to "cough up" only once in however many years he's been going. Not a bad record). In the book "You Can't Lose Trading Commodities" by Robert Wiest.
Finally, in his book, Wiest suggests that options trading should be stopped, as they (options) serve no useful purpose. I cannot quote verbatim, nor can I find the relevant passage without re-reading the book, but Wiest also says people have written to him with ways to combine scale trading with selling options. He claims this cannot work in the long-run, and implores readers not to write to him with suggestions on how it can. I have listened to this wish, and have not written to him. However, I believe I have found a method which works, and has yielded good profits to me throughout 1995. Wiest is much older than me, and can therefore rightly claim to have seen a lot more than me. But if I remain "unbitten" through 1996 as well, I shall start to believe seriously that I am onto a definite winner.
I am up 46%. If I had stuck to Wiest's methods, I would only be up 28.5%, so clearly selling options has been worthwhile. Furthermore, I am happy with my life, and above all my trading life, and my trading is both interesting and fun. Scale Trading alone is rather boring (which is both a major danger and prime drawback), whereas options trading is much more fun!
I most certainly do not make thousands of dollars a day, but I seriously believe I shall make at least 20-40% profit more or less indefinitely. Maybe I am in for a rude shock. However, I seriously implore you to read the book if you have not already done so.
Mucho Baloney - Don McCullough
Just received some literature from a couple of people and it gave me the "urge" for another article. Wish someone would send me something I felt positive about. I won't hold my breath.
Mucho means much in Spanish and baloney means . . . well . . . you know what that means.
I mailed a letter to a fellow asking him (only) if I could buy the two books he wrote having to do with trading the markets. What I received in reply was his student entry fee is $5,000 and he requires access to me (his students) via Internet or other means.
He tells me I will have access to all he has written about his methods since 1979. He mentions nothing about my being able to purchase his two books. Well, if I could get $5,000 from a person rather than sell him a couple of books for perhaps $50 each - l too think I'd go for the $5,000!
Evidently, I can forget about buying his two books - that's all I wanted to do. Now here's a guy who's been trading the markets since (at least) 1978 still feels the need to give seminars and charge "students" a $5,000 entry fee. Is there an exit fee? Seems that after 15 or more years of trading, a guy should not need students or be running around the country giving seminars. This tends to give me a pretty good idea of how his trading profits compare to his teaching profits. The books? Now I know I don't want them.
Another "gonna help me make a killing in the markets" offer I recently received started by telling me I was one of ten selected to purchase the world's most popular futures trading system. Now what a bunch of bull! A grade school student wouldn't fall for that baloney. As to the system being the most popular in the world -- how could he possibly know that?
At his incredibly low price, he tells me he's only "authorized" to sell ten systems at this time. Hard for me to see how a guy would think potential customers would be stupid enough to swallow this kind of pitch. Guess I've been lucky. Over the past several years I have received a lot of stuff like this through the mail. How so many complete strangers can have my best interests at heart and want to help me so much is . . . well . . . what do you think?
All of you ad copy geniuses can feel free to remove my name from your mailing list. I've been helped so much, I feel guilty.
Comparing Trading to the Game of Baseball - Don McCullough
Like many traders, I too am motivated to write articles, to a significant degree, to help me clarify the various aspects of my own trading. If what I say helps others, good. My main concern is the "truth-action-dollar equation."
Suppose you are a professional baseball player and you are "at bat." Further, suppose every time you swung at the ball and missed you had to turn around and give the catcher $10,000. And, suppose you had to wait one to two hours between pitches never knowing when the next surprise pitch would come roaring toward you.
That's a somewhat playful analogy of what daytrading the S&P 500 is like. Let's say the professional ballplayer makes 2 million a year while the average trader makes $50,000. That would make his $10,000 loss equal to the average trader's $250 loss on one contract. (I am not striving for a perfect analogy in this article, only a meaningful one).
How successful do you think the pro baseball player would be if he had to play in a game with the above rules? Can you imagine the negative emotional impact he would experience if he had to give the catcher $10,000 every time he swung and missed the ball? Can you imagine the negative emotional impact of him waiting an hour or longer between pitches and never knowing when, during that time, the pitch would suddenly come?
Some of what I've just said might be overstating things somewhat, but there really is some truth to it. The daytrader watches and experiences the very real loss as it's occurring. His mental goal is to not let the loss bother him and to be positively ready for the next signal. The daytrader very often has to wait a very boring 1 to 2-hours between trades never knowing what kind of trade it will be or in what way the market will try to fool him and do the unexpected. The trade you just took may be the sucker trade and the big move may suddenly be in the opposite direction.
One very big difference between the professional baseball player and the average trader is the ballplayer has years of actual playing experience while the average trader has very little actual trading experience -- especially when compared to the professional traders. As many traders say, "You learn trading by trading. Real trading in the real market." How many traders really have the time or the money -- and yes, the determination to accumulate the experience needed to become successful at daytrading?
There is a very real emotional hurdle to daytrading that has to be experienced to be appreciated. Decisive action in a very uncertain environment doesn't come easy!
Yes-er-reeeee, I'll bet the batting averages of the professional baseball players would drop considerably if they had to turn around and pay the catcher $10,000 for every missed ball.
Money Management Method Based on Las Vegas Horse/Sports Betting - Part 2 - Tom D'Angelo
In my first article, I described how traders can utilize the Profit Center technique of business organization in developing a personalized money management plan, specifically tailored to his style of trading. Now I will describe the reports I create and how I use those reports in developing my personalized money management plan.
In my final article, I will tie all the statistical reports and calculations together into three management reports:1. The Performance Report
2. The Trading Plan
3. The Trade Journal
The Performance Report is the summarization of all the important statistics for each Profit Center and is designed for the trader who desires to attain a professional skill level in the discipline of money management.
The information from the Performance Report is then used to complete the Trading Plan. The Trading Plan is the trading strategy for the next trade in that Profit Center.
The Trade Journal is an "after the fact" critique of the Trading Plan after the trade is completed.
In my last article, I described how to file these reports so that the trader is managing his trading in professional, disciplined environment.
Before reading on, be warned that this article is geared for the serious trader seeking long-term profitability and a professional skill level of trading expertise. Those looking for trading systems or the latest system fad are best advised to save time and skip to the next article.
I create the following nine reports for each Profit Center. These reports are created by my software called The Manager. Each report displays an important money management concept and contributes to my decision as to: 1. if I will trade that Profit Center and; 2. how many contracts to trade if I do decide to trade that Center.
1. Drawdown Analysis - $ drawdown and % drawdown is calculated after each trade. Every trader (successful or unsuccessful) is in a drawdown mode at least 85% of the time. This creates psychological problems since a successful trader feels he is always losing money even though he is a long-term profitable trader. Real-time monitoring of the drawdown situation currently in effect for each Profit Canter is a major factor in overcoming the psychological problems inherent in speculation.
2. Series of winning and losing trades - Calculate the consecutive series of winning trades and losing trades and the $ won or lost in the series. For example, a trader has the following five trades, +500, +700, +200, -100, -600. He has a series of three consecutive winning trades and a total of $1400 won in the series followed by a series of two losing trades with a total of $700 lost in the series.
Having a history of consecutive winning and losing trades is the second most important piece of information in the trader's money management plan. The trader must have some type of idea what to expect concerning the worst series of consecutive losers and best series of consecutive winners.
Having this information will assist the trader in preparing for the inevitable future series of consecutive losers since he will know what occurred in the past and can be psychologically prepared for its recurrence in the future.
3. Optimum number of contracts to trade - Formula found in Ralph Vince's book Portfolio Money Management Formulas
Also calculate % of bankroll required for margin and % of profits in that Center which will be lost if you are stopped out of the trade.
Trade close to the optimum in profitable Profit Centers with up-trending profitability (you will also require graphs to determine the trend of the profitability - see my next article). Trade less than optimum in profitable Centers with downward trending profitability. Do not trade unprofitable Centers.
This subject requires deeper explanation which I will attempt to perform in my next article. Knowing when, where, why and how much to trade distinguishes the professional, confident, successful trader from the 95% floundering novices who will inevitably go broke.
4. Pessimistic Return Ratio - Formula found in Vince's book mentioned above. Calculate after each trade for each Profit Center. Excellent measurement of profitability.
5. Centers comparison - I generate a report which instantly compares any four Profit Centers I select, displaying the following statistics:
Beginning Capital - Net profit or loss - Current capital - % winners - % losers - Average profitable trade - Average unprofitable trade - Ratio average profitable trade/Average losing trade - Largest winning trade - Largest losing trade - Standard deviation - Kelly percentage
Hint - If you establish different trading systems as Profit Centers, you have an excellent means of instantly comparing four trading systems.
6. Percentage analysis - Calculate total profit and losses in a Center and then determine the % each winner or loser was of the total profits or losses. For example, a Center has two winning trades, +500 and +300. Total profits are $800 in the Center. Trade #1 comprised 63% of profits in the Center (500/800) and trade #2 comprised 37% or profits in the Center (300/800).
Some Centers demand consistency in trading results, winning or losing the same amount on each trade (example - daytrading system where one tries to obtain the same dollar profit or loss on each trade). Percentage analysis reveals your success or failure in achieving consistency. If you're consistent, all percentages will be about equal. Excellent measurement of trading performance for daytraders who attempt to realize the profit or loss on each trade.
7. Portfolio construction - Sorry, I can't explain this concept in a few words. Basically, I select commodities in various Centers in which I have a positive Sharpe Ratio and then create a new Profit Center composed of these commodities. I select the best of the best and put these commodities into a separate Center (portfolio) and then establish a bankroll for that Center and then trade the Center. This ensures I'm taking trades in areas where I have been very profitable in the past. Great confidence builder.
8. Statistical Analysis - I calculate the following statistics after each trade for each Profit Canter. The statistics are eventually incorporated into my Performance Report:
Trading Efficiency-A. % Profitable Trades
B. % Unprofitable Trades
C. Average Profitable Trade
D. Average Unprofitable trade
E. Ratio Profitable Trade / Unprofitable Trade
Risk Management -A. Unprofitable trade as % of Capital
B. Profitable trade as % of Capital
A. Profit Factor
B. Expected Next Trade
C. Pessimistic Return Ratio (Mentioned above)
Operating Efficiency -
A. Trade Tracker - My simple invention. Divide last profitable trade by current average profitable trade. If last profitable trade was $500 and the average profitable trade at that time was $250, the Trade Tracker ratio=500/250=2.0. Perform the same calculation for losing trades. The ratio for profitable trades should ideally be above 1.0 and increasing. This means you are taking profits greater than you average profit. The Ratio for losing trades should ideally be below 1.0 and decreasing. This means you are taking losses lower than your average loss.
Great info when displayed in graph format with 1.0 marked off as the boundary line.
9. Sort trades - I sort my profitable trades from biggest to smallest and print out the report. I can instantly see the range of my biggest to smallest winners for each Profit Center. I do the same for losing trades. Very handy info to have.
Some of you may recognize the basic thrust of the Money Management plan is to: 1. distinguish a positive expectation game (Profit Center) from a negative expectation game (Profit Center); 2. Play only positive expectation games and; 3. structure bet size (number of contracts to trade) according to trend of profitability.
1. Sorry if I couldn't go into depth regarding some of these concepts, but there obviously is a space limitation.
2. Next article, I will describe the money management statistics I graph and how I use the graphs to determine when, where, why and how much to trade. I will also attempt to tie everything together into the Performance Report, Trading Plan and Trade Journal.
3. If the above methodology sounds like a lot of work, I felt the same way myself until I realized that without this type of analysis, the chances of achieving long-term success in speculation is close to zero.
4. If you would like to know the most important ingredient in achieving long-term success in speculation, read Marty Schwartz's answer to the question "Is there anything to add to that list" found on page 275 of the hardcover of Market Wizards by Jack Schwager.
5. The concepts described above were obtained from and work extremely well for professional sports and horse players in Las Vegas. The same techniques apply to speculation. I don't argue with success.
Which Is Best - Omega SuperCharts or Equis MetaStock?
James Mitchell would like input on whether to purchase Omega's SuperCharts vs. Equis MetaStock. I plan to download tic data after market hours for analysis and trade ideas. Contact me via CTCN. I would appreciate input on the most reliable sources for after market hours tic and daily data.
Editor's Note: Many other members have also asked this question. These two products are by far the two most widely used "toolbox" type programs utilized by CTCN members. That's according to our Member Response Coupons. It would appreciate if members would also give feedback on these two popular programs via publication in our next issue.
How To View Omega EasyLanguage Functions - Lowell Huber
Here are some instructions for viewing Easy Language built-in functions at your workstation or PC. Like Tom Dyste pointed out in the last newsletter, they show many valid coding techniques.1. Assuming your in Windows, click on the file manager icon.
2. Select (click) on the drive you have your Omega directories or files on - usually C.
3. Click on View, click on Tree & Directory.
4. Click on C:\SC\BIFUNCS in the left half of the window.
5. On the right side of the window you will see a directory with boooo.asc type file names. Each file contains a built-in function.
6. Click on File, click on Associate
7. Under Associate With: Click on Text File (Notepad-Exe) click on OK
8. Now double click on one of the boooo.asc type files and you will be viewing an EasyLanguage Built-in function. Note: be very careful not to alter and save any of these functions under the same name unless you're very sure you know what you are doing.
P.S. Your newsletter is great, keep up the good work.
Help With Trend Following - John Bowley
Trend following is the basis for many trading systems. ADX, trendlines, moving averages, etc. may be used to decide whether any market is trending or trendless. Two weekly publications have also been a big help to me recently in this area. Ken Jechusen's Chart Insight and Glen Ring's Trends in Futures point out that analysts design systems, but traders like them can help decide which trades to actually enter, exit or reenter and when. This type of information can make any system work better.
There is a Tech Analysis Assn For Dallas Area Traders - David Slavik
This is in response to Gerald Barrington's request for info on a Market Timing Group in Dallas, re: CTCN Vol 3, No 10, p 20.
I belong to a group called The Association for Technical Analysis that has approximately 160 people attend our scheduled monthly meetings - September thru May each year. In April we hold a seminar that lasts all day. This past May 95, we had the following speakers at our seminar: John Murphy, Larry Williams, John Bollinger, Dr. Elder, Jim Paul and Mark Leibovit.
In addition to our regular meetings, we have three special interest groups that meet once a month. These groups are: 1. Indicators; 2. Mutual Funds and; 3. Psychology of Trading.
The address is as follows: The Association for Technical Analysis, PO Box 121780, Arlington, TX 76012 - Vice President/Membership is Randy Tareilo 817-265-9243
We have members throughout the Dallas/Ft. Worth area. Our meetings are held at the Harvey Hotel in Addison.
Opinions on Ken Roberts,Lind-Waldock, Omega & Developing & Following Your System
Hey Great Newsletter! It has been a lot of fun to read and learn from. The nicest part is that a broad cross section of people are represented, so whatever your style of learning and whatever your level of knowledge, there's bound to be something of interest to you every issue.
I am a new trader. I opened my first trading account this week. I feel that the transition from student (which all of us are) to trader (which fewer of us are) is significant enough to warrant documentation for the benefit of "future" futures traders out there that are either afraid to start, saving up to start, or just studying futures trading as a hobby and may not ever actually trade.
Ten years ago I sent for Ken Robert's "World's Most Powerful Money Making Manual." I read it, understood it and was hooked. Unfortunately, I had neither the confidence nor the capital to begin trading then, even though Ken said all you needed was $800.
Just as well because if I had the money, I would have lost it using his methods, but it gave me a basic understanding of how a futures market works and how money can be made or lost quickly. No activity occurred for the next 6-years, but the occasional Futures Magazine kept me interested. After getting married, digging my way out of debt, going to engineering school, and working two years for a high tech firm, I am finally in an emotionally and financially healthy enough place to consider trading for real.
So, I bought the mags., contacted system sellers and got lots of sales calls and junk mail. I quickly realized that if not careful, I could be taken. On studying one of the many free price charts I received daily in ads, I discovered a simple signal on every chart that when developed into a simple system would be the basis for my trading.
Developing your own technique is the only way to go. Believe me, your ideas are NOT "too simple," or "not professional." Your ideas are eventually going to be the only ideas that you will ever really trust with your own money. You would rather lose all of your money trading your own system than trading someone else's, right? Especially if you don't even understand what their's is doing with your money.
Your system is good enough, and the rewards for trading it successfully will outweigh the initial development pains. Testing your own systems are fun, not paranoid as testing a canned system must be lest you get taken.
I chose Lind-Waldock because they have a good program for beginners called Intro-Account. They have all kinds of resources for new traders that will make you better, faster. They are also marketed well, with no typos or misleading statements in their written materials. I know that they're a commission factory, but they seem very professional and commissions are reasonable ($16/daytrade/MidAmBonds/live quotes).
I haven't placed my first trade. I'm practicing first with my DBC Signal (cable TV), TradeStation, and data from MidAm. I will trade T-Bonds at MidAm. My trading system is just about breaking even now after 2-weeks of real-time practicing.
The message I write most often on my scorecard is "follow the system, dummy." It is tempting to "go for" every little twist of price change on the screen, but you will lose every time, if you divert on a whim.
My system was tested on CBOT T-Bonds tick data, which is a much better market for my system, but I want to try a few low cost trades, to break even or make a little profit at first. I can make more mistakes per dollar with MidAm bonds than CBOT. S&P 500 index futures are the end goal for their smooth price movement (due to high volume), and terrific profit potential per day.
Omega's customer and technical support are still lacking, but the program is awesome (not so with my previous SuperCharts 2.1 - full of bugs). DBC Signal service and people are perfect. More detail on my progress will come. Wish me luck!
Editor's Note: Judging by the complaints your editor receives, I would have to agree with Richard about Omega's Customer Support needing improvement. The major problem seems to be simply getting thru to them in the first place and then getting them to get back to you with the answer to your question. However, their products are rated excellent by most everyone I have spoken to.
Searching for The Holy Grail - None of the Top-Ten Systems
From 1-Yr Ago Are in Top-Ten Now - Ernest Goldstein
It has been a very interesting and informative year of getting CTCN. Being a system trader I have noticed a pattern that has developed in the letters written by members that is quite interesting. The greater majority of us are seeking the HOLY GRAIL system that will give consistent winners and big profits. We hungrily send for the latest and newest system offered even though all the ones we purchased in the past have not lived up to expectations or are complete failures. On the Omega Website there is a big battle going on between Dowling & Chalek. Each declaring they have perfected the same system that is the best ever. They are taking each other to court over the rights to see who can market it. Who even knows if the system is a viable one and can make the profits they proclaim.
Those who have written in to say that they do have the perfect system end-up with a caveat. They say they have taken many ideas from other systems and more important than that claimed they have infused their own personality, philosophy and psychology when they make a trade. It is not a pure system that everyone doing it will come up with the same answer.
I checked the listings of the top-ten systems of a year ago by Futures Truth. Not one that was listed then is in the top-ten today. I would like to trade for a living and work as a sideline, but until that right system comes along I will keep looking along with the rest of you.
How To Capture Signal Data Using CIS Software - Barry Frost-White
In the Oct/Nov95 issue, Mr. George Moldenhauer expressed frustration trying to capture single session data for multi-session futures using DBC Signal. I received a flyer from Coast Investment Software, located in Sarasota, FL (813-346-3801), regarding their solution to this perplexing problem.
CIS has developed two programs to help in this area: LOTUP and CAPTURE. CIS states that LOTUP is designed to update daily historical files from the Signal receiver. You can download prices of tradables up to twice daily and the process is fully automatic. You select the times you want LOTUP to collect quotes. It recognizes and ignores weekends, so you won't get multiple entries of the same data. The program works even if you are on vacation.
The outcome is that you create a time bracket for your instruments and that is what is recorded as open, high, low and close. Other sessions are ignored.
LOTUP loads the data collections on its own into the Signal receiver. The output is in CIS Microsoft binary format and can easily be converted into ASCII or the newer IEEE format for many Windows based programs.
CAPTURE monitors tick data and creates batch files in 5, 15, 30 and 60-minute bars. It does not save the ticks themselves, just the 5-minute and larger bars to save disk space. Again, the user selects start and stop times for the data collection.
LOTUP and CAPTURE sell for $99 each and discounts are available if other software from CIS is purchased. I'm told that these programs have been used by traders of futures, stocks, indices and mutual funds for years.
Thanks For Your Enlightening Concepts - Ca Ley Wong
I have been following articles in CTCN with great interest, and I would like to thank you for making it clear to me something that I have suspected all along: that success in the commodities market depends entirely on one's psychological makeup. Thank you for this enlightening concept.I appreciate you sharing this. I also appreciate the fact
What did you see before that made you get out of a winner as soon as you saw a little profit, and what do you see now that makes you get out of a winner with the most profits? What makes you place a stop now, and what prevented you from using a stop then? What types of self-talk, self-visualization and gut feelings you had then, and with what kind of self-communication you used to replace those? What specific differences do you see in your friends (who despite learning your system, aren't successful) and in yourself? Any other beliefs you would like to share? We appreciate you sharing your valuable experiences.
Editor's Note: These issues are addressed in CTCN's video tape series and our trading manual. We are now accepting orders for them, but please hurry.
Software Review: CATS Crossover System - Sam Jackson
This software program, which requires Windows 3.1 or higher, uses moving averages to try and catch trends. I first learned of it on Prodigy, when the author began posting the trades he planned to do the next day based on its signals. CATS Crossover System measures the 4, 9 and 18-day moving averages, and issues buy or sell signals based on the crossing over of the three averages.
While using moving averages to detect trends is certainly not new, it's a method that worked well in trending markets over the years. What CATS Crossover System does for the user is apply a few simple price closing rules as filters to the moving average system to cut down on whipsaws, and more importantly it automates the whole process.
The program will read data in a variety of formats (MetaStock, CSI, Tech Tools, etc), and it has the usual look and feel of all Windows programs. The manual is well done, and installation is simple. It will compute signals on any number of markets or contracts you desire.
I have mine set up to check 30 contracts, and it takes about 2-minutes to produce a chart showing whether to buy or sell tomorrow at the open, and where to place stops. As the trades progress, the program automatically moves the stops, tells you to remain long or short, or tells you to exit a trade if the trend seems to be faltering.
From my limited 3-month experience with the program, it has worked well. When a trade isn't working, the stops seem to be set in such a way as to keep losses relatively manageable (about $200 to $500 or so per trade).
When a trade is working, the stops move up to protect profits, but in my opinion the stops sometimes are a little tight and should be overridden. It gives on average, about 5-6 signals a week in the markets I have it check each night. Of those 5-6, I may end up with about one trade a week on average, due to my imposing an additional optional filter that's mentioned in the software's manual.
For those who desire to have a simple, easy to run moving average system, this is worthy of consideration. According to the authors, it has back-tested well over the years, even without using any filters. According to my trading it in real-time during last 3-months, it appears to be living up to its promise.
Name Withheld Seasonal Trader's Bible Review - Harold Uney
Name Withheld "Seasonal Trader's Bible" should be on every trader's desk. Jake has produced the authority on seasonal trades. The years covered are sufficient to produce seasonal trade information that's as reliable as seasonal trade information can be.
Jake suggests you use your own favorite system to filter or pinpoint seasonal timing. He is not in favor of using seasonals on their own as a trading system.
For instance, my proprietary S&P trading system signalled a buy of Dec. S&P's for October 27-Jakes's high profit/loss ratio seasonals "Buy - Enter 10/26 exit 11/2 stop 200 points." I bought on 10/27 at the opening at 578.60 (used my system stop of 573.00) and sold at 582.00 (market was showing resistance) for a $1,700 gross profit.
The power of Jake's Seasonals is that they are not based on coincidences, like some other seasonal studies, but on logical pricing at a particular part of the year. I certainly recommend the book.
Advice Addressed To Traders Who Don't Make Money & Help - Steve Benger
I've been a CTCN subscriber since 11/93. Having read numerous articles, I would like to express my thanks to all of them. Obviously CTCN offers plenty of information which might or might not be useful to reader.
I would like to cover one aspect of this information "pipeline" which has rarely been addressed. At least not to my knowledge. The following is addressed to the traders who do not make money.
First let us examine your mental framework. I state that you became a CTCN member, because you want to make money in the markets. In my opinion this should be the driving force behind your doing it all times when you get involved with them. If you honestly disagree, take my advice: do not even try to trade!
Until you succeed and make money, you will experience pain, feel uncomfortable, and will go through all levels of emotions you know from your real life. And the most important thing: you will loose real money! Well, this does not sound very promising, does it? Why would you like to go through all of this? Obviously it is much easier to listen to someone else's advice. And that is the problem. All of you are looking for the Holy Grail of trading. The problem lies in the fact that there are numerous ways which will lead to success.
CTCN offers insights into these ways. Unfortunately (for you) it is left up to you to decide which way to go. Most of you have failed in the past and will fail in the future because of the lack of determination to cope with the unpleasant and the pain through which you have to go in order to get the conviction that you are right.
It seems much easier to start with a trading strategy being delivered via CTCN or any other source and change over to another one, if the old one does not work. Your problem might be that you have too many ways to go, or just too much information and your current knowledge does not enable you to determine which piece of information is important to you and what you should forget.
Try to take any failure as an investment in your future. Realize that trading is a serious business. Imagine a business man who is not prepared to invest in a new company, not prepared to put the invested capital at risk. You have to be prepared to risk something, money and your beliefs!
Be prepared to lose a battle and accept it as normal, you want to win the war. Always realize that you have to fight for your success. Very rarely it is being given to you as a present. Understand that you have to think as a trader before you will trade as one. Finally try to make up your own mind about what I am saying here. Do not trust me, try to assess yourself whether the above makes sense or not. If one of you saves money because of my article, it has already made sense.
Two Popular Ways To Report Max Drawdown One Is Much Easier To Take Scott Caldwell
Maximum drawdown is a very important figure which is normally reported as one of the factors in analyzing a system by historical testing software. It is generally defined as the greatest decrease in equity at any time during the testing period under consideration and it is usually reported both in terms of actual dollars and as a percentage.
Only recently have I begun to realize that various testing software programs differ in how they report this figure. The two biggest variations seem to center around whether or not the maximum drawdown figure is based on closed trades only or on both open and closed trades.
Open and closed trade calculations: When maximum drawdown is based on open and closed trade equity it will tend to vary every day that any trades are in progress. The benefit of this figure is that it monitors daily fluctuation in equity throughout a trade or a portfolio of trades. The limitation of figure is that it counts losses of open profits as actual losses.
For instance, let's say you are trading a system and you currently have open trades in 4 markets: JY, SF, BP and DX. All the markets are moving well and you have a current open profit of $5,000 per market or $20,000 total. Then, as it often happens, the markets move against you and your long-term system doesn't get you out until you have lost half of your open profit. So, you exit the 4 trades with $10,000 in profit. This would be common of many long-term systems which allow a market to move a large amount against you before exiting the trade as a tradeoff for giving the market room to stay in the major moves.
The problem is that these 4 profitable trades will be reported as a $10,000 drawdown since you had a $10,000 loss in open equity. If this period were immediately followed by an extended period of closed trade losses totaling $10,000, those total losses would be added to the previous open profit drawdown of $10,000 to arrive at a new figure for maximum drawdown of $20,000. In this case half of the maximum drawdown figure would represent actual closed trade losses and half would represent decrease in open trade profits.
Closed trade calculation only: When maximum drawdown is based on open and closed trades it will only vary when your system exits a trade. The only factor taken into consideration is the affect of actual closed profits and losses.
The limitation of this figure is that it does not tell you anything about open equity when you are currently in trades. The benefit is that it reports the important maximum drawdown figure only on the basis of actual losses.
Let's look again at our above example where you were currently in 4 trades in 4 currency markets. In that scenario the system would report a $10,000 profit and 0 drawdown since you actually made money upon exiting the trades and you did not actually lose any money.
Personally, I am more interested in knowing the maximum drawdown based on closed trades since that tells me the greatest decrease in capital I could have had if I had started trading at the worst possible time, although it's true, drawdown figure will change even over the same testing period depending on when you start the test.
There is a vast difference in going through a drawdown of $20,000 in actual capital and in going through a $20,000 drawdown in open profits that ultimately ends up as a profitable trade. Also, there is a big difference psychologically.
My complaint with reporting maximum drawdown as a percentage is that it is usually based on the greatest percentage decrease in equity at any time during the testing period. This would often include equity based on open and closed trades which I have already given my opinion concerning.
The other problem here is that it is a figure that is based on the current equity which begins as the initial start-up capital and by design it will almost always identify the greatest decrease in equity by percentage to be in the earlier years of a test. This stands to reason since equity will generally increase over time with a profitable system.
If you begin with $50,000 in capital and immediately have a $20,000 drawdown, then that number represents a 40% drawdown. However, if you initially have some profitable trades and ultimately double your capital to $100,000, the same $20,000 drawdown now only represents a 10% decrease of your capital. It ends up telling you more about how early in the testing period a drawdown occurred than how large it was.
Personally, I'd rather see this percentage refer to the same maximum closed trade drawdown period which the dollar figure drawdown refers to. My own spreadsheet calculations, if correct, indicates a closed trade max drawdown will often be much less than open trade max drawdown.
One system I compared had an open trade maximum portfolio drawdown of approximately $47,000 and a maximum closed trade portfolio drawdown of approximately $39,000 or 17% less. Another system had a open trade maximum portfolio drawdown of approximately $36,000 and a closed trade maximum portfolio drawdown of approximately $16,000 and represented a drawdown which was 56% less.
The difference in these numbers could make the difference in a trader deciding whether or not to purchase or trade a system. Also, the method of calculation of maximum drawdown based on open trade equity might tend to encourage system developers to design long-term systems to exit trades quicker in order to limit open trade drawdowns which may ultimately be to the detriment of overall profitability.
There are obviously benefits in knowing maximum drawdown based on both open equity and on closed equity only. So, why shouldn't both be reported by testing software.
Numerous figures of performance evaluation are normally included in testing summaries and it would not seem hard to include one more that is particularly important. That way you would know both the greatest decrease in open trade equity at any time during the testing time frame and you would know the greatest decrease in actual money lost in closed trades.
I would be interested in hearing or reading about the opinions of others relating to this subject. Contact Scott Caldwell via CTCN.
Here Are The Addresses of Popular Internet Directories - Alex McCallum
Here are the addresses of a number of well-used directories on the Internet, including financially oriented ones: 1. Every single one of these URLs should be preceded with http:// 2. http:// is the starter for every Web address, so it has become common usage not to include it in conversation and other interpersonal communications. 3. Some addresses may have a slash at the end. These are redundant. When you enter the address, it works whether you put in the slash or not.http://www.yahoo.com
Dave, I'm interested, if you are, in carrying a selection of your articles in INO's MarketZine.
Editor's Note: Alex McCallum is affiliated with Investment News OnLine (http://www.ino.com). CTCN is establishing a Website and Home Page with Investment News OnLine. It should be operational soon. (Update: Our new web site address is www.webtrading.com)
At first, we wanted to go with Joe Esposito's ison.com. In fact, ISON had first contacted us about going with them. However, it turned out for some odd reason they seemingly did not really want the business. They failed to answer our letters, did not return numerous phone calls, and when finally reached (after many attempts), they were not very helpful and again failed to call us back with their pricing.
Perhaps just as well, as we decided to go with ino.com. We are glad we did as they appear to be much bigger and better than ison.com. In addition, they are much more helpful and friendly, and have a much larger clientele of well known futures industry firms. They have clients like Lind-Waldock, the number-one discount broker, five commodity exchanges, and dozens of other Websites related to Futures Trading.
Did D.B. from Australia Really Walk The Talk or Talk The Walk? - J. Trevor Byatt from Australia
I have read with interest the article by D.B. of Australia (Vol 3 -10). If he is who I think he is (I leave it to you, Dave, as to whether or not you print this name), then I am hardly surprised he is concerned about the possibility of flack.
I do not doubt that he has made 4 or 5 million dollars using Gann, but I suggest this was primarily from selling his interpretations of Gann principles. Now I suppose there is nothing wrong with this per se, and I admit he did not actually say outright that he made all of this money from trading, but to me he certainly implied that he did.
It is true from what I have read that he made some impressive and correct predictions, but boy oh boy, did he cash in on these in the form of very (in my opinion ludicrously) expensive seminars and tapes! Again, I suppose there's nothing wrong with this if people were prepared to pay his price - I certainly was not, but that was my decision.
So come on DB, be absolutely straight with us. Tell us your name and let us know (with confidential proof to Dave) how many megabucks you made from actual trading. There is no need to worry about flack, if you just tell us the truth.
Ramblings From A Rookie Trader - Steve Dallas
My first introduction to the futures market was in 1990, when thinking I could get rich quick, I allowed myself to be persuaded to purchase a silver call option for which I paid an obscene commission. I really had no clue about how it all worked, I just knew that silver had to go up and that I was going to make some easy money.
Of course, my option expired worthless. So for the past 6-years (other than that option experience) I have been watching the futures markets from afar, always knowing that I would give them a try again. I finally opened an account, and have done about 10 futures trades. My account is slightly in the red, but so far, I consider my education to have been relatively inexpensive.
What got me off the sideline and into the game was when my uncle purchased one of Ken Robert's courses. I looked it over and decided to open an account and try trading tops and bottoms, sideways channels, and some other technical formations.
Well, as you might have guessed, I haven't made a million yet, so I am trying to regroup and adjust my tactics. I decided relatively quickly that I, personally, would not experience any long term trading success just by looking at charts and making a subjective bet about which direction the market might go.
The last couple of months I've been researching various methodologies and mechanical trading systems that, hopefully, will be in harmony with my own psychology and allow me to systematically enter and exit the market. I intend to follow a system and only apply personal market biases to my money management. I do not have any desire, at least at present, to day trade, and it would not be possible even if I did because of my full-time job.
I anticipate that I would be most comfortable trading a statistically based, trend following system, but at this point, I am still doing research. Another consideration is that I will only be trading about a 10K account, so I can not afford too many large, sequential draw downs. If at all possible, I would prefer to not have to "reinvent the wheel," maybe just tweak it a little. Hopefully, I can find an existing system that I can trade in this manner.
Anyway, that is enough of my ramblings, but I do have some questions that perhaps some of the readers would be address in future issues of CTCN, and, additionally, I would appreciate it if they contacted me personally.
Is CSI a good data service to get futures and options data from?
Editor's Note: Your Editor has been using CSI for 13-yrs and has found their end-of-day data retrieval service as close to flawless as possible. In 13-years of continuous daily access, there have been (from what I recall) not even a dozen or so days when I had any difficulty, or even a minor delay in getting my daily download via modem. In addition, data errors have been extremely rare and negligible. Also, because it works so flawlessly, and due to the nature of my fixed portfolio, there's really no need to ever contact their customer support dept., except in very rare situations.
Also, If you make your own trading decisions, is there any benefit or advantage to a full service broker or broker assisted account over a discount broker? Are the fills any better? Are fills really that different between brokerages (and FCM's)? Does anyone know where I can obtain a book which I believe is called The Traders Window by Ed Seykota (or anything else that he has written)? Ed Seykota was the trader that I most identified with when I read Market Wizards and I am interested in any information that may be available concerning his philosophies and trading methodologies (for that matter, Ed, if you read this and have ever considered being a mentor, I would be honored to be considered as a protege).
I am also interested on the pros and cons of granting or selling options as well as any good books and software programs (is any one familiar with OptionVue)? I would also like to see some members write in with there opinions on various analytical/charting software such as Omega SuperCharts, Windows on Wall Street, InvestoGraph, and MetaStock.
Any opinions or observations about Keith Fitschen's Aberration would be appreciated. Finally, I have been looking for information about the Currency Breakout system that is or at least was marketed by Jurassic Trading. I have tried to contact Jurassic Trading by mail and by telephone (which is disconnected), but have been unsuccessful. I believe that they are out―of―business.
Anyway, any thoughts. suggestions, or responses to any of the above subject matter would be welcomed and greatly appreciated. Contact via CTCN.
Odd's n' End's From - C. J. Casebeer
I sure do like your newsletter (booklet) format. Sorry I was late in renewing my membership.
In the Oct/Nov issue there was a lot of tidbits of valuable information from various members.
I would be interested in George Harrison's approach that is based solely on market action. But maybe it's secret!
Terry R. Davis is on the right track to test a system with soybeans. What a dog to trade is sure true to me.
I guess I did a bum job in spelling Trend Master author's name. It is Ken Zinke, not Friske. I have a habit of putting a dash through the Z, to emphasize it is a Z rather than a 2. Now for comments on the Dec/Jan 96 issue.
Specializing in one market maybe one of the best ways, but those patterns crop up in many markets and can be taken advantage of, it seems to me. "Search for simplicity" says it all in his last paragraph, trading "can be that simple."
Don says "the S&P is really where it is at." Most daytraders do trade the S&P. But I believe in the caution of Joe Severa in Vol 3/9 where he says "Most plungers lose eventually and if Mr. Meadors only trades the S&P, he'll find that out when he least expects it." That market is for the brace at heart, although I have traded it years ago. It seems to me the S&P is more treacherous as time goes on. So, not only "new comers beware" but all traders that trade the S&Ps.
Editor's Note: Once you see why the method only daytrades the S&P, as discussed in CTCN's Video Tapes, you will no doubt be agreeing with the reasons. Believe me, there are some extremely valid reasons. However, the Real Success methodology will also work in a number of other markets but on average, not as well as S&P 500 daytrading.
In addition, you should know the methodology also works well on daily charts and overnight position trading, not just daytrading. However, the method probably is more suited for daytraders, but it's not limited to just day trading.
On Harold Uney and the moon cycles. This is pretty old stuff. If I remember correctly, Larry Williams' How I Made One-Million Dollars Trading Commodities book had it on silver. Other writers have reviewed it. Sometimes it's right, sometimes the markets goes opposite or simply ignores those cycles.
Don McCullough agrees on KISS!
John Piper and Robert Miner have good bits of information. The latter says a mouthful in his final statement. I still have several thousand dollars to make back and the S&P500 just dropped a thousand ticks."
For all the W.D. Gann advocates, Greg Donio quotes a classic from Gann, "Discover the trend and go with it." Again KISS! Keep up the good work!
Knowledge, Stops and Ratio Trading - Terry Davis
Reading the articles in Commodity Traders Club News reminds me of a lonely hearts club. Oh, if I could only be successful. What I wouldn't give for that. You need to ask yourself - what would you give? If I had only used stops. Folks, this is basic knowledge - not rocket science. Instead of (K)eep (I)t (S)imple (S)tupid. . . How about (D)on't (B)e (S)tupid.
There are quite a few good systems on the market that do work. I have several of them that I have developed. Instead of tooting my own horn, I would direct you to the grandaddy of them all: Commodex. It is consistently successful nearly every year. Instead of searching for a 800 correct system, why not just learn to follow Commodex all of the time.
Most traders cannot follow any system no matter how good. If it has 5 losses in a row it must not work, right? You should know that statistically speaking any system that is 55% accurate (that's a good system) over a 10-year period may have 12-20 losers in a row before turning around again. That will happen. Not maybe, but will!
Three of my systems are being published (with my permission) as individual Fax services available to the general public. They all (knock on wood) continue to perform well. They generally make new highs every month. Some months the accuracy is 60% and some months the accuracy is 38%. Does this bother me? Of course it does! Does it keep me from taking the next trade? Absolutely not.
Good systems continue to perform day in and day out. They make money consistently. If you follow a system (that performs well) and don't take all the trades you are a fool. If you pick and choose the trades that you like you will always pick the losers and let the winners go by. The same goes for individual markets. you say you don't like to trade lumber. (D)on't (B)e (S)tupid. If the system gives the signal, take the trade. My favorite saying to software buyers is "take the damn trade."
I don't feel comfortable risking more than $500 per trade. On most markets I risk much less. Bonds, Notes, Yen, Franc, Pound and Coffee are the only markets where I risk $500. If you are risking more than that you are using the wrong trading methodology. Don't be stupid. I have small drawdowns because I don't have big losses. Cosmic, Huh? If someone tells you, you must risk more than that then perhaps you should look a little further for your trading methodology.
After speaking to various people on the Faxline, it amazes me what questions they ask. I would like to see a history on the system. I un-politely inform them that the only time I can trade is now . . . not in the past. We have been Faxing out our signals and continue to do well. What do I care what the system did in the past. The only time my broker will let me take trades is now! If you have one that will let you trade in the past, I would be very interested in talking to them.
There is a great deal of interest these days in "fixed ratio trading." Ralph Vince's books have really got us all thinking. That is great! I have found the easiest way for me to use fixed ratio trading is just to multiply my account size by a fixed percent. That way if you lose or win it automatically adjusts the amount of contracts you can trade with. This is extremely conservative trading.
Let's look at an example. Since all of my trading is done with fixed risk per commodity, it is very easy to calculate. Let's say you have a $10,000 account and want to risk 5% on each trade. That amounts to $500 per trade. If you are trading corn and the risk is $150, then you can trade three contracts. If I am trading the Yen and the risk is $500, then I can only trade one contract. By multiplying 5% times your account balance, you always know the amount of contracts to take.
You should remember that every trade might fulfill your wildest dreams. In 1988, oats went limit up for 18-days in a row. This is the simplest way to accomplish multiples trading that I have seen. give it a try. If you have questions, contact me via CTCN.
Face Up To It, No One Twisted Your Arm You Are Responsible - J. T. Byatt
Where the shame does lie is in your whining like a spoiled 10-year old about your broker being responsible for the losses you - yes you made.
I do not doubt that you have been a very successful businessman. However, I modestly refer you to my articles in Vol 3 - 8 and Vol 3 - 9 - the results of countless hours of reading - and in particular immediately to points 2, 3 and 4.
You have already learned (and indeed as most of us have 'bought') the vital lesson that, as you so correctly put it, "The only way to make money in commodities was to become knowledge, self-reliant and call my own shots." Now read at least Market Wizards and The New Market Wizards (both by Jack Schwager). Then take a look at yourself and grow up in the trading sense.
I am not a broker nor do I have any connection whatsoever with the broking fraternity, but I have always found the vast majority of brokers to be both conscientious and competent in doing their job, which in my opinion, is taking and executing orders - not giving trading advice.
They will of course out of courtesy, give advice, but it is my opinion that they are too close to the market and hence thinking in the wrong time frame for most people. In any case, they will by necessity be jumping from market to market as they place various orders (many both long and short in the same market depending on the time frame in which the particular customer is thinking) and may well, indeed most probably, not have a reasonable amount of time to analyze fully your particular situation - but that is not their fault.
If you decide to seek their advice, then that is your decision. You placed the final orders didn't you? I'm sure your broker did not threaten you or twist your arm. So face up to it, your $230,000 loss was your fault and your responsibility -- nobody else's -- certainly not your broker's.
I am willing to bet that if you said to the broker, who you claimed lost you money, that in the future you would require no advice and for him solely to execute your orders he would not only accept this, but do so gladly. Not that I recommend this -- in fact, I suggest you start afresh with a different broker, only because you stuffed up your first broker relationship.
I do not wish to appear unkind or patronizing. Indeed my sole wish is in the spirit of CTCN to try to help. Many traders, myself included, have made the same mistake as you. If I have been able, perhaps by being rather blunt to persuade you and maybe other readers that this is not an easy business -- indeed it is an extremely difficult one requiring unique and special techniques and psychology -- then I believe I have been of service.
Trading Thin Markets During Holidays May Mean Losses - New Member "Will"
Thanks to J.S. from CA for his comments on the Christmas Stop, when prices are subject to sudden drops and exaggerated moves the last 2- months of the year. Too bad I did not know this before my last trade. My experience relates to his comments.
Oats were in an uptrend so I entered the Mid-Am at 2.12 and was making profits. Moved the stop several times. Was doing so well, I decided to buy another contract and double my profits. Bought at 240 and watched it go to 242+ then drift back down.
At the approach to Christmas "it" happened. The price dropped suddenly from Wednesday's close of 235 to next day's open of 228 on Thursday the 21 st. right through my stop of 234. Stopped out, good bye profits! The double contract loss wiped out my profits plus doubled the commissions.
I did not expect a dramatic move from Mid-Am Oats. Next year I will trade from the short side only or get out for the holidays.
"The Trader's Tax Survival Guide" - George Campbell
Ah yes . . . it's that time of year again folks, and I thought some comments on Ted Tesser's book might be in order.
I purchased the book last summer and found it mildly interesting. It did however, prompt me to begin thinking about my tax situation from a perspective I hadn't considered before. But in mid-summer, who concentrates on taxes?
But now, with the Internal Revenue Service salivating at the door, I am surprised at how much more interesting Mr. Tesser's book has become. He takes a very tedious, tiresome subject, and makes it as close to enjoyable reading an one can get with a very depressing subject. His approach to "Trader" status is sound, logical, and I thought easy to understand. However, Glenn Skirvin, seems to have missed the main point of the book entirely, and this was correctly pointed out by Jim Bunyan in the Dec/Jan issue of Commodity Traders Club News.
I sent the book to a CPA who's opinion I respect for his evaluation of Mr. Tesser's work. His only cautionary comment was "I would take some of his comments (regarding audits) with a grain of salt. IRS auditors are not an easy to deal with as he portrays." I must admit, I never arrived at that conclusion, but thought it was worth mentioning.
I recently had a conversation with a person fielding questions in Mr. Tesser's office regarding his book. I was interested in finding out if Mr. Tesser was still of the same opinion regarding audit avoidance strategies, as he was when he wrote the book. Namely, filing an late as possible. The response was "yes." File for an automatic extension to 8/15 using Form 4868, then in a timely manner file for another extension to 10/15. There is probably no objective way of evaluating if this technique will have the desired effect or not, being that a certain number of audits are pretty much of a crap shoot anyway.
I would recommend this book to anyone who has not filed his tax returns an a "Trader". This will be my first filing on Schedule C as a Commodity Trader, and it does make for a significant savings on my tax bill. I will just have to wait to see how smoothly it goes, but the savings makes it worth the effort. I always remember; Every dollar earned is only worth about sixty-five cents. Every tax dollar saved is worth a dollar.
I would very much like to hear from anyone regarding filing as a "Trader." Comments, thoughts, advice, etc. Contact via CTCN.
Trading Psychology & Van Tharpe - John Piper from England
Thanks for another action packed issue.
I endorse all the comments within CTCN on psychology. However, I would be interested in hearing from traders' experiences with "Trading Psychologists." I know of Dr. Van Tharpe and I understand there are one or two others. Tharpe does not trade himself, but claims to have modeled, in true NLP style, the crucial elements that make the best traders the best. Such people do not exist in the UK - what has their success, or otherwise, been in the US.
I have studied Tharpe's "Peak Performance Course" and have found it excellent, as far as it goes, albeit it is fairly expensive (compared to what? Tharpe would say). However, the seminars and consultancy start to get into "funny money" and I would welcome feedback on such services.
"Adaptive Moving Averages Make Sense" - Adam White
Here's a "food for thought" trading strategy idea. It's another one of those things I can't test because my testing software isn't flexible enough, but it makes sense to me.
Adaptive moving averages change their period's (and thus speed) based on the market's volatility. (Or the market's noise actually, a slightly different measure than volatility.) When the market is noisy, a longer moving average is preferred because it creates more space between the moving average and the market, thereby reducing whipsaws. Conversely, when the market is less noisy a shorter period should be used because it reduces the lag between the moving average and the market.
Here's my idea: use the above construction for entries, but the reverse construction for exits. An "inside out" adaptive moving average would be fast in noisy conditions and a slow in less noisy conditions. Ideally, a trend-following strategy should have a selective entry and a sensitive exit. This new approach really amounts to a noise filtering system because participation during noisy periods is minimized. In high noise markets it would be difficult to enter but easy to exit, whereas in a low noise market it would be easy to enter and difficult to exit.
"Profit Centers" Will Pinpoint Strengths & Weaknesses - Tom D'Angelo
In other articles I have written in an attempt to describe some of the more sophisticated techniques of money management that I have incorporated into my trading and included into my pro-manage money management software.
I stressed that the profit center concept of trade segregation would enable the trader to conduct his trading activities in a manner similar to a successful business, instead of falling prey to the disorganized and often chaotic practices of the vast majority of traders.
Proper organization of trading results into profit centers will enable the trader to instantly pinpoint trading strengths and weaknesses. In addition, having instant profitability analysis of profit centers will greatly enhance the trader's battle against fear, uncertainty, loss of confidence and greed since he will know the profitability and key money-management information of any trading system, future, stock, option or buy/sell signal.
The type of knowledge provided by profit centers instills confidence and diminishes fear and uncertainty. The trader can now manage the market instead of having the market manage him. These are the concepts I embodied into my pro-manage money management software.
In this brief article, I will present two additional tools the trader may wish to adopt in order to run his trading as a successful business and not in the "open an account, wire funds to a broker, buy a trading system, make some trades, pray for the best syndrome followed by 95% of all traders.
Every successful business, whether giants like IBM or small entrepreneur owned firms establish goals and compare these goals with actual results. You will rarely, if ever, find a successful company or individual who does not establish some type of goal measurement scheme.
The table below illustrates a report generated by the goal program of pro-manage software. It compares the goals that the trader has set for a particular profit center with actual results. The first four items, $profits, $losses, commissions and net profit or loss are financial goals. The remaining items are operating goals, that is they are key money management statistics.
As an example, the trader established a goal of $300 for the average profit per trade. He actually obtained an average profit per trade of $650. The actual of $650 divided by the goal of $300 means that he achieved 216.7% of his goal (650/300=2.16)
Pro-Manage instantly and automatically performs these calculations for you, but a similar work sheet can obviously be set up on a lotus spreadsheet. The proper way to use this information is the following:
1. Goals should be set up on at least a monthly, quarterly and yearly basis for each profit center.
If the trader is active, weekly goals should also be established.
2. At the end of each selected period, weekly, monthly etc, the trader should analyze and constructively criticize the variance between the goal and the actual results of his trading performance.
For example, assume the profit center is a trading system he developed after back-testing it over a 10-year period and he was expecting an average loss per trade of $600 and % losing trades of 45% based on 400 hypothetical trades over this 10-year period.
The trader starts trading the system and enters all trades into the profit center which only contain trades from that system. After 3-months of trading, he finds that he has 57% losing trades and an average loss of $800 per trade.
What went wrong? Is it his fault or is this an early warning sign that the system can not perform as well in real world trading as in the hypothetical world?
Has he been following the system or has he been changing the stops losses prescribed by the system and taking larger losses than expected? How can he improve performance? Should he stop trading the system?
These questions are identical to the question faced by managers of IBM or General Motors:
1. Are we meeting the goals?
2. If not, then what is the problem why we are not achieving our goals?
3. Once the problem is identified, how do we eliminate the problem?
4. If we are over achieving our goals, why are we overachieving and how can we obtain the same success in other profit centers?
As an accountant for 15-years, I can assure you that this is how successful companies and individuals run their businesses. Trading is a business. And as a trader, your approach should be to emulate and model yourself after success.
The second money management tool I have added to pro-manage software and would like to share with you. This pro-manage report accesses any profit center and computes the total profits and losses in that profit center. Then it divides each individual profit by total profits and each individual loss by total losses.
For example, report 1 lists all profitable trades in the TSBO profit center (TSBO signifies a trading system based on a break out signal). This profit center has 10 profitable trades which if added up will total $7,000.
Likewise, on Report 2, there are 7 unprofitable trades in the TSBO profit center which total $4,300 in losses.
By dividing each profitable trade by total profits, we can see the percent each profitable trade contributed to total profits. The same approach is applied to losing trades.
For example, we had an unprofitable trade on soybean meal which lost $900. Dividing $900 by total losses in that profit center of $4,300, we will find that the meal trade contributed 20.9% of total losses in that profit center. Also, we see that the $900 loss was 8.6% of the capital in the profit center at that point in time.
This is a simple, but very informative method of quickly seeing if a few trades are making an inordinate contribution to total profits or losses. You can then go back and analyze those trades and attempt to determine what you did right or wrong and try to improve your trading techniques.
I feel that the trader should strive to keep all the percentages as nearly equal as possible. If the trader has each trade contributing roughly the same percent to total profits and losses, he will significantly reduce his psychological stress since he will be fairly confident that he is not dependent on any 2 or 3 trades to contribute the largest % of profits or likewise worrying when the 2 or 3 trades which contribute the largest % of total losses will bury him.
Similar percentages signify consistency and a disciplined trading style. Consistency brings forth confidence. Confidence reduces uncertainty. All these factors enable the trader to greatly reduce the pernicious psychological problems which haunt most traders and contribute to the large percentage of traders who fail.
A similar technique on Report 3 is to divide the profits or losses for a particular future by total profits or losses in that profit center. Table 3 shows that the 7 profitable trades for beans totaled $5,700 which represents 81.4% of total profits of $7,000 in that profit center. These profits totaled 44.4% of capital. A similar approach is used for analysis of losses. This analysis will inform the trader in which futures he is strong trading in and in which he is weak.
Please keep in mind that the analysis described in this article has its most beneficial effect when applied to profit centers. For a discussion on profit centers, please refer to past issues of Technical Traders Bulletin.
Managing the markets instead of trying to beat them will enhance the success of most traders. Feel free to call 1-800-money30 if you have any questions on money management or would like further information on the techniques I have incorporated into pro-manage and pro-graphics software.
(Note: Charts are not available here on our webtrading Website but are included in the print edition of CTCN)
Spending 20% Of Net Profits On R & D, & Here's Two Items of Value - Ray Barros
I am always looking for ways to strengthen my trading plan - a firm believer in the precept "if It ain't broke, fix it." Twenty percent of my net profits goes to Research & Development. Most of the stuff that I come across is a waste of time and money. However, in my travels on the net, I came across two items that I found of value.
The first: "Dynamic Gann Levels", a manual with fourteen mini tutorials. Cost is US$85 and is available from Don Fisher. Contact via CTCN. (no relation to Peter Picks' Ganntrader).
I first came across "DGL" through Don's posting of the levels in the "misc.invest.futures" group. I noticed that very frequently the market turned on the levels published. Finally, I asked him for details on 12/15 when on the 13th he said that a substantial fall In the S&P's was imminent.
I was pleasantly surprised at the cost and even more impressed when I subjected DGL to my testing. DGL is a mathematical formula that determines support and resistance levels from which a market can turn. In determining these levels, it incorporates time as well as price.
I do not use DGL in the manner Don does. Nevertheless, the test and trade results have been impressive. I investigated DGL as I was looking for a reliable indicator of price levels that would augment my termination price patterns in the time-frame I am trading. I found the "normal" methods not up to the standard of reliability that I seek. DGL is the first forecast approach that gives me that reliability.
I found Don very generous with his time as far as questions are concerned. He also places you on his e-mail list for regular updates.
In terms of value for money, I'd give it a 9.6 out of a scale of 1-10.
The second item: The Undeclared Secrets of the Stock Market by Tom Williams. Cost is US$99 plus postage and is available form Larry Levy, 1-800-260-8095, the number is routed through Europe so please allow a full minute. I'm told that it's disconcerting to hearing nothing for a minute as with US phones you hear the connection almost immediately. Fax is 34 71 700965. E-mail address is Ilevy@ibm.net. There is also a web page at "http://www.ocea.es/vsa/vsa.htm"
Tom has a Wyckoff approach to the markets. I came across Wykoff's ideas about 6/7-years ago when I completed SMI's The Wyckoff Method of Stock Market Method Analysis. Tom's work is not as detailed as SMI's in dealing with the various stages of the market and in defining what is accumulation or distribution.
Both concepts are extremely important to Tom's "secrets" which are a very clear description of the volume and price patterns to look for when looking to decide if trend is likely to continue or if there is going to be a major change in trend. Tom's strength lies in this very clear description.
If you have your own method for determining structure and price patterns to answer the questions: continuation or change In trend? then Tom's work will provide invaluable assistance.
The web address serves as a valuable support module. Tom is giving end-of-day assessments for the FTSE, DOW and S&P.
Tom also sells real-time and end-of-day software, but I have not evaluated them. In a rating from 1-10, I'd give Tom's work 7.
Like To See Higher Swing Low or Lower Swing High & Divergence - J. T. Byatt
I share Ashley Howes concern about the reliability of oscillators in predicting tops and bottoms (Vol 3-10). I looked at a few relevant charts and Ashley's confirmatory signal appears to work - thank you, Ashley. I will certainly be using it in the future, but together with many other invaluable confirmatory signals I learned from Tom Bierovic.
I went to a seminar in Sydney, Australia at which Tom spoke about Synergy and to say that I was most impressed is indeed a gross understatement. Tom also made himself freely available to speak individually with attendees and I took advantage of this. I found Tom to be absolutely genuine and 800 honest.
I have done some research on the use of Tom's Synergy principles and they seem to work extremely well and to suit me ideally. Indeed, I have just taken my first trade using a situation which to me satisfied his Synergy criteria - Long at 1276 in March 96 Cocoa on January 16.
I have in fact been trading for well over 10-years and of course like every other trader made my share of mistakes and losses - with more to come I'm sure. Nevertheless, I feel sure that the application of Tom's Synergy will both vastly improve my profitability and reduce my losses and number of losses.
I like to see a swing following a divergence between price action and oscillator extremes. For example, after a bullish divergence I wait for a confirmatory swing low which is higher than the lowest low price of the divergence before going long and after a bearish divergence, I wait for a confirmatory swing high which is lower than the highest high price of the divergence. In both cases both the market and the oscillator should be moving in the same direction after the divergence.
My Opinion on Curtis Arnold's PPS System - Scott Caldwell
Since this article is of a negative nature against Curtis Arnold, he should be given a chance to respond to it. A copy of this letter has already been Faxed to him. Enclosed you will find copies of pages of 18 and 19 from the PPS Software brochure which I refer to in my comments.
PPS Concerns - Some time ago I purchased the PPS software system from Curtis Arnold. While I do not believe that vendors are in any way responsible for the future profitability of their system, I do believe they are responsible to practice truth in advertising. This is the focus of my complaint.
A brochure sent to me by Curtis Arnold indicated that he had studied 30 commodities for 10-years and researched over 1,400 price charts and ultimately discovered that certain chart patterns were effective in certain market scenarios. He then related that one of his student's translated the rules of his 200-page training manual into SystemWriter Plus and proved for himself that it worked.
"In late 1990, unbeknownst to me, one of my students, using Systemwriter Plus, began laboriously translating the rules and conditions set forth in the 200-page training manual into computer code." (page 18, PPS brochure) Mr. Arnold then notes that he then hired programmers to translate that code into another computer language that anyone could use. "The next logical step would be to translate that code into another language so that the system would run on anyone's computer." (page 19, PPS brochure).
It was my understanding from these excerpts in the PPS software brochure that the software which was being marketed was in fact a computer translation of the 200-page manual which was the conclusion of Mr. Arnold's research.
After purchasing the software, I incidentally had a conversation with another purchaser of the PPS software who had also paid extra for PPS training. He commented that the rules in the manual he received were not the same as the software. Later, others seemed to indicate that this was in fact the truth.
I contacted Mr. Arnold's office and expressed my concern that I had purchased the program with the understanding that it was a translation of the written manual relating to Mr. Arnold's research and now I had reason to believe that it was actually something different than advertised.
The response was you couldn't really translate all of the rules into computer code and I shouldn't be concerned since the software was such a close approximation that any differences were negligible. I requested a refund on the basis that I had been misled by false advertising and was told that such was not possible. I believe I was offered a free manual if I wanted, which I declined.
The above summarizes some of the facts relating to my concern as well as my conclusions which I draw from the facts. My request to you, CTCN members, is to provide me with feedback in regards to my conclusions and, if applicable, to respond to the following questions:
1. If you purchased the PPS software system, were you partly induced to do so because of a personal understanding, based on PPS marketing information, that it was a computer translation of Mr. Arnold's 200-page manual which was the result of his research?
2. Is my logic reasonable and do you agree that the marketing information on PPS appears to promise the software is a computer translation of the rules in the manual and is it, in fact, not true?
3. For those of you with legal backgrounds, do you believe that this constitutes misleading advertising and does the delivery of such through the mail constitute some form of mail fraud?
4. If you believe you are the victim of misleading advertising communicated through the US Mail, are you interested in participating in some form of class action response?
Paul Wagner writes "Please encourage D.B. from Australia (last issue) to write a follow-up letter explaining how he uses Gann's methodology in his trading. D.B. says he doesn't need the flack, but I doubt his critics are smiling as much as he is when they go to the bank." Keep up the good work Dave, CTCN is very informative.
Tom Feldberg from England is interested in the article by Sam Jackson that the Supreme Court had decreed that books and software belong to the purchaser and that the purchaser may give it away or loan it to whomever. Could you cite the reference for this ruling via CTCN, since it seems contrary to the restrictions and disclosure requirements that most software vendors seek to impose upon purchasers.
Ron Kuchmek is interested in a number of systems and would like to speak with members about George Angell, Fontanills, and Insight Trading.
Julian Braun says "There is a widely advertised system named System 2000." Is this system any good or is it just another boondoggle? J. Wojciechowski and several other members are looking for info on Dave Wright's Cherry Picker system. Please reply via our next issue.
New member JDW wants to know if there is a broker out there who trades Trendx Trading Co.'s Swing Catcher system. Reply via CTCN.
Any who has had dealings with John Stenberg, I'd appreciate it if you would contact Alex Alexander c/o CTCN.
Who has experienced the letter from Rebecca Nolan, Hong Kong, Financial Astrology. Please write to W. Troppmann, 37, av. des Grands Prix, B-1150 Bruxelles, Belgium.
Don Wilson would like to talk to S&P daytrading students of the Profitunity Trading Group. Contact via CTCN. I have experience with and opinions on several other S&P daytrading methods.
Charles Meyer would like to hear from members who have experience/information on Ellery Coleman's Fax service. Contact via CTCN.
James Footer is looking for comments on the Ken Roberts courses and the Craig Stevens Company courses.
Jack would like to know if anyone has attended George Fontanills seminars or purchased his manual. Contact via CTCN.
Having been a successful investor with various CTA's and CPO's over time, I would welcome opportunity to mutually share knowledge, experiences, and ideas with other CTCN member investors. Networking could be good fun and perhaps serendipitously rewarding. Contact via CTCN.
I would like information from anyone who has traded David Wright's Lil Gapper or his Cherry Picker system or any of the systems put out by "Market Research." Please contact via CTCN.
Neil Sterritt wants to buy a Lotus enhanced black box receiver (FM - 9600 baud, 1200 symbols). Please contcat via CTCN.
F. Verschoor would like info on following companies via CTCN: Alaron Trading, 822 W. Washington Blvd., Chicago, IL, and on Greenstreet Discount Corp., 109 N. Green St., Chicago, IL.
Eddie Shaw would like members' opinions on the following: 1. Wilder's book The Delta Theory or Secret. The hype is hard to believe; 2. Gary Wagner's video from Traders Library on Candle Stick Charting; and 3. Craig Steven's Commodity Trading course.
Charles Meyer would like information on the RPM S&P Daytrading Method. If you have experience with this product or have been a subscriber, please contact via CTCN.
Successful OEX traders: I'm looking to contact other successful OEX traders to network, help each other and exchange data. I'm generally in the market 1-3 days, rarely exit same day of entry. He also is interested in Optionetics by George Fontanills. Who is actively trading with this information, successfully or not?
I'm thinking of attending his 5-day advanced workshop March 24-28 in Chicago and want some real-time feedback. Also, workshop cost is $4,995, but 50% each if two sign up. Would you care to attend and share the cost? Contact Marc Mitchell via CTCN.
In our last issue, I said "watch your mail during January for a special offer. (Re: Real Success methodology). Please read our comprehensive "Freedom" Info-Guide for all details and your ordering opportunity to get CTCN's own Real Success tapes and methodology, produced by CTC.
Many of you have been impressed by CTCN member Robert Edwards, who has written several informative and well received articles for us. Bob has started his own newsletter titled "The Short Bull." It appears to be very well researched and most importantly written by someone I consider extremely knowledgeable, especially as far as selling or writing commodity options is concerned. I am sure Bob will send you at least a free sample upon request. Contact The Short Bull via CTCN.
Unfortunately, Futures Truth did not send their rankings in time for this issue. We called them several times but never received their Fax and could not delay our print schedule any longer.
In all likelihood we will change our publishing schedule, in part to avoid the problems getting the Futures Truth reports in time in the future. Our planned new schedule will also be more in-tune with other future industry publications and also make more sense as far as the calendar is concerned. We are planning an extra issue on about April 1. After the special April bonus issue, the next issue will be May/June, sent out mid May.
This issue is a record setting 39-pages long, jam-packed with knowledge for you. We are constantly making CTCN larger to accomodate all the excellent contributions you are making.
Special Note: We ask you please do us all a favor by making a contribution to the next issue of CTCN. Don't worry about your submission not being interesting or useful to Members...rarely is that true. Usually, most all contributions/ submissions/articles are quite interesting and valuable to other traders, but the author usually does not realize the actual value of his knowledge or experiences. Submissions can be any length, long or short; typed, handwritten or submitted on a disk. Formal or informal. Please participate by sharing your information and knowledge with other traders. Please make a contribution about your experiences, both good & bad with systems, services, advisors, data vendors, and other trading related product. P.S. - Remember, as a special reward for making just one contribution/submission per year, you'll receive an automatic 50% price reduction on your subscription renewal. Thanks to everyone who has contributed your knowledge to this issue of Commodity Traders Club News. Without you it would not be possible.
You should become a member of Commodity Traders Club to get our knowledge-packed issues. Click-Here to join our group NOW!
Thanks to everyone who has contributed knowledge to this issue of Commodity Traders Club News. Without you it would not be possible. P.S. - Remember, as a special reward for making just one contribution/submission per year, you'll receive an automatic 50% price reduction on your renewal. Submissions can be any length, long or short; typed, handwritten or submitted on a disk. Formal or informal. Please participate by sharing your information and knowledge with other traders. Please make a contribution about your experiences, both good & bad with systems, services, advisors, data vendors, and other trading related product. The reproduction, copying or publication of any part of this work beyond that permitted by Section 107 or 108 of the United States Copyright Act, and also World-Wide International Treaty Provisions, is unlawful. ALL RIGHTS RESERVED. Written permission from the Publisher/Editor is required for reproduction in any form (with proper credit to CTCN, including our address and phone number being required), and may be withdrawn at any time. Commodity Traders Club News (CTCN) is a 'Clearing House' or 'Information Exchange' for members only. We do not verify, (and we have not) verified the accuracy of the mathematics or numbers published herein, or accuracy of comments and remarks made by the authors. All information and remarks in the contributions are the opinions of the author or contributor, not the Editor or CTCN. You should be aware that P&L reports and advertisements are frequently based on hypothetical (not real-time/actual) trades. Article headlines or Sub-Headlines sometimes may be changed or written solely by the Editor, using verbiage the Editor believes highlights important points being made by the contributor. CTCN Membership, which includes our bi-monthly CTCN newsletter is "Your Guide To Profitable Trading and How To Save Money Along The Way." It's regularly priced at $100 (US) for 1-year. . . and includes free postage within USA & Canada (add $20 for Overseas Air Mail). Publisher: Webtrading.com, D.B.A. Our E-mail address is: firstname.lastname@example.org Our Website address is www.webtrading.com Editor is Dave Green. The opinions and recommendations are those of our writers and not those of Webtrading.com, CTCN, or its editor. (Note: There is high risk of loss in futures trading and past results may be difficult to achieve in the future and also may be based on hypothetical trading, with benefit of hindsight, and not actual trades) Note: We operate open member forums and consequently reserve the right to publish e-mail and other communications received. Therefore, please indicate "confidential" or "not-for-publication" on any e-mail or other correspondence sent us which you want kept private. Please contact us if we publish your comments and you object. Thank you.
Copyright 1993-2013 by Webtrading.com, All Rights Reserved. For comments about Webtrading.com Home Page design or connectivity, please contact our Webmaster. This page is maintained by Webtrading Internet Services