A Letter From Futures Truth's John Hill Saying They Do Not Allow
"Tweaking" of Performance "Numbers" by Vendors
"Re; Your recent 'report' (previous issue of Commodity Traders Club News). The number(s) we show in our report do not permit 'tweaking' by vendors. Not one number in our report has the benefit of hindsight." "The only numbers we show in our report are after a vendor's most recent modification. We clearly point this out in our report."
Editor's Note: Is the above statement a contradiction or are we misunderstanding what John Hill is trying to say? Unfortunately, John went into little detail on this matter. Some traders have said allowing vendors to make "modifications" is very similar to "tweaking the numbers" by the vendors. We ask John to please clarify this important issue by submitting a more detailed article about this for our next issue.
"We track the Miracle Trading System in our report and not his latest software version. This is clearly pointed out in our report. We don't recall any conversion with Mr. Antonacci regarding this matter. However, he could have called and if he did we reported the above. He has only purchased 2-copies of our report in the past 2-yrs.
As a reporter, I suggest you correct the inaccuracies and stick to the truth. Reporters generally get into trouble by not reporting the truth."
Editor's Note: At the time, we had absolutely no reason to doubt what Mr. Antonacci said in his article was not the truth or his honest opinion. If there is a question or accusations about an article not being the truth we certainly would attempt to look into the matter. Perhaps we would not even publish the article, providing those assertions came before the article was published. Of course, we would never knowingly publish an article which we knew in advance was not the truth.
Futures Truth being critical of CTCN by saying we need to "stick to the truth" after the article was already published is absurd. Lacking a crystal ball or psychic powers, how in the world would we know the article in question, or any other article was not the truth beforehand?
In fact, even now we still do not know the facts on this particular issue. John Hill wants CTCN "to correct the inaccuracies." This is impossible for CTCN to do as we don't know for sure what these inaccuracies are. Having never been advised in writing about them, and also not being a party to the issue in the first place.
I did call John about another matter involving an apparent error in their last Report and briefly discussed this issue. However, the conversation was somewhat confusing (in my view) and I do not recall all the details on these alleged inaccuracies. Therefore, it's up to John Hill to submit an article to CTCN with his views.
Also, it would be most welcomed if John Hill would also cover his opinion on the reasons so many traders allegedly experience vastly inferior results compared to Futures Truth's performance figures.
Not only do we not have a large investigation budget and private investigators, we are also lacking any legal authority to decide on the "truth." As referred to in our InfoGuide, CTCN is not the Police or a Judge. We don't have the authority to conduct investigations and we also do not have the funds, time or resources required to verify the accuracy of submissions and articles.
My Trading Career of 46-yrs with 32-yrs of 8-hrs A Day Market Research - Basic Rules: Trade With Trend, Use Loss & Profit Taking Methods - James Geftakys
I will retire from trading, but I will continue researching the market. I'm 75-years old and want to take it easy. I have been trading the market since 1950, when I was in Law School. I never liked working for anyone else and as of 1967, I became a full-time trader.
I believe one reason I have been successful is that I never tried to be a millionaire. All I tried to do is make a good living, better than average. When I made enough money to take care of my needs, and I lived well, I would stop.
It didn't matter if I made the money in 2-months or 6-months. I needed a certain amount of money and that was it. I lived in California and Hawaii and spent my time between them. Later I lived in southeast Asia for about 7-years.
In reading your Real Success Bulletin, I
noticed many people are having trouble with swings and trends. I would suggest
that they study Donchian (?) with his A's and V's - TOT TOB and the way Gann
showed how to determine a Trend. (I'm not a "Gann fan." I knew him
and wasn't impressed) but that's another story. In any event, I believe this is
the simplest way to determine the trend.
Editor's Note: Mr. Geftakys is only the second person I am familiar with who has actually known the legendary W. D. Gann. Your editor and many CTCN members would be greatly appreciative if James would submit an article on his personal knowledge about Mr. Gann and his trading methodology.
In particular, we would love to know what it is about this infamous trader you didn't like and were not impressed by and also what trading techniques he employed which were the most profitable for him. Please consider writing about this in time for our next issue. Gann is very mystical. In fact, he personally is perhaps even more mysterious than most traders find his trading techniques to be!
For what it's worth, I use only my own methods developed after 46-years of hard work - 32 of those years, 8-hours a day in original research. For everything I found, I must have discarded at least 7-8,000 ways that didn't work.
I note you mention mechanical systems. My system is mathematical and mechanical 90% of the time. It is complicated to learn, but I do not use anything that other people use and in my case, I find Tradestation useless.
The reason I bought it was to make charts. As over the years I made all my charts by hand. So beginning in September, I will go back to LA and work with my son to teach him enough so that he can learn and earn his living from trading.
I know practically all systems in the market and feel they are worthless. To me a system is only good if it has 90% winners and even then you can lose money (90% valid signals=90% winners).
I do believe the Real Success Methodology has merit. I see things in it that can be improved. I understand the concept. I plan on doing some work on it and see if I can improve on it. I plan on going to SE Asia (Singapore and Thailand) for about 2-4 months in September. (Editor's Note: Please share any ideas you have on how to improve it. We are always on the lookout for enhancement techniques so Real Success works even better).
I believe you have provided a real service to the members and hope they keep the method to themselves.
Actually, the market is basically simple and has not changed in 300-years.
I will give you some basic rules that are 95% plus accurate. 1. Only take a position with a favorable trend. 2. Cut your losses. 3. Assure some profit. It is that simple!
Editor's Note: The above three points are excellent and critical to the successful trading of commodity futures. However, they are somewhat difficult to implement correctly in a trading methodology as they are somewhat subjective, making it hard to mechanize a system based on these important points.
Cutting losses is achieved by using a pre-defined stop-loss price. Assuring profits may be achieved with a pre-determined target price. An excellent way to determine the trend is to use Market Construction techniques. This may be defined as being in buy mode when a "Higher Swing Low" occurs. Conversely, be in sell mode upon the occurrence of a "Lower Swing High."
These three critical rules and their correct usage are the basis behind CTC's Real Success Methodology. These three techniques are vital to the success of Real Success and also to many other trading approaches.
Making 80.9% Over 10-Month Period - William Kent
How many people have I read about who tried various systems and lost money? Too numerous to count. But why did they lose? The simple answer may be the best one -- the systems didn't work. And why should they?
I have developed my own techniques and have made 80.9% over 10-months. So what? I could be broke next year, or the year after. However, so far they work. Wonderful! Should I go public and sell it? Absolutely not. I think I could make 70% a year. In three years, I'll be making big bucks and of course more from there on, assuming the methods hold up.
You can imagine what I could be making in five years, of course, paying all the taxes out of other income. So why would I sell it? If I did, and again, assuming it holds up (and I do) it would cease to work.
How do I know this? In the late 60's, I did a piece for Barron's on specialist trading. Calls came in from everywhere--banks, funds, money managers of all types. Two years later I was approached to allow the article's reprinting in a textbook on technical analysis. I agreed only on the condition a caveat appears above or below it saying that it didn't work. It stopped working within one-month after the article appeared.
The same thing happened with a book I did in 1972 for Doubleday, The Smart Money. In it I described various techniques for spotting stock winners. You guessed it--by the time the book came out, zippo!
All of this applies only if the method works originally. Since one can assume that some "systems" are worthless to begin with, so you can see the futility of it all.
Now let us assume that I made some big bucks selling my methods. Well, I'd have to make more money than I could using it myself. That would require a great leap of faith. Further, I would have to invest possibly $25,000 and upwards on promotion. And that's with no surety of success. Meanwhile, I have something that seems to work for me.
And there is, as the reader undoubtedly realizes, the emotional factor. Even if the method continued working (a large expectation) one has the problem of ego, fear and the like. Narcissism, a syndrome quite common today, causes the individual to invest entirely too much in his ego with trading -- a deadly factor.
Humility would be preferable, but how many intended traders have it? How many people who expect to outwit floor traders (pit traders) plus bankers with powerful computers and monetary muscle would you expect to be humble persons?
So what did I do? I developed my own "system." Yes, but only with expending thousands of hours not only tinkering but also testing it. How many individuals will do that? No, they are looking for a sure-fire method that some other character is willing to give up. Not much chance to get a good one, is there?
Meanwhile, I plod my lonely way. Perhaps next year or the year after I'll write again. Something like-How I lost it. We'll see.
Meanwhile I'll finish my book on how I cured my asthma. Do look for it. It will be called "What Your Doctor Doesn't Know Can Kill You." Oh, I did it with research -- tens of thousands of hours of it. Would you do the same?
Can Spread Trade Money Be Made By Selling the More Volatile One & Buying the Other - Cyrus Patel
I am a new subscriber and a neophyte trader.
In my attempts to understand and manage risks, I have for some time now tried trading the Swiss Franc/D-Mark and the NOB spreads.
After trial and error, I observed that in trading the spreads, one leg of the spread tends to be more volatile than the other. For example, in the Swiss/D-Mark spread, the Swiss Franc appears to have a greater volatility. This means if the Swiss is in a downtrend, sell the Swiss and buy the D-Mark; and vice versa if Swiss is in an uptrend.
Similarly, I observed that bonds are more volatile than notes. If the Bonds are in a downtrend, short the bonds and go long the notes; if bonds are in an uptrend, vice versa.
Since I am new to this, I would appreciate any comments on this observation from the more experienced traders among CTCN readers.
Comments About the Last Issue of CTCN - Don McCullough
I just finished reading the April/May issue of CTCN. What really motivated me to write was to tell you that I truly respect your totally open and honest approach to this newsletter's content. That takes integrity and courage. I don't believe many people would have been able to take the threats of lawsuits and continue--and continue strong! -- as you have.
Your comments throughout each issue are quite good. Keep it up. Many subscribers may not appreciate the advantage of your position. You talk to many knowledgeable people. This does not mean that you therefore have perfect knowledge, but it does mean your opinion is worthy of attention.
I was surprised when you stated in this issue that you might have to stop publishing this newsletter if you continue to receive threats of lawsuits. Be assured, anytime I write an article that says negative things about specific people -- I have the proof to back it up.
Keep up the good work! If there's some way I can help you "stay in print" be sure to contact me.
In my "Better Charts and Charting" article I stated that I always use 250-bars on a chart. I now go as low as 150-bars depending on the bar "increment" and what is happening in the market. These numbers pertain only to my way of charting and may not be best with other methods.
With daily bars I usually use 250-bars but often use more. With daily charts I like the complete history of a particular contract to (initially) be there. Then, I use a macro which quickly takes me to the 250-bar view.
Other macros I find handy are: one which gives me a vertical line positioned over the very last bar on the chart and with the data box showing. If you hit the tab key while making this macro, the vertical line will go exactly to the last bar. Another macro gives me a horizontal line with the data box showing. The "data box" is a MetaStock feature that can show you the date, time, high-low-close, etc., depending on how you configure it.
Another macro will speed me through my daily charts. I have the price scale showing only on the right side of the chart. This allows more room for the bars which makes for more clarity. Another thing I do that adds clarity to my charts is, I omit the opening tick mark on the left side of each individual bar.
I like to write messages on charts. This helps keep me focused on what's important or something new I've never seen before. If what happens is really important I'll make a printout and be sure to write comments about this on the chart. I may do this while the market is updating in real-time, so I am sure of recording it exactly as it happened. This is important since charts can take on an entirely different appearance as the day progresses. By placing things like numbers, dashes, pound or asterisk marks in front of file names, you can have the charts in the order you prefer.
Most of the books about daytrading will show 5-minute bar charts. I know you can use 5-minute bars for daytrading the S&P market, but I also know for sure, it's not the best with my charting approach. The 5-minute may be O.K. with other markets or methods.
Generally, the slower the market the larger the number needs to be. I know it's possible to successfully use 5, 15 or 30-minute bars with the S&P market. Finding the best bar size for daytrading the various markets requires a lot of chart study.
I found the editor's comments about at-the-market orders to be correct. No doubt about it. A lot of pros are often getting "positive slippage" from their at-the-market orders. It's true also that you immediately know when you're in and out of a market with this type of order. That's often a big problem with limit orders. I have waited from 18-30 minutes for a fill report from a limit order! Many times the S&P market will make a $1,000 move and the trader using limit orders will want to take profits, but he doesn't even know for sure he was filled on his entry order. I have read that the people who use the most complicated types of orders are usually the inexperienced traders. I expect this is true. Those who nearly always get filled with their limit orders and always get quick fill reports are probably the larger and much more "better connected" traders. No doubt we can safely assume that such a favored few truly exist.
Gale and Jo Paxton. The two of you have really been trying things out! I enjoyed your articles in the last issue. When it comes to succeeding in the markets, I think most of us finally find out the most important person of all to trust is ourselves. Didn't you just love the Swedish trader's comment that "all systems make money, providing you sell enough of them?" Similarly a very famous trader once said, "Traders trade. Newsletter writers write newsletters."
I have found that many book writers, seminar speakers, etc. are mediocre to bad traders (some don't trade) or use the money from such endeavors to support their trading -- and yes, trading losses. Note, I didn't say all such people do this. When you really understand the truly astounding profits that can be had from the markets by a top trader you then more fully understand why most of them are not in any kind of advisory business. A poor trader who writes enough books, or has a successful newsletter or is a good speaker, can support his lousy trading for a lifetime!
Dr. Claus mentioned Mark Weinstein in his article. Mark Weinstein is one of the Market Wizards in Jack Schwager's book, Market Wizards. Mr. Weinstein is truly remarkable with his 800 winning trades in a 3-month trading contest. I had read the chapter in the book about Weinstein, but only recently read it and fully comprehended his ability.
For those of you who don't have this book, I think you should buy it. The chapter dealing with this trader is worth the price of the book. And, there are many other great chapters and traders in this book. The better books and book chapters are well worth reading several times. Over time you'll find important truths that were not apparent before.
I'll end this article by quoting one of the Market Wizards. He said something like: "Most people who want to succeed as traders aren't committed, they just think they are."
Was A "Cheap Shot" Taken Against Futures Truth? - John Bowley
This will give my comments on Futures Truth. The only problem I see is the 2-month data delay. It's due to their insistence on use of final corrected data. I suggested that they use the data we all use and state that minor changes might occur in the next issue when final data is available.
My experience with George Pruitt has been very good.
Editor's Note: So has CTC's experience been good with George, who has been very helpful in our past dealings and seems to be an honest and trustworthy individual. He is an excellent employee of Futures Truth who works under John Hill's direction.
He (George) also helped Gary Smith and Chuck Hughes produce smooth equity runs over 10-yrs. He does use 5-minute data for daytrading, while others use daily, hourly, 30-minutes, etc., which are less accurate. Obviously it's best to compare actual and computer results for the same period, not current with past as you do.
Basically, you (CTCN) took a cheap shot at Futures Truth (in April/May Issue). They are not promoting or responsible for any system, only comparing all with the same high standards.
Editor's Note: Thanks for your opinion but a "cheap shot" in our previous issue was not intended. We know they are not responsible for other systems. I was only referring to the many allegations heard about the (systems rated highly by FT) performance not correlating to what they are reporting to the public.
Things I Wonder About - Don McCullough
The stock market has been going up (with exception of the huge drop in 87') since 1982. This was the year the S&P futures market began. Is there a connection? Is the S&P futures market controlling the direction of the stock market rather than the other way around? Are politicians controlling the direction of the stock market by exerting "pressure" on futures exchange officials? Markets can be, and have, been banned by politicians. Would a severe drop equal to or greater than the one in 87' cause the banning of the S&P futures market? Wouldn't exchange officials be likely to do all in their power to prevent this from happening? And, do you suppose such preventive actions by exchange officials is the main reason we've had such a tremendous bull move? Should the market drop severely, can they "engineer" a "soft landing" or even a much smaller drop?
Mutual funds. I wonder to what extent the every increasing popularity of mutual funds has enabled the stock market to continue its phenomenal rise for so long? Perhaps because the public has put much of its money in the hands of the professionals running these funds, we now have a much smaller percentage of "weak hands" in the market. Therefore, when a scary dip occurs the funds buy these dips while in earlier times the public would be selling like mad and this would have caused some typical bear markets to occur -- like in pre-mutual fund days.
Trading rooms. Banks, insurance companies, brokerage houses and firms like Ralston Purina dealing in commodity related products have actual trading rooms. Sometimes they are called "trading desks." Most of us know very little, if anything, about these trading rooms and I would like to know more. These rooms contain some of the best traders in the world. The professionally trained people in these rooms represent some of the high caliber traders you and I are competing with. I'm sure it would be best not to compete with them, but rather trade as they trade.
My understanding is you begin in these rooms as an "assistant trader" and after a certain time you then become a full-fledged trader. What a terrific advantage these aspiring traders have over the rest of us! Person-to-person training by a proven top professional trader is something most of us can only dream about. I'm sure the applicants are very diligently screened before being accepted for an assistant trader position. How all of this screening and training is done would be very enlightening. I'm sure banks, in particular, would be the last to willingly divulge such information. They are bound to want to maintain their safe, secure, conservative image.
I welcome any input regarding the above.
Letter Received from Lind-Waldock addressed to Doug Bowersox & Others
Dear Customer: Record grain market activity is big news -- as you know if you've been following the coverage in the Wall Street journal.
"Wheat and corn prices have skyrocketed amid concerns about harvests, unexpectedly high overseas demand and stockpiles near postwar lows."
"The volatility in the grain markets has stretched traders and the CBOT staff to their emotional and technological capacities."
"The 148-year-old Chicago Board of Trade is proposing sweeping changes in its agricultural trading operations to make the markets more efficient."
But it was big news at Lind-Waldock before it ever appeared in print.
"As you may have experienced, the crush of volume in these markets has created unacceptable delays in getting orders in and out of the pit . . . As a result we've had to leave too many of our customers in limbo about their order and/or fill status."
That's from a letter that I sent to you in mid-April, when you and we were concerned about the market conditions shaping up in meats, grains, S&P's, and bonds. At that time, I outlined the situation and filled you in on what steps we were taking to provide the best service possible, given overall market conditions.
Well . . . it's a little over a month later. I'm satisfied that, with the exception of feeder cattle and some isolated situations that we're still working on, things are much improved in bonds, meats and S&P's. But the grains remain an area of concern. We're still breaking volume records? The CBOT is still strategizing. (If they strategize long enough, this market will fade into memory.) And we at Lind-Waldock are still fighting the fight. It's a fight, I might add, that some other firms in our industry have given up on-at least as evidenced by the resigned, "what can any firm do in markets like these" attitude that I've encountered often in meetings with management at other FCM's.
It's true that no brokerage firm has a lot of control in a situation like this. But that doesn't mean that we can't respond quickly and effectively with everything we've got to help our customers trade these markets. After all, this is history. It's the biggest grain move since 1988. The Chicago Tribune calls the move "a Trader's Delight." Maybe . . . but not if you're waiting for a fill report!
It's one thing to talk about the exchange infrastructure being taxed. It's another to analyze what's actually going on in the pit. I asked our floor manager at the CBOT to provide me with the numbers of filling brokers and locals, by contract month, in each of the grains. The numbers are approximate, but they give you an idea of why there's a logjam in getting orders in and out of the pit. Example in print.
Take a look at the third option in corn, for example. You have got a situation where about seven brokers are filling 4,000 to 5,000 orders a day. Bear in mind too, that "other," as in "back month & other," refers to the fact that these filling brokers are also handling activity for new crop contracts and, often, for spreads. No wonder we can't do order checks!
Sometimes you can't solve a problem, but you can do your best to work around it, and that's exactly what we're doing. We're attacking the situation from every angle, from hiring runners to reallocating exchange seats. Here's a summary:
- We've leased an additional CBOT seat, so we can add a broker in the corn pit. He works exclusively for Lind-Waldock and is assigned to "float" - helping us out with whatever contract month is busiest.
- We've added overflow brokers in corn and bean options who handle this activity, as well as orders requiring special handling.
- We've added two brokers in wheat options who fill our orders exclusively.
- We're reallocating two CBOT seats as of June 1, enabling us to establish exclusive order fill arrangements with two additional brokers. They'll help with our order flow by filling in where needed in the grain room.
- We've just installed a headset location in the lead month in corn. We are one of only a handful of firms with headset capability in this market. (In bonds we're the only firm with two headsets).
- We continue to increase our staff, adding order specialists in the Trade Center and runners and keypunchers on the floors.
- We're recognizing our employees for the job they've done. Many of our people have been putting in twelve, even sixteen hour days. So I've just announced that all of our 650 employees get an additional day off this year (after things slow down!)
- Every firm in the industry (that's doing any business) is overloaded with fill reports. We're reporting fills slower than we'd like, largely due to the delay in getting filled orders out of the pit. We're doing what we can to speed up that segment of the reporting process, and we're also working on cutting the time it takes for us to enter the filled order on the floor and report it to you. It's not the heart of the delay, but every little bit helps!
In that regard, we have 48 keypunch clerks entering fills on US markets. We've begged and borrowed to get the floor space necessary for this operation. I've recently approached CBOT management to personally request additional space on the CBOT floor so we can add more keypunch and call-back locations (though given the demand for floor space, I'm not too optimistic about getting it).
Our Fill Direct system is the most efficient, automated system of its kind -- yet it's up against the same problems in reporting fills as the order desk in terms of pit delays. Nonetheless, in a just-completed survey of Fill Direct users, 86% voted Fill Direct "excellent" or "good," 98% of those responding said they planned to continue to use the system. If you haven't looked into Fill Direct, I invite you to do so.
- We've increased automated quote capacity by 50%. I mentioned this in my last letter, and it looks as though we now have more than enough capacity, with room to grow. We're making sure of that.
In fact, if you want to find me and our senior Trade Center managers at 9:30, our peak time for quote activity, we're all down in the phone switching area making sure all the lines don't stay lit up for automated quotes. So far, so good!
If you've gotten this far, you must be a grain trader! If I leave you with one thought, it's that you and we are partners in trading. We don't have a lot of control over the situation (I wish we did), nor does any brokerage firm. But we're not about to sit back, and we're certainly not about to throw up our hands and blame it on the "infrastructure."
Instead, we're thinking creatively and acting aggressively to do all we can to make the best of a difficult situation. After all, who speaks for the individual investor better than Lind-Waldock? It's what we've been doing for over 30-years -- so it's not surprising that it's what we do best. Sincerely, Barry J. Lind
Internet Source for Quotes - Lanne Terry
The Internet has several places to get quotes. Just use search on you Internet browser and search for Chicago Board of Trade. CBOT has 10-minute delayed quotes and end-of-day quotes. They also have charts that you can download, but there is a fee for them.
If you are unable to get them with the browser, here are some addresses you can use.
Settlement Prices On Option
Close Grain Prices
Daily Grain Report
Grain Weekly Recap
10-Minute Delayed Quote
If you have any more questions, I can be e-mailed at TCLINE@GETNET.COM
A Proposal To Set Up An OnLine Users Group Using "MIRC" - Ron Archer
I'm really excited about the potential of a Users Group being able to communicate real-time during the trading day. Once you're set up we can create a (CTCN) Real Success channel and talk this afternoon. Instructions:
1. Download MIRC 4.0
A. Connect to Internet
B. Go to location: http://www.shareware.com
a. Quick Search: Type MIRC in search form box
b. Select Windows Version from Drop Down Dialog Box
c. Click Search Button
Now, you should have the results of the search displayed.
a. Scroll down the page and "Click On" MIRC 4.0 ZIP Internet Relay Chat Client
Now, you should have a list of sites from which you may download MIRC.
b. Scroll down to United States and Click On any of the sites to download MIRC
c. Save the file to a Temp Directory
C. Disconnect from Internet
Install MIRC 4.0
A. Create a directory MIRC & Unzip the file
B. Create an Icon for MIRC.Exe in Windows 3.1 or a Shortcut for MIRC32 in Win95.
Setting Up and Using MIRC
A. Connect to the Internet
B. Select MIRC
a. Select FILE | SETUP
b. Complete the Setup Info: Name,
C. IRC Servers
b. DESCRIPTION | us.undernet.org
c. IRC Server | us.undernet.org
d. GROUP | 2
e. PORT | 6667
D. Select CONNECT
Now you're connected to the us.undernet.org server
E. MIRC CHANNELS FOLDER
a. Enter Name of Channel to
Join | Bullseye
b. Select ADD
Now, you're talking!
Editor's Note: At first I resisted Ron's idea about setting up a live on-line "chat channel" over the Internet because I thought it was far too technical for our members to set-up. In addition, I feared only the "techie" members would successfully set it up and participate. This would limit the on-line channel to techies for the most part and eliminate our average CTCN members.
Ron contacted me several times about it so I decided to try setting it up. Unfortunately, my fears were correct. I followed Ron's written instruction to the letter and met with failure and many error messages or missing or unclear instructions or inputs required. Ron tried to walk me thru it, but again we were unsuccessful. After many failed attempts to set up, I finally gave up.
Ron has a good idea, but I fear it's far too technical and has too many installation and operating steps for most CTCN members to use successfully. The downloading, installation and setup procedure is very user unfriendly and complex. I seriously doubt if many of our members would be able to set it up and use it successfully. Ron say's I am wrong about that. I ask members to try it and let me know if they were successful, so we can find out the validity of the idea.
A much easier way to communicate online is by using one-way online (rather than two-way as Ron proposed) via CTCN's own Internet Website, and two-way communication only via e-mail. We are hard at work getting this set-up for members to use. It should be fully operational within the next 2-months. It will be extremely easy to use and almost all of us will be able to participate without being a techie type person.
Truth or 56% What? - Kent Calhoun
Congratulations to Dave Green for having the courage to drop Futures Truth's "Top Ten," which belongs on post offices walls next to the FBI's "Top Ten." Why are two #I "Top Ten," system vendors under current CFTC indictments? Futures Truth allegedly forgot to use the most important figure available to any potential system purchaser, the system's TOTAL maximum equity drawdown, before rating the system. Top Ten vendors are allegedly allowed to re-tweak their system's parameters, after they sustain a drawdown.
"Truth is stranger than fiction, because it doesn't have to make sense," observed Mark Twain. Truth gets really strange applied to the business dealings of a company called Futures Truth, hereafter referred to as Futures What? (I refuse to degrade Truth by using it with this company's name).
When Mr. Hill called me to state he was going to publish results on my 5-Vertical Bar Trading Pattern, he never asked my permission but told me his intentions. I asked him where he got a copy, since all purchasers are required to sign a Non-disclosure Document, and he had never bought my manual.
Mr. Hill stated Futures What? does not buy systems, but gets them from friends and clients (who illegally violate their signed agreement).
Mr. Hill allegedly rates systems, sells the ratings in his newsletter, he allegedly sells special reports on them, he allegedly discusses the system structure (except for parameters a programmer might get from a computer), then allegedly sells videos discussing a system's design. Futures What? allegedly had an income over $200,000 in 1994. The system creator gets nothing from Mr. Hill, not one penny.
Mr. Hill gave me his word of honor, I could examine his results before he mailed them to his clients. On that promise I invited him to a KCI seminar. Mr. Hill called me to state his testing was completed. I asked him if he tested both the standard and conservative approaches, and he didn't know the difference, so he sent John Fisher to the next seminar.
I got a FedEx package with his testing results the day after Mr. Hill had mailed his newsletter. John Fisher, ex-president of Futures What? wrote a public letter of apology stating he had tested the system in a manner in which it was never taught or presented at the seminar. The apology was printed in Club 3000. (Mr. Fisher allegedly quit over ethical problems with Mr. Hill).
I believe Futures What? (again I refuse to dignify a company with the name of Truth when it does not belong) uses only the drawdown for a 12-month period. So a system that may have actually lost more money than it ever made during the life of the system can become a #1 "Top Ten," system for a recent twelve-month performance! (This is like letting Charles Manson out of prison because he was a good boy and didn't kill anyone last year)!
The first rule of trading is "Don't lose money!" If you do not know how much money a system loses, except for the last 12-months of Future Truth's top ten rating, then how can a trader adequately make an informed decision? He cannot! The first consideration of the risk-reward ratio is risk! If a trader does not know at what price his trade analysis is wrong, he is not entitled to the profits even if his trade makes money! Think about it!
When Futures What? rated their own $2,000 system in their own top ten, did they have their system independently tested as they advise the system vendors, like Kent Calhoun, to pay them to do? No! When Club 3000 issue 93.12 page 4 independent testing reported Futures What? had allegedly overstated their system's profits by $341,266 did FW bother to have someone else independently test their system? No! By allegedly skipping the most active crude oil contracts, Futures What? allegedly showed profits of $33,950 opposed to losses of $17,420!
If you think this is the exception, I know over a dozen other improper technical and ethical problems with the way Futures What! runs their supposedly altruistic operation, but will mention only one in closing. Last year in Futures Magazine, Mr. Hill stated Futures What? no longer rate their own system in their own "Top Ten." Mr. Hill tried to explain this as an honest voluntary decision on his part, but again all CTCN subscribers know Truth is stranger than fiction.
The real truth is my letters in CTCN caused such a public outcry he was forced to drop his system from his own top ten. I was both threatened by Mr. Hill with lawsuits over those letters and also were banned from Club 3000 subscriptions and advertising. It took real courage on Dave's part to print those letters, but he did so for one reason Truth! He placed the CTCN subscribers' interests before his own private interests.
Universal is the name of the Futures What? system mentioned above. It is now owned by Stafford Trading. Mr. Hill took the opportunity to rate this system in his own top ten and have the list published in Futures Magazine. Guess who owns Stafford Trading? It couldn't be John Hill's son could it? Guess again! What does a conflict of interest mean? Obviously three words must be looked up in a dictionary. Does Futures What? know how to operate one.
Perhaps the owner of Futures What? should rename his company 56% What? so it would match Universal's percentage of accuracy reported by independent testing in Club 3000. Talk about a company that gives truth a bad name? Futures What? has facts that appears to be more fiction than truth.
Fourth Of A Series On How Money Management Methodology May Help You Trade More Successfully - Tom D'Angelo
This is my fourth article intended to provide readers of Commodity Traders Club News with a money management methodology designed to organize speculation along the lines of a successful business. Refer to my previous articles in Vol 3-8, Vol 4-1 and Vol 4-2.
In my previous articles, I described the Profit Center concept of trade segregation which enables the trader to organize his trading in a professional, disciplined and businesslike manner. I also described the statistics which should be calculated for each Profit Center.
These statistics which reflect the trader's trading efficiency, risk management and profitability are entered onto the Performance Report. I complete a new Performance Report for each Profit Center on a weekly basis, usually on the weekends when the markets are closed.
The Performance Report is a summarization of all the key money management statistics for each individual Profit Center and is similar to a management report used by nearly every successful manager or entrepreneur. I described the Performance Report in detail in Vol. 4-2.
In this article, I will describe the Trading Plan and Trade Journal. The Trading Plan is the trading strategy for the next trade based on the statistics provided by the Performance Report.
The Trading Plan is divided into the following sections:
General Comments: A short summary of the trader's profitability and overall performance in the Profit Center, e.g., Profit Center is profitable. Profit Factor=1.73 and trending upwards. 57% profitable trades and current profits of $3,600. I am showing consistent success in this Center. Trade aggressively. Trading Capital currently=$100,000.
Trading Strategy: The general strategy for trading the Profit Center, e.g., Day trades on 5-minute bars based on the Real Success trading methodology.
Entry Strategy: The strategy for entering the trade, e.g., buy a closing price reversal bar, if 21 bar moving average is moving up and the high of the entry bar is higher than the highest high of the last 10 bars.
Profit Strategy: The strategy for exiting the trade with a profit, e.g., move stop to break even after prices advance $200 in my favor, then liquidate when prices provide a $1,000 profit. If the $1,000 profit per contract is not reached in 21 bars, exit position with market order. If trade is profitable, profits in the Center will increase $3,000 to $6,600 based on trading 3 contracts.
Stop Loss Strategy: The strategy for entering the initial stop, e.g., Optimum number of contracts (based on Ralph Vince's formula )=5. Due to past success in this Center, trade aggressively and trade 3 contracts. Enter stop loss $400 below entry price. Loss of $1,200 (1.2 % of capital) on the 3 contracts if the trade is unprofitable. Margin required=$ 30,000 ($10,000 per contract ) which=30% of trading capital. Current profits in the Center are $3,600. If the trade is unprofitable, $1,200 which equals 33% of the $3,600 current profit in the Profit Center will be lost.
Reward/Risk Ratio=3000/1200=2.50 based on 3 contracts.
Before any trade is initiated, the trader must know: 1. the potential dollar amount of the loss; 2. the % of capital he will lose and; 3. the % of profits in a profitable Profit Center he will lose if the trade is unprofitable or the increase in the net loss if the Profit Center is currently unprofitable.
He must also know the % of trading capital required for margin and the capital available for margins on other trades.
While the Trading Plan appears to take time to formulate, notice the discipline and the thought process it imposes on the trader. The trader can explain exactly when, where, why and how he has arrived at his trading decision.
There are no surprises. He knows exactly what will occur if the trade is either profitable or unprofitable. This businesslike, disciplined approach to trading is the one sure sign of the true professional speculator.
This structured approach significantly reduces the emotional problems of anxiety, fear, greed and uncertainty which prevent nearly all traders from achieving long-term profitability.
The third and final report is the Trade Journal. The Trade Journal is the "after the fact" critique of the Trading Plan. Did you do what you said you would do?
The Trade Journal is divided into the following sections:
Entry Strategy Critique: I hesitated when the entry was indicated by a closing price reversal bar. Prices began to move up rapidly after the entry bar and I delayed placing my buy order. As a result, I was filled 30 points worse than if I did not hesitate.
Profit Strategy Critique: I moved my stop to break even for the 3 contracts as planned after prices advanced $200 in my favor. However, I exited all 3 contracts with an $800 profit instead of the $1,000 profit per contract. I became frightened that I would lose the profit on the trade, so I exited the trade prematurely instead of waiting for my planned profit level. Prices eventually reached my objective, costing me a lost $200 profit per contract.
Stop Loss Critique: I placed my stop loss at the $400 per contract level when I received confirm on my entry as planned. The trade was profitable and the stop was not hit.
General Comments: I am still experiencing hesitation on entering the trade. If prices are advancing rapidly on the entry bar, I tend to freeze and delay entering my order. I must learn to follow my entry plan and enter the trade immediately after the signal is given.
Likewise, I am not following my profit taking strategy. I exit too fast and take small profits, since I fear prices will reverse and I will lose the small profits I have. I must wait until my profit objective is hit before exiting. I am not letting profits run.
My stop loss strategy was executed as planned.
Every long-term successful trader performs this process . . . writing down strategies and critiquing the execution of the strategies. This is the tried and true methodology for moving up the learning curves on the three disciplines necessary for achieving long-term profitability: 1. money management; 2. psychological development and; 3. trading system execution.
The working environment in which the trader functions has a significant impact on the trader's eventual success or failure. A sloppy, disorganized workplace produces sloppy disorganized thinking and sloppy trading results. A neatly organized trading environment in which important information is readily available produces a sense of professionalism and confidence. This in turn instills discipline and reduces psychological stress. A neat filing system is an indication of the serious, professional speculator.
There are three ways you can file the reports. I have described in these articles: 1. an accordion folder; 2. a 3-ring notebook or; 3. manila folder.
Using an accordion folder, make each section in the accordion a separate Profit Center and place each Profit Center's reports in its own section. If you use a 3-ring binder, separate each Profit Center with colored paper and index tabs and place each Center's reports in its own section. If you use 8-½" x 11" manila folders, make each folder a separate Profit Center. Punch 2-holes in the folder and punch 2-holes in all the reports. Then place each Center's reports in its own folder and hold them together with a 2-prong metal clasp.
I use a 3-ring binder and always file my reports in the same order. On the weekend, I use the Manager software I developed to print out the statistical reports for each Profit Center. I throw out the previous week's reports. I file these reports for each Profit Center in the appropriate section of the 3-ring binder. I then complete a Performance Report which reflects my trading performance in each Profit Center. I know exactly what my profitability performance is for each Profit Center.
Next, I staple each Trading Plan with the associated Trade Journal and place them on top of the other reports. Each Trading Plan has its own Trade Journal. The filing sequence is Performance Report on top, Trading Plan stapled to each Trade Journal and then all the statistical reports on the bottom.
Thus, each section of my 3-ring binder contains all my reports for each Profit Center filed in this order: 1. a Performance Report which reveals all the key money management statistics for the Center; 2. each Trading Plan stapled to each Trade Journal and; 3. all the related statistical reports.
All the information I need to make informed and educated trading decisions for any Profit Center is easily found in each Profit Center section of the 3-ring binder.
I am now managing my trading in a professional, confident and disciplined manner. I am trading in an organized businesslike environment, designed to increase my psychological growth, trading skills and money management discipline.
I have a readily accessible document data base in which I can constructively criticize all my trades and attempt to eliminate any destructive psychological problems which are producing unnecessary losses. I can quickly locate Profit Centers where I have achieved success and trade with confidence as well as Centers where I am producing losses.
The Centers which are producing losses need to be analyzed to determine if the problem is within me and can be corrected, or is the Center basically unbeatable and should be abandoned. For example, if you set up each Exchange as a Profit Center (CME, COMEX, CBT, NASDAQ, etc.) you may find that you are unprofitable trading that Exchange due to slippage and/or bad fills. Some Exchanges may just be unbeatable and it is best to identify this situation as soon as possible and abandon trading that Exchange.
Adopting the simple and inexpensive money management plan I have described in these four articles will do more to mold you into a profitable trader than all of the thousands of dollars you will spend on courses, seminars and trading systems.
Unfortunately, for most traders reading these articles, everything I have described appears to resemble work and does not appear to be much fun. The real excitement and fun in speculation is trading the markets, watching prices go up and down and testing or purchasing trading systems. The first question the trader must ask himself is the same question the average sports bettor must ask in Las Vegas . . . are you in the game for the excitement and fun or are you seeking long-term profitability? Disciplined, organized, focused and confident individuals achieve long-term success. Everyone else fails in the long run. It's as simple as that. No exceptions.
The techniques I have described in these articles are utilized by very successful sports bettors in Las Vegas who bet anywhere from $5,000 to $30,000 a game. These individuals are very intelligent focused, disciplined and organized. They are the only ones who achieve long-term success betting on sports. Every sports bettor who is undisciplined, disorganized and un-businesslike loses in the long run, just like futures traders.
If you would like to receive a free booklet illustrating the reports I utilize, feel free to contact me at 702-261-9417 or 800-MONEY30.
In my next article, I will go into more depth into drawdown analysis, which is the most important money management statistic the trader should monitor. I will present some drawdown statistics I have developed which are excellent "stress indicators" which every trader should monitor very closely. I will also go over some simple techniques for determining how many contracts to trade.
Charles Lindsay And His TradeBase Network - Dale Johnson
In reference to article by GK, Vol. 4-2, I had a similar bad experience with Lindsay and his Tradebase Network some months ago. Very sporadic operation, sometimes you could reach it, sometimes not. When you did reach it there were many bugs in the system's trade listings and signals. Same thing with Lindsay, sometimes there, sometimes not. After a couple weeks of being unable to reach Lindsay, I gave up on trying to get any of the $500 deposit back.
Quote services, I've used CSI for the past 10+ years and am satisfied. A monthly fee of $21.99 paid annually in advance allows you to download up to 100 contracts a day plus 2500 months of historical data. I don't know of anyone that is cheaper or that has been in the business longer or that has more accurate data.
E-mail, I still see a lot of aol.com e-mail addresses. With Internet or computer magazine advertising, many companies provide unlimited time on the Internet for the flat rate of $19.95 a month, why do people pay America OnLine a monthly subscription fee plus a per minute fee? Seems very expensive to me.
Also, seems everyone disagrees with the way
1256 contracts are taxed, myself included. Does anyone have any suggestions of
an alternative method?
Editor's Note: AOL and other popular services have low monthly rates of only $4.95 to $6.95 a month or so, for limited use, including some free hours. The Internet Service Providers often charge a start-up fee and (or) a software cost, which is usually not charged by the large on-line firms. Also, many people do not use e-mail or the Internet enough to warrant the higher unlimited fees of $20 to $25 per month. Plus, many also enjoy chat groups, on-line support, and other activities of America OnLine and others.
In addition, AOL seems to have 28,800 baud high speed access lines available throughout the country, including less populated areas. I have accounts at both AOL and a local Internet provider. The local provider normally connects at 19,000, 21,000 or 24,000 baud, but AOL is always either connected at 26,400 or 28,800 baud. The local provider cannot explain this as his advertising says he has 28,800 baud lines.
Some others such as AT&T World Net, Earth-Link, Global Network Navigator, Microsoft Network, etc., have no local access in this area of the country (and some other areas of the nation) or slow access lines, such as 2400 or 9600 baud.
Still another major advantage of AOL is the fact they have something called "Flash Sessions."
This involves the automatic dialing to send both pre-composed (off-line) e-mail and receive all your incoming e-mail messages all accomplished in several seconds of actual on-line time. After all e-mail is both sent and received, the computer automatically disconnects and you may then go in and read all your e-mail while off-line, incurring no charges and not tying up your phone line.
These Flash Sessions cost almost nothing as the on-line time is normally a matter of seconds of time at 28,800 baud, depending on how many e-mails are involved.
This nifty cost effective and convenient AOL Flash Session feature is the main reason CTCN is using America OnLine. However, I admit AOL is used strictly for our e-mail because as Dale suggests, our local Internet Provider is much more economical for our lengthy Internet sessions, which by the way seem to be getting longer and longer as time goes by.
First Trade . . . Not - Linda Sumner
As a new trader I've heard all the warnings. 90% loose money, don't over-trade, can't pull the trigger, on and on. So patiently I study, read, subscribing to charts, investigating software, taking home courses, and getting this wonderful newsletter.
Trading commodities has been a life long dream. I'm ready to give it a go. My account has been open for three months. I'm waiting -- want the perfect trade. So careful, finally I see bellies make a 1, 2, 3 top. I'm on vacation, will wait and watch. Shucks, 5-points are gone -- two weeks later it sets up again -- surely there will be a 50% retracement from the top! I figure out my stop -- decision time, I watch the clock for the opening. I make the call, "I've decided to go short one contract of pork bellies on the MidAm" (I'm playing it safer) . . . Broker: "Bellies, are you sure that's a good idea? I know you're nervous on your first trade." Me: "It's the only trade that meets my criteria." Broker: "Its been going limit up and down a lot lately. My boss has a real good soybean spread, I think you would like." I'm shaking my head -- Broker: "Could you please hold." I hang up the phone . . . maybe tomorrow. I'll watch and wait.
Later I see the afternoon wrap-up -- Bellies
-- limit down.
Editor's Note: This type of event happens all too often. I have heard of brokers talking someone out of a winning trade many times.
I remember a Commodity Traders Club News member who had just bought a $2,000 trading system. The first trade generated said sell the Swiss Franc. When he called the broker, the broker said "you really don't want to sell . . . do you . . . all our big traders are buying, not selling!" Needless to say, the market dropped down sharply after the trader had second thoughts about it and ended up bypassing the trade completely.
This client was more influenced by the broker than his new $2,000 system, even though he knew the broker likely had never traded for his own account or else was unsuccessful at trading himself.
An Explanation On Futures Truth Test Result Discrepancies - Randy Stuckey
In the last issue of CTCN there was an article by someone who noted that he did not get the same results for a particular system as reported in Futures Truth. As a systems developer and vendor, I am aware of several possible reasons for discrepancies between Futures Truth, other test methods and real life.
One reason for differences between Futures Truth and other test methods is obviously the test methodology itself. Futures Truth uses their own Excalibur testing software. On the other hand, most people use SuperCharts, TradeStation or MetaStock to back-test a system.
Since you can only test one data file at a time with these programs, most people use continuous contracts so they can test long time periods. Unfortunately, this immediately creates a serious and altogether fake performance for the particular trading system.
One of the most serious distortions is the fact that there are no rollover trades when using continuous contracts. Yet in reality, rollover trades are a fact of life for any position trading system. After all, contracts do expire. If you're in a trade and the current contract expires soon, you have no choice but to either prematurely exit the trade or rollover to a more distant contract. You clearly experience slippage and commissions on these rollover trades.
The system I'm most familiar with is my Catscan system. Over the last 12-years it would have had over 1,600 rollover trades. I took a $75 per trade loss on each rollover trade to account for slippage and commissions. Clearly it hurt profits and drawdown, but that is the price of more honest testing. Meanwhile, the continuous contract tester had no rollover trades at all. Futures Truth uses actual contracts for their testing and includes all rollover trades.
That brings up the next possible discrepancy-the rollover schedule. Let's say that in real life you've chosen to rollover a particular currency trade on the 5th of the month the contract expires. For most commodities Futures Truth rolls over on the last day of the month prior to contract expiration. This can create a major difference in actual vs. test results. While it's relatively rare, due to differences between contract months, you can actually be long and Futures Truth may be short.
In addition to rollover trades, another possible discrepancy in testing is the inherent differences created by continuous contracts vs. actual contracts. No continuous contract creation technique is without its flaws.
If you just hook contracts together, you create gaps on the day you switch to the next contract. Many systems will falsely trade that gap. If you use continuous contracts which were created by back-adjusting prices to eliminate the gap, then you have a 5 or 6-day period of false prices in the continuous contract.
Another continuous contract problem can occur when a continuous contract goes "below zero" due to back-adjustment. Many data vendors solve this problem by pushing up all prices by an equal amount. This solves the below zero problem and still preserves each day's range and the relationship between the various days. However, if a particular system or indicator uses absolute prices, you have a giant problem. For example, most oscillator indicators are normalized by dividing by price. If the continuous contract prices have been pushed up to prevent below zero, you will get a huge difference in the oscillator.
An example: A commodity has a current price of 50. To prevent below zero 50 has been added to each value in the file. So the continuous contract price for that day is 100. Clearly dividing some oscillator by 50 instead of 100 will generate radically different results.
There is one more common reason for differences in real life vs. Futures Truth. Recently, a Catscan owner called me and said he got significantly lower profits than Futures Truth on Coffee. We explored his trade by trade results with Futures Truth trades. There was no significant difference, except for one trade. Futures Truth had reported a $12,100 profit on the particular trade. The Catscan owner had a $3,945 profit on the trade. I noticed that he exited the trade 12-days earlier than Futures Truth. When I ran the Catscan system in TradeStation, I also had a $12,100 profit on that trade. So I asked him how he could possibly have exited the trade on the date he did when the Catscan stop for that day was well beyond the price range for the day.
Then the truth surfaced. He said that when the trade showed a $4,000 profit he exited at the market "to protect his profit." Clearly he wasn't really trading the Catscan system. He was trading Catscan with his own exit rules added to the system. There is nothing necessarily wrong with that. But Futures Truth has no such choices. Their software rigidly trades the system's rules all the time.
Finally, there was a comment that Futures Truth allows system vendors to "tweak" their system after release. This is very misleading and not entirely true. The article implied that therefore only the results after the last tweak were valid. This is incorrect. Futures Truth does allow vendors to change their system. However, only future test results use the changed system. They do not allow the previous test results to use the new system changes. This is as it should be.
I'm sure there are many more ways that differences can occur. These are just some of the more obvious ones. A final comment: Even with all these differences, I'm not aware of any company that generates more accurate or objective system performance results than Futures Truth. As usual I should probably note that we have no financial arrangement of any kind with Futures Truth. This is not meant to either defend or criticize Futures Truth. It's just an attempt to explain some of the reasons for differences.
Probabilities - Dave Jordan
Regarding the probability of 5 losses in a row (Vol 4-2), Donald Turnbull's calculation of about 3% is correct if the trades are not correlated with one another. In practice, however, the trades may be highly correlated if they are generated by the same system and/or are in related markets. The higher the correlation's among a set of trades the higher the chances of 5 losses or successes in a row.
I, like RFK, look forward to info from someone who has successfully claimed Trader Status.
Regarding Gale/Jo Paxton, you might try PTI Securities as a broker. They handle commodities and stocks at reasonable commissions, and they are in their offices until 2:45 or 3:00 PST. For downloading quotes, it would be great to find accuracy like CSI at a better price. Traders Access has a good price and comprehensive data. It would be good to get other views on a cost-effective solution to this.
I would recommend Fontanills' Optionetics Newsletter and Wiest's The Scale Trader as useful approaches, though quite different.
Does anyone have info to share on Don Fishback's Odds or Insider's Options System?
Gambling vs. Trading - Mark Harris
I'd like to comment on Donald Turnbull's article (and your Notes) in Vol. 4-2. Most books on gambling theory discuss unfair (subfair) games, fair games and super-fair games. The classical fair game is coin tossing with an unbiased coin or rolling an unbiased die where you win 6 times your bet if your number comes up (and lose otherwise).
All Casino games are unfair as for example roulette (American Style) where you make an even bet (win or lose an equal amount) on red or black - there are 18 each red and black, but there are also two GREEN numbers (zero and double zero). Obviously, any fair game can be reduced to an unfair one by simply having the house take a small cut out of each payoff pot. A super fair game is one where you have an edge -- i.e., the guy on the other side of an unfair game is playing in a super fair game.
If you are playing in an unfair game, your best strategy (assuming you must play) is to minimize the number of times you need to bet. Thus, if you have 10 bucks and need to run it up to, say, 100 bucks, you bet the 10, if you win you bet the 20 and so on. (Here when - if??) you get to 80 you bet 20 and quit if you win otherwise you must bet 40 of your remaining 60 and so on). (In texts on gambling this is often called a "bold" strategy and it is mathematically optimum for any gamble where your odds are 50/50 or worse). Any other strategy, i.e., subdividing your stake into smaller piles like two piles of 5 bucks, five piles of 2 bucks, etc., has less chance to win. Conversely, in a super-fair game you want the game to go on as long as possible - i.e., you are the house and on average you win a little bit on each play.
Risk of ruin when playing a fair game (again, let's say coin tossing) against an infinitely rich opponent (a casino or the market) depends on your initial stake and your goal. If you have no goal - (you are willing to keep playing no matter how much you win) then ruin is certain, but of course, it may take a very long time.
A lot of texts use "expectation" which is the probability of a win times the amount won minus the probability of a loss times the amount lost. If the expectation is less than zero, it's best not to play (the game is unfair).
If the expectation is zero, we're into recreational gambling (coin tossing, office football pools, etc.) and, of course, an expectation of greater than zero is what we traders hope that our system produces (although needless to say the guy on the other end of the trade is playing in an unfair game if we're correct )!
If Donald Turnbull has five trades going each with a 50/50 chance of failure or success and the amount he risks is equal to the gain he'll accept and the five trades are completely un-correlated (i.e., beans falling has no effect on pork, meat, etc.) then it's true that the diversification cuts his chance of losing in all five to about 3%. In real life, I suspect that none of these obtain.
A different question is how many losses in a row one is liable to pile up (in a 50/50 game) played repeatedly. For example, what is the probability that in a series of 100 coin tosses you will encounter a run of 10 or more heads (or tails) i.e., 10 straight wins, 10 straight losses). Even though the priori odds for 10 heads is 1/2 to the 10th power (i.e., about a thousand to one) there's about a 10% chance of getting 10 heads in a row sometime during the 100 tosses.
Put differently, you could say that if your win/loss probability is 0.5 and you're going to make 500 trades, you have a nearly 50% chance of experiencing 10 (or more) losses in a row. If you take a number of "expert" traders who trade frequently and they maintain 50/50 or even better (like 60/40) odds, it's almost a sure thing you are going to hear about 10 or so straight losses (and, if they're touting a system, 10 or so straight wins).
In truth, I don't think a lot of gambling theory applies to commodity trading. In gambling you make a single decision (bet on black), the wheel spins, you win or lose and that particular gamble is complete - known results. In trading you always need to make two decisions, i.e., you decide when to put up your bet, and you decide when you've won or lost enough.
A gamble has a bounded win/loss structure, a trade has a relatively unbounded win/loss structure (don't ever think that a stop-loss order actually limits your loss, remember those times when a commodity is pegged at the limit for days in a row).
Vol. 4-2 was one of the best issues I've read to-date. Particular thanks to Gale and Jo Paxton for sharing their experience and for writing such a succinct (a doff of the hat to Greg Donio for his great explanation of just what's meant by 'succinct') and informative article. I'm sure all of us receive enough 'pie in the sky' and 'free lunch' literature to get tempted occasionally. CTCN's readers' contributions are great for helping us keep our feet on the ground and spreading the harsh light of reality on the 'one-size fits all', can't lose systems and programs whose hype literature fills our mailboxes.
Referring to Duane B.'s contribution about the Mac vs. PC's. I have an old PC so I don't know how it is with Mac's, but I'm finding that almost none of the newer market software will run on my machine. I have a 486-25 with 8 megs of memory and when I call Nirvana to ask if their current software would run on my machine, I was told it wouldn't (apparently you pretty much need a fast Pentium processor (or equivalent) and 16 megs of memory).
Anyhow, it seems doubtful to me that the size and speed of your computer has much correlation with how successful you are in your trading. I agree 800 with Duane that most software vendors have a very limited concept of what traders really need, and that's just because something can be programmed doesn't mean it should be programmed.
Software bugs (and they're ubiquitous it seems) drive me up the wall. In almost no other product will customers so willingly accept defective merchandise - if you bought a car and when the wheels fall off, the manufacturer told you they were designing a fix or a work-around (and expect you to pay for it when it's done) you'd probably go to court, but with software it seems the norm.
A final question. Since you adopted the new
publishing schedule to coincide with the release of FT data, will dropping FT
allow a more flexible publishing schedule?
Editor's Note: Yes, our publishing schedule can be more flexible. You probably are not aware of the fact several times Commodity Traders Club News was delayed due to delays by Futures Truth in sending their reports to us. Sometimes we had to contact them many times before we finally received their rankings.
By the way, if a sufficient number of readers ask us to reinstate the Futures Truth Reports we will attempt to do that by asking permission again from FT. Please let us know your opinion on this issue.
Who Are The Winners? - Jerry Ross
As a new member reading back-issues, I must say that they get the creative juices flowing.
I believe we are all familiar with the studies that show 95% of commodity traders are losers. If so, then who are the winners? I have always assumed they were the brokers who take a little commission on each trade. Recently I have been hearing that the winners are the CTAs who manage accounts--they are 80% winners. I would like to know more about the winners. Who are they? Are they the Commercials, Hedgers or the large Speculators? Are they the Professional CTAs who manage accounts?
Or are they, as I suspect, the ones who take a little commission--a little off the table with each trade. Maybe members can shed a little light on this problem which has been bothering me.
Intraday Analysis of S&P Daily Pattern Systems - Don Wilson
Over the past two years, I have devoted many hours to coding S&P daily pattern systems into systems that can use intraday data. I initially pursued this to determine whether I could successfully use intraday indicators to filter trades signaled by the daily data. I have had some success with this approach.
Once I had the intraday data systems, I did extensive testing on the historical (pre-release) performance versus the recent (post-release) performance of the systems. Based on my testing, it appears that once these systems are released, their performance tends to degrade.
On intraday data, on many occasions the price is pushed just high (or low) enough to trigger the trade and then reverses to cause a loss. Of course, it could be coincidence -- but it does not appear probable to me.
It could be that once the system is known to large funds and brokers, the floor traders catch on and join in to push the price just enough to trigger the system, and then enjoy profits during the volatility excess which results.
Have other members had similar experience with these systems? Any interested in discussing this topic can call or Fax me at 352-683-7597.
Any Real-Time Data Sources In Japan? - Mark Owens
I recently switched my computer over to Japanese Windows 95. I thought I had saved all the data files needed for Swing Catcher, but after reinstalling Swing Catcher and adding the historical data I received with the trading system (current as of 7-14-95), I was not able to use the files I had saved to update the system.
I am a subscriber to your monthly parameter service and have just received the latest disk. I would like to use the data therein to start again from scratch. Could you tell me how to do this (and update the historical data)?
I'm interested in your Real Success Video Package. I have been interested in daytrading for some time now (my work as a translator allows me some flexibility in the hours I work), but I do not know of a vendor that provides real-time data feeds to Japan. Do you or do any of the readers know of such a vendor?
A Good Book Is Worth Buying John Bougearel
This is a brief note to let you know that your newsletter is just getting better and better. I'd like to put a plug in for a book I have recently read. (Name of Book was omitted from this note). I agree with the idea that a good book that comes highly recommended is worth purchasing and not to be borrowed. Personally, I take a certain pride in my library collection.
Editor's Note: I agree. The value of knowledge is so great. All traders should own their own library of trading books, rather than borrowing them from a mail-order type of "library." Book purchase costs are insignificant compared to all the money you will make or lose trading commodities. Plus, as stated so well by John, we should all take pride in our book collection.
What's All The Fuss About? J. L. from Wimauma
O.K. Dave. Let's see what needs editing this time. (Thanks for not changing the message). I didn't make much money last week, so I guess instead I'll tell others how to trade. Sound familiar? The anonymous trader says cut the crap out and trading is simple. I say the place to start is at the beginning.
Call it the Basics - I call it the Logic. To the only trader I've shared ideas with in my 14-years (a seasoned ex-floor-trader), I said the following. "What's the fuss? Prices can only go up or down!" He looked like I hit him with a 2x4!
I'm convinced that one could go long 10 ticks above, or short 10 ticks below any one single price on stops in any active contract and the biggest problem (sometimes agonizing) would be when to take profits! Some problem! Sure, you could get whipsawed a few times, but usually sooner rather than later, you've over-all netted some money -- maybe a lot of money depending on your profit timer!
Say it another way. How many times have you heard, "Oh, commodities. They're such a gamble!" C'mon! A gamble is odds against you (Las Vegas style)! The market is 50/50 for starters. Do you suppose you can find a price chart or two to better your odds? Of course you can! Or you can play Maverick if you like. Your choice. By the way, if you're not sure what the trend is, show your chart to your 5-year-old. He (or she) will tell you up or down in 30 seconds.
One more thing. Have you ever considered that there is no such thing as a "bad" trade. There can only be a trade that's too early! (Yeah, it might be two years too early, but life isn't about everything going your way - it's about what you do when the "you know what" hits the fan)! I'll be coming back to this "early" idea in later articles if my "contract" is picked up with CTCN.
To wrap this up I say, "Develop your own system!" I have enough trouble following my own rules. How could I follow somebody else's? And guess what! Your system will be designed around your quote service(s)! And Leroy Jenke, (issue #10), why don't you, like me, marry a good delayed price service (with charts) to a discount broker who has a free real-time call-up quote system (such as InfoLine)? Build your system around that combo and you start by saving $300/mo. for quotes! Gotta go, I have more ideas on the finest "in home" business ever created!
(Since writing this, things have changed big time. That's why I wrote my later "EUREKA" article). Ah, such are commodities!
Why Elliott Wave Does Not Work - Kent Calhoun
The interpreters of the complicated Elliott Wave Theory have told us we are in the "5th wave of the 5th wave." Now they are not so sure whether the 735 top in December 1961 is the completion of the advance. This was written by Henry G. Davis in June 1962. Does it sound familiar? Now 35-years later, the same story. Futures Magazine covered EW practitioner Prechter's very bearish "5th of the 5th wave," stock market Elliott analysis beginning 1995. Result: 1995 was the third strongest Dow bull market in 110 years!
The Elliott Wave normally appeals to pessimists and people with negative attitudes. How else would you describe the impending doom forecasted in EW book titles which usually reference "The Crash of 1929," the "Coming Depression of 1990," "The Reckoning," etc. Prechter's "Final Tidal Wave" conjures up images of economic disaster flooding the world economy with generations of depression.
The only question never answered in EW books is at what Dow price are they wrong? Traders are not entitled to profits even when they are right, if they don't know the price their analysis is wrong. Risk must be considered before rewards!
Elliott Wave is complex and subjective, used differently by different traders. EW tries to give structure to price chaos, but often breaks down at critical market junctures where Elliott Waves are defined by zigs and zags with numerical counts usually under 5. When the EW analyst improperly analyzes a market, he merely explains his mistakes by stating "there was an alternate wave count." This is like Steve Martin who explained his mistakes exclaiming "Well Excuuuse Me!!" Elliott wave counts are often lagging indicators of price action, because EW does not have a quantifiable structure 800 always predictive.
January 4, 1990 was Prechter's first Dow buy signal in 14-months. USA TODAY published his buy signal. The Dow immediately dropped 260 points, more than 10% in 13 days. (The 5 VBTP's sell signal occurred the same day, and S&P's dropped $17.000 per contract to a 5 VBTP objective of 323.50). The Elliot Wave's "alternate count" was used to explain Prechter's mistake. Similar incorrect Prechter EW trades for gold and T-bonds had the same catastrophic results.
In the same January 4, 1990 interview in USA TODAY, Elliott Wave's Dave Allman was asked why the Elliott Wave had missed the largest bull market increase since World War II, over 30% in one year. Allman responded by stating that Prechter had not placed enough emphasis on the put-to-call ratio, and the Arms Index.
"Excuuuse" me? Does this mean the EW can't be used for trading commodities, since there is no Arms Index for them? When Elliott created his wave from De Broglie's wave principle, which won the Nobel prize for physics in 1929, there was no Arms Index, or put-to-call ratio! I have not seen his latest Elliott explanation for 1995's Wrong - way- Prechter result. Maybe Bob should just place a fake arrow on his head, buy a white suit, and say "Excuuuse me!"
Reliable Data Sources - Duane Barnhart
Take heart, Jo. If you can weather this drawdown you are on your way. Your awareness that you are on your own is a vital, key, essential factor. Sounds like you are nearly there. Believe it. Believe in your own best analysis. If you're wrong, you'll be ahead by the fact you know it and have no one else to attribute it to. If right you have the double benefit of knowing you did something right. That bolsters one's self confidence and esteem as well as one's bottom line.
Losing is not all that bad, so long as it is within your acceptable risk area and you learn from it. I have lots of losses which will one day provide insight to reap even greater profits.
Like you, I tried trading other trader's advice. When I confided to Larry Williams that I was going to trade on my own analysis after trying to follow his Hotline, Larry was spontaneous and sincere in encouraging me to do so. He told me that is how he broke through to winning.
I use a few sources which enable me to look beyond the myopic picture we get as technical traders. If you have not tried the following, do so on a trial basis only and without any assurance that they will help you. They have helped me. however, I frequently fade their recommendations.
You will find your own growing self-confidence will provide more profits than adherence to any other trader. Only you have a unique insight into what works for you.
My sources are as follows: Bill Gary's "Price Perceptions" 800-525-7082 - Commodity Information Systems, Inc. 800-231-0477, and Frank Taucher's "SuperTraders Almanac"
Editor's Note: We included a flyer in our last issue for you to order
SuperTraders Almanac via CTCN. This offer is still available thru Commodity
Traders Club News.
You may hear from Jeff Borowitz, the founder of TrendSetter. I am testing his software and shared with him your report on unreliable DialData market into. Jeff has a more favorable assessment of their data.
I have conditioned my use of Jeff's software on its compatibility with DBC data for I have a high regard for their ability to deliver reliable data. I also have five years data in that format. Tracking 491 contracts, I am not about to change horses for the convenience of another software.
DBC provides a prompt daily update of all Grain contracts soon after those markets close at 1:15 p.m., CDT. I usually run an update on all grain trades at 1:20 p.m., CDT, 8:20 a.m. Hawaii time. Occasionally there's a change later that day.
As I spoke with Jeff, last Friday, I began to think of why you may be having difficulty. Have you run sufficient checks of your modem or computer to see if the problem is at your end?
A fellow trader here in Hawaii found he was receiving tick data 40 seconds later than a colleague in California. He traced that glitch to his own modem, replaced it and is now in sync with real-time quotes.
Jeff asserted that DBC was more expensive than DialData, but I question that. I pay $60 + tax for end-of-day data which includes real-time info on about 42 indexes including INDU, INDS, NYA, UPVOL, DVOL, PREM & BANK which I track graph for reference and use, but not for trading.
Do you have other traders in your area to compare data with? We had problems with DBC 6 to 8-years ago until I networked with enough other traders to verify my belief that DBC had a problem. Only then did they accept that fact and correct it. You may have a similar problem with your local server. Have you checked with the local source of your signal? If not, be sure to do so and network with other traders for help in isolating the problem.
Commodity Traders Club News has a High Level of Give & Take - Adam White
I just completed my month-ending marketing statistics (Investors Timing Service newsletter), and once again Dave Green's CTCN has been on my top list. Both in terms of inquiry requests and the conversion rate of requests to orders.
I think there are two reasons for this list's quality: as traders these people survive by making decisions and taking action; and most are free from bureaucratic constraints. And they are a collegial group; the newsletter fosters a high level of give and take, so the people on the list are familiar and trusting of each other. This kind of confidence goes a long way.
EUREKA (I've found it) J. L. from Wimauma
Like E.T., I'm back! I'm the guy who wrote that he didn't want to screw up his life by making $100,000 next year. Well, that still applies, but I really needed to replace the sagging income of a 60-yr. old piano player. That wasn't going to take much. A 30-50% return on my risk capital would give me a raise! Well, I'm here to tell you -- EUREKA!
From the beginning . . . Buying a stock is a typical investment. Right? You pay up, you get your piece of paper. What do you pay for a futures contract? Answer. No more than your drawdown (if one develops). Your margin deposit is sitting in your T-Bill making 5% (or it should be). It is not at risk (or no more than your house and wife are at risk) unless you are so undercapitalized that you shouldn't be trading at all.
That deposit is returned to you - win, lose or draw. Stupid me! I thought that's what a deposit was! My conclusion, I need a 50%+ return on my maximum drawdown - not my margin (or a multiple thereof). But not so fast. Isn't my actual drawdown over the term of the trade approximately 1/2 of my maximum drawdown? It certainly isn't the max., except for just a second. Hmmm. That 50% return is a lot more attainable now and still beats the pants off of any "return on margin" scheme.
After all, isn't my drawdown really my capital "at risk" and isn't any other method of figuring a "return" meaningless? And if I'm right, why haven't the experts told me this in 15-years or are they still just "drips under pressure?"
Having established that to my satisfaction, it suddenly hit me! As in life, 95% of what I've learned is wrong! Haven't the experts shown us that they don't know where the market is going either? A coin-flip should give you 50-50 odds; they are proud of 40% winners! I didn't get the message when my first and best broker would say, "Don't ask me what silver is going to do. I don't know what silver is going to do."
Instead I switched to a broker who always knew what silver was going to do. And after I had lost enough money with him, I decided that I myself could know what silver was going to do! Sound familiar, anyone? My advice . . . speculation is great fun just so long as you don't do it with your money! (Try the weather or what your wife might be thinking).
If Larry Williams said he wouldn't divulge his best system, I now know the feeling. What I am doing now will meet my goals and then some with the biggest risk being that I might stop doing it! If it sounds like scale trading, I don't have that much patience either, but Robert Wiest's book really put me on the right road.
Indicators, back-testing, work-stations, buying someone else's system, advisories, etc., in the words of the anonymous trader, are all crap now. Give me bar charts, intraday charting (delayed OK) and my discount broker. My rules fit on the back of an envelope (like any good system should). Bottom line . . . I don't know or care if the market is going up or down tomorrow. I make good money either way! (No, it's not options either). Just one more hint. Any damn fool can see that if you buy anything with intrinsic value cheap enough and have the money to hold it long enough, you will eventually make a profit! And "long enough" sure isn't very long in commodities!
I'm really trying to say that 15-years of trying to learn to forecast the twists and turns of the market was a fool's quest. I now leave all that to the computer buffs and the commodity cowboys (you know, the "instant gratification crowd"). If it weren't for them, there wouldn't be any corrections to buy! I should know. Lord knows, I've done my share. I too have been trying to outguess "God!" And thank you God for making all that unnecessary! The question remains. Would you rather be "right" (sometimes) or do you want to make money? Be honest now. I just took the "fun" out of my own trading, but doing that has been more fun than I've had in 15-years! Here's to a million in 6-years! (You know that hogs got slaughtered). Nuff said! Good trading! Or to be more accurate, Good investing!
Successful Traders "Trade What They See On The Charts" - Bill Donnally
Am wrestling with indecisiveness and fears: trying to decide to retire and trade full-time!
I wonder what percentage of traders are actually successful in today's markets. Apparently, each of us seems to feel that the "90+%" failure rate statistic will not apply to us! Hopefully we are different from most of the diverse, whimsical and typically irrational trading public including the majority of the big commodity funds, whose average trading record has been poor.
I believe that the few successful traders are those who have the courage and independent conviction to "trade what they see" on the charts, and from their perception of fundamentals. The school of "hard knocks" has taught this minority to take responsibility for their own actions; they must ultimately rely on themselves -- we have to find and trade the uniquely compatible approach that works for us as individuals.
I avoid computerized trading system programs sold by self-proclaimed experts. Market behavior/composition changes. However, I do read books on trading to see what might be of value to augment my view of the trading universe.
Believe that since the some market characteristics such as behavior of momentum-based oscillators tend to persist over the short-term, one can exploit these characteristics provided one trades with discretion -- after all, the word 'speculation' comes from the Latin "specular" meaning to observe; i.e., you must trade the market patterns you can see in the markets, not what someone else says they see or have concluded by computer back-testing, etc.
I must credit Joe Ross for the very important teaching: "trade what you see." At first this idea may seem trivial, but it's the foundation of successful trading/speculation -- most people indeed tend to trade what somebody else says they should see.
I've been using FutureLink satellite data feed for position trading for a few years now. A plus is that snapshot quotes are transmitted for most US futures markets every 10-minutes with no added delay (quasi - real-time). As you might expect, NY markets are delayed 30-minutes.
Understand FutureLink intraday data sample snapshots originate from "FutureSource, " which is a real-time data service. Unfortunately, my FutureLink software has no capability for downloading these 10-minute interval snapshot/updates; the software is intended only for updating your charts on an "end-of-day" basis: i.e., daily Open, High, Low, Close.
Daily, Weekly and Monthly Charts with additional data fields for volume and open-interest can be exported for use by MetaStock, SuperCharts, and other analysis programs (at this point in time, I much prefer SuperCharts to MetaStock -- reasons for this preference might be discussed in a future article to CTCN). FutureLink includes FWN (OnLine Futures World News wire) which provides market news stories.
My perception is that practically all significant market moves get under way prior to the respective FutureLink FWN news release; news stores typically provide a rationale why the market jump/change has occurred. Perhaps of greater value to position trader is weekly KR-CRB "Blue Sheet" Futures Market Service (sent by mail).
The recent move by Corn to record highs was clearly and unambiguously indicated/forecasted well in advance by the "Blue Sheet" with ample supporting data and explanations such as bar charts showing world grain stocks to usage in percent vs. year, supply deficits, the fact that China shifted from exporter to importer of corn, ethanol production, domestic feed grain use and the poor shape of the Kansas crop, etc.
I feel you don't have to be an agricultural expert to successfully interpret the "Blue Sheet" -- the fundamentals are generally clearly covered (of course, acts of nature like crop freezes may not be anticipated).
However, perhaps you should devise and use your own market timing/entry strategy [not the specific entry strategy recommended by the Blue Sheet] since market price dynamics in the short-term often seem to ignore such fundamentals - there's a lot of strategic 'manipulation' of markets by the big players in the short-term -- e.g., ever notice how daily price will often move down with relatively low volume just before a big up-move?
A book I consider essential reading for traders is "Winner Take All" by William R. Gallacher (revised 1994 edition by Probus Publishing). This book is a very entertaining "tell it like it is" expose of charlatans and puts light on popular misconceptions.
One point I got out of this book was that position traders should not ignore fundamentals -- indeed, strong fundamentals like those reported for corn could very well be the basis for only taking long positions earlier this year.
Another thing, one might consider using closer protective stops with a willingness to re-enter after being stopped out - this could mean calls to your broker for quotes during the day, or at least get back in a day or so when price moves in the original direction again (you are responsible for the criteria of determining what market action may constitute a trend resumption, etc. -- life is not easy).
Comment about the Commodex Service: Are you familiar with the Commodex System? Intriguing. It is said that most big commodity fund managers subscribe to this service. It's a very popular 30+year old mechanical system for position trading of US-exchange futures. The Commodex service sends daily trade signals by mail, FAX or modem.
On average, this mechanical system has about 30%-35% winners, but reportedly catches all the big moves; losses on most loosing trades apparently tend to be relatively small. Like most moving average-based systems, repetitive losses occur when markets are in narrow trading ranges (too often for my comfort level).
The Commodex system has evidently averaged over 800 profit every year for thirty years - the worst year was a 30% drawdown and the best year was like 500% or more - don't have all the figures in front of me). A $250K account is suggested in order to trade roughly all the 90 or so positions, (signals generated for about 30 different commodities in the 3 or so leading contract months).
Of more interest to ordinary humans, Commodex has also recommend a small portfolio (5 or so commodities) which has ("historically") yielded on average around 800 profit per year, that is, around $15K to $20K annual profit for the small $15-20K account! -- my opinion is that the account size for the 5 commodities should be much bigger from a money management viewpoint, but so far they haven't bombed out).
In the brief time that I subscribed to Commodex, it really seemed to work, and substantial profits appear to be realistically attainable, even though Commodex signals/scores are calculated and transmitted a day late (exchange open-interest numbers are not available until the next day after a market closes). Often looking at a chart, the Commodex system seems to signal a trade entry for no apparent reason and then the market makes a big move. In my view, the system's major weakness seems to be that as much as _ of the open equity profit is allowed to be lost before a successful trade is closed out -- the system sacrifices most of the accumulated profits when the market moves against the trade.
On the surface, at least, it would appear that one should attempt to take losses more quickly and be willing to immediately re-enter, if and when the market resumes the trend (life is not easy)! The idea would be to use the Commodex service for entry signals and then use your own support/resistance based strategies to exit trades.
Back in Aug 1992, I subscribed for 3-months to Commodex (special offer). A year or two ago I went through the stack of about 65 each 8"x14" trade summary sheet mailings (a Commodex summary sheet was mailed each trading day during the 3-month subscription period). For that 3-month period about 34% of the trades were winners, and the system made a profit mainly due to big currency wins.
Since then I attempted to program (strictly for my own amusement only) at least a good approximation of what I understood the Commodex system "rules" were, using SuperCharts "easy language" and most often, obtained pretty much the same values for the Commodex system "daily" and "trend" indices which are used as triggers to enter and exit trades.
I believe most of the differences between the Commodex entry and exit points and my program was due to very small, but often surprisingly significant, differences in volume and open interest that was transmitted by my data service and whatever exchange data sources that Commodex uses.
Last year I called the Commodex service in New Jersey and was told that for $80 one can order a list of Commodex trade entries and exits covering a period of one year (unfortunately, this yearly list does not include Commodex's calculated "daily" and "trend" indices).
I prefer to trade my own ideas, but one can subscribe to a daily Commodex FAX service, Computer modem transmission, or daily mailings for 3, 6 or 12-months.
It seems contradictory to "common sense" Commodex, a well-known, fully disclosed, system readily available to everyone, including the big fund managers, can indeed generate greater than 800 profits for most years consistently for the last 30-years! Performance has been even better during recent 9-years. How can this be? Seems incredible! If there's an illusion or misconception here, I would like to hear about it.
About Advisors and the Competition - Don McCullough
There may be more poor advice about the markets than on any other subject. Without question, the advisory business is and has been very Iucrative for many hypsters, mediocre and failed traders. Most of these people know much more than the general public and I'm sure they think: "Why let all of my knowledge and efforts go to waste?" Next thing you know they're writing a book or newsletter, or speaking at a seminar or selling their super-duper system.
Looking back, I'm sure many of us wonder why we didn't, at the start, aggressively question the difference between advisors, hypsters and genuinely good traders--and which was most likely to have the best answers. Now, it seems so obvious to me that a tremendous amount of worthless information would have to exist in the market advisory business. The "easy fix" for big money has always and will always be tempting to the general public. Supply and demand you know!
I think even the best trading knowledge in the world can only be acted on consistently and confidently by the person who has spent the time and effort needed to become fully convinced of the validity of this knowledge. (I stress the word fully)! That may require 1000's of hours or years of study. Think about this. People are usually being offered what amounts to a "black box" and they're expected to trust it and keep trading it consistently after several losses in a row. That appears to me to be just about impossible. (I'm saying whether fully explained or not most purchased systems will not instill adequate confidence in the mind of the purchaser).
Competing against the pros requires more than mere knowledge. Professional traders have the experience of acting properly with their knowledge in the frightening, loss taking world of real trading in the real markets. They have proven themselves to themselves. This gives them great, performance enhancing, self-confidence.
A person may know how to hold the bat and swing at the ball, they may know everything there is to know about playing baseball -- but they're still a long way from being an experienced, professional ball player. As one pro trader said about the markets: "This is the major leagues!"
I think it takes years for the typical person to acquire the needed knowledge, and even more years to acquire the needed psychology. Another huge advantage many pros have over most of us is this: They learned from top, proven professionals -- person to person! This is a tremendous advantage!
I can easily imagine the better pros laughing at most of the books amateurs and book publisher are raving about! (I now look at about 120 of my 130 books about the markets and think: "What a waste of money, time and effort!" Not only a waste from a learning, but also from an "unearning" standpoint).
If you'll study the few books that contain strictly top professional advice (there's about 10 such books I'm aware of) you'll find that most of these Market Wizards had help from professional traders -- person to person.
Many of today's top pros who now trade from a screen spent years as floor traders. (Linda Raschke is one of many). As you know, floor traders are, and have to be very good at executing many times each day. Successful, consistent execution of a viable methodology is often a significant obstacle to trading success. The experience, and the quality of the experience, acquired by the better pros gives them a great advantage over the typical trader!
Most of the better pros have never and will never be writing books, speaking at seminars or selling systems -- or teaching "students." The typical trader's ignorance and poor psychology, or unwillingness to "pay the price," is money -- tons of it -- in their pocket!
Large pro traders need lots of people doing the wrong thing at the wrong time. Such people provide the liquidity needed for the pro (with his huge multi-contract position) to "dump" into and "load-up" from. Without this liquidity he will not get the best price, entering or exiting. He will instead, drive the price against himself.
Above all, a professorial trader can take losses and still maintain confidence in themselves and their signals. The pro has (totally!) accepted losses as a natural part of the trading process. Assuming correct knowledge, my definition of a pro trader is: When you can take losses calmly and keep on trading -- you're a trader! That's the professional trading psychology to strive for.
The Holy Grail - Don McCullough
Its been said, over and over again that there's no Holy Grail when it comes to trading advice or systems. If by Holy Grail they mean a system that gives 800 correct signals, then I'd agree there is no Holy Grail. If, however, you'll view the statement in a less exacting manner and settle for 95% plus correct signals, I'd then be forced to admit that The Holy Grail does indeed exist!
In the great book, Market Wizards by Jack Schwager, you'll find an interview with Mark Weinstein. Mark tells the author he's had only 3 losing days in the last 2-years out of thousands of trades he's made during that time. Mark also says he entered a 3-month contest and had 800 winning trades. A mutual friend confirms Mark is telling the truth about his fantastic winning percentage. Jack states that Mark must have a winning % around 99%. I think that's close enough to merit a Holy Grail rating, don't you?
Editor's Note: I have known about Mark Weinstein's truly incredible and amazing claims made in the first book some years ago. Apparently Jack Schwager and others are convinced his almost 800 success rate is true. However, your editor and some others find his percentage of profitable trade figures extremely hard to believe.
It's really incredible anyone could only have 3 losing trades out of thousands over 2-years. If these claims are correct, it seems to me he could put his trading method down in black and white and easily sell it for hundreds of thousands, if not millions of dollars, per copy. Why wouldn't he do this?
He would become even more famous and make millions of dollars and still be able to trade the method himself. Since he could charge vast sums of money per copy, it would result in a relatively speaking small number of actual sales and be very unlikely its performance would degrade due to overuse!
It's very hard to believe a trader could have a system almost 800 profitable and yet be relatively obscure like Weinstein. We challenge Mark to backup his amazing claims with copies of all his monthly brokerage account statements covering the 2-year period.
P.S. - Don't be fooled by seminar and trading system people who will only give you daily broker statements. Occasional daily statements are basically worthless if using them to backup a trading system's profit claims. There are several vendors out there who will only give you sporadic daily statements or perhaps an occasional monthly statement . . . non-continuous.
The above mentioned book also contains an interview with Marty Schwartz. Marty, as you may recall from one of my previous articles, is said to make between $300,000 and $500,000 a month (Yes, per month) trading the S&P market. A friend of Marty's told him he didn't think anyone could make $40,000 a month trading options. Marty says he can now do that in a day without any problem. Marty says he's proud of his futures trading because he took $40,000 and built it up to around $20 million with a maximum drawdown of only 3 percent.
In 9 out of 10 trading contests Marty entered he made more money than all the other contestants combined! I have no idea what percentage of Marty's trades are correct, but I don't need to. To me his method -- whatever it is deserves a Holy Grail rating.
Editor's Note: Marty, these alleged claims are incredible and to be perfectly frank with you, very hard to believe! I also challenge you to submit your own continuous monthly statements to us for verification?
Another outstanding book by the same author contains an interview with Linda Bradford Raschke. The title of this book is, The New Market Wizards. Linda tells the author that she has about 70% winners. I wouldn't consider this deserving of a Holy Grail rating but it's plenty good enough. From all the reading I've done this percentage seems to be about maximum for most professional traders. Some professionals make large amounts of money with only 40-50% winners. They do this by being able to ride their winners and getting rid of their losers, fast! Definitely easier said than done.
Market literature contains several myths. To me, there is a Holy Grail and some of the very best professional traders have found it! Not too many years ago all of the books were saying that it was impossible to day trade successfully. Now, of course, we know that's total nonsense. I can easily imagine many professional day traders during that era laughing at authors of such books.
I'll bet they are still laughing about many so-called truths many people now believe to be "Gospel."
Another myth that was quite popular a few years back was that charts, chartists and charting were all a bunch of baloney. Or, it's all right to give a glance or two at a chart, but the real answers are in the fundamentals. I can just see nearly all of those fundamentalists saying the markets gotta do this or that and losing their tail-ends as a result! When you say gotta you ain't flexible and if you ain't flexible you ain't no trader. The gotta is, you gotta go broke with a rigid mind. One of the Market Wizards calls the fundamentals the "funnymentals." It's all right to "make sense" of the markets but I think it's best if it's unconventional common sense.
I believe many people who attempt trading would fit the saying: "They know just enough to get themselves into trouble." When I hear about people who take 23 losses in a row I can barely believe it. A system that produces 23 losses in a row does not deserve being called a system. It's a catastrophe! How people can believe that "hanging in there" with such a system is the right thing to do is beyond me! I don't believe any truly viable system would have more than 3-4 losses in a row, and that many losses in a row would be very rare.
One of the most common myths many traders now have is thinking that with a great system testing program their computers are going to make them millions. Perhaps they should question whether a computer is capable of finding the best answers to the markets.
Seems that many people are dedicated to making the search for a viable system as complex as possible. Maybe the search means more to them than profits from the market? My choice is the computer between my ears, charts, a creative mind and long hours.
Aloha John P. Meehan - Duane Barnhart
Thanks for your insightful article. Read with keen interest and empathy after arriving at similar deductions during 8-years trading.
Your few copies of Matlock's "Man & Cosmos" are probably off to those more swift of footPhone or Fax. But if you still have one, I would like to read & pass it on to other traders.
Your article is especially timely. I have been asked by three friends to consider trading their accounts or teach them how. Your article will help and enable explaining my reservations. Our friendship is far more valuable than any money they could make or loose.
You may have read my first article posted on page 33 in the last issue. I look forward to reading more articles from you and RFK. His work will enable bringing my CPA up to speed and on track with how to handle gains and losses. We are fortunate to have CTCN to exchange valuable information like this.
Your Latin quotes also timely. My wife and daughter are in Athens, Greece on a Latin class expedition with Punahou School 7 & 8th graders.
All About Probabilities & Percentage of Wins - Donald Turnbull
From your comments about my 3/22/96 letter, it is abundantly clear that the letter was not well composed. To begin with, I did not suggest that all commodity trades have a 50% probability of success. It depends on who selects the trades.
I chose 50% for my example because Morry Markovitz [Trading With Morry, 201-794-1221) claims that "over half of his trade recommendations are winners." Any one of his recommendations, then has a 50%+ probability of success.
He also says that the average commodity trader makes profits on one out of every four trades. Thus, any one trade would have a 25% probability of success.
Morry also says that the top one percent of traders (mostly professionals) make profits on one out of three trades, for an average rate of 33% successes.
As far as probability is concerned, it is always true of a dichotomous population that the probability of failure is 1 - the probability of success. This is a simplification of real life, because as we all know, it is possible for one person to make a profit while another person experiences a loss on the same trade. Thus the population is not truly dichotomous.
I was unwise to choose the 50% success rate because the failure rate is the same and it's not clear, in a mathematical formula, which is being used.
The next principle of probability to be understood is that if the probability of one event is "p," then the probability of one event or another with the same probability is p + p or 2p. The probability of one event and another of the same probability is p x p, or p squared.
Now, let us reword my example using the 33% success rate. The probability of failure must be 1 - .31=.67. The probability of two failures is .67 x .67=.449 or 50%. The probability of five failures in five trades is .67 x .67 x .67 x .67 x .67=.135. or 13½%. The probability of four failures is .67 x .67 x .67 x .67=.20 or 20%.
The probability of at least one success, then must be 1 - .2=.8 or 80%. This assumes, of course, that the person choosing the trades is among the top 1% of traders in the country. However, even among the top 1% of advisors there is a 13½% chance of having 5 losers in a row. There is also a 2% chance of having 10 losers in a row. (.67)
Suppose there are 250,000 traders in the country. There will be 2,500 of them in the top 1%. Of these 2,500, about 50 will experience 10 losses in a row. This is the luck of the game.
The point of my example was to show, with numbers, that the probability of success is much higher with a multitude of trades and tight stops, so that the few winners make more money than is lost by the many losers. However, all you can do is put the odds on your side. There is never a guarantee.
You mention in your comments, that some trading advisors claim a 60% or 70% (or even better) rate of successes. I would guess that these advisors are whistling Dixie. In March, I had two winners in a row. Does this mean that I have a 800 success rate? I did in March, but it is the long run that counts.
If The Recommended Trade Wouldn't Work...Why Did It Work! - Bob McGovern
I read with interest the anonymous letter written by "PEP" regarding why the NOB spreads I recommended in December wouldn't work. "PEP" obviously spent a lot of time working on the letter, and I want to thank him for the enlightenment.
Since "PEP" explained so well that the NOB wouldn't work, would it be inappropriate to ask him why the NOB spreads did work. The March NOB narrowed from 220 in January to around 100 in the March and the June NOB narrowed from 225 in January to 22 at present!
See Spread Scope charts of the March and June
NOB for your review:
(Note: Charts are in our print newsletter, not here on online)
A "Library" Is A Good Idea - Phil Baker
I like the idea of having a library for members. Members can borrow books, software, systems, etc., so we can see if it is something we would want to buy.
There should be a time limit of 2 to 4 weeks for borrowing items and returning them.
I think it would help sell vendors' items in the long run, because I would personally never buy a $2,000 to $5,000 system from an advertisement, but if I borrowed it and liked it, I definitely would order it as soon as I could.
If needed I would try to help get the library going. I have 10 to 15 books people could borrow. I'm a farmer and we borrow and use equipment all the time, so we will know what kind of equipment we like and need to buy for our farm. It definitely helps sell farm equipment.
We need feedback from members about setting this library up.
Market Timing Group - Steve Kelson
This is in response to the letter by "Anonymous GK" which appeared in the last issue of your publication.
Because we strive to provide the best in personalized instruction, we were stunned by apparent shortcomings in our training with this person. I sincerely hope that you will publish this letter so that "Anonymous GK" will learn of our most sincere desire to help correct several obvious misunderstandings in the proper use of our system. GK never notified us of any problems or dissatisfaction with the system. I will spend whatever time necessary to work with and help produce profitable trades for this person.
This person stated that the system was bought about a year ago and used for 3-months which resulted in three, maybe four losing trades. During a full 3-month period our system will normally signal at least 20 profitable trading opportunities, monitoring seven to eight markets. This comment alone is what leads me to believe this trader is not applying our formula correctly. I believe most traders will agree that losing on only 3 or 4 trades during a 3-month period is hardly justification for severe condemnation of any system. Coincidentally, I received a call last Friday from a customer who, in the last 3-weeks, tripled his account using this same system taught to GK.
This customer is a doctor specializing in radiology. Since many people may have a hard time imagining this, (nobody believes system vendors anymore). I will give his personal phone number to anyone interested in verifying this. For the record, he found the sell signal in the S&P starting 7/2, long D Marks 7/9 and 7/15, long Beans 7/8 (plus a few others I don't recall).
People in the public eye are misquoted on occasion. One year ago, due to urgent family obligations, I was forced to spend less time at my office and attend to other business interests for a short period of time. I recall sharing this with a few customers, but stressed we were always available during regularly scheduled hours to be available for training. Let me clear up an issue in the letter which included several misstatements. I am the President of Market Timing Group and spend full-time trading, studying and researching the markets to develop a technique to forecast market direction. The system has been slightly enhanced twice and we are continually testing new ideas. The bottom line: We have many users who have made lots of money using our system.
I will give any member of CTCN the following guarantee: If you are fully trained in using our system, we will unconditionally guarantee ours to be the most accurate system in the world. Since our technique works in every market including stocks, (and also all time frames) compare the results of ours to any system you have now. No matter if your system ranks in the top ten in Futures Truth, we assure you, you will have better results with ours. If you can prove to us you own a system that is more accurate than ours in forecasting market reversal days, and overall more profitable, we will refund your training fee. Obviously, a valid comparison over a reasonable period of time must be made, over a variety of markets. Stops of comparable size should be used. If your system risks $600 to $800 and ours risks $250 to $400, this would not be a fair comparison.
Why would we offer a comparison guarantee against any system available? First of all, only two or three other systems could even stand a chance of winning such a bet. Secondly, this offer tells the customer they have no risk in trying our system, even if you have a great system now. (Besides, we know our competition. There's very little available that trades as claimed).
Our mission as a company is to provide the finest personalized training in the trading system industry. We feel obligated to retrain GK at no additional expense. The impression from my notes on anyone resembling these initials, is that this person only kept two of his four training session appointments, as I have attempted to reach him from my customer files and notes. At any rate, it is clear he needs more sessions to review the mechanics. I thank you for bringing this matter to my attention.
Judo and Trading - Dan Wu
While scanning through the TV guide for the Olympic games, I noticed one of the events is Judo. An idea came to me for trading at that moment. Why not have a belt system in trading just like in Judo for traders? The following is a proposal for this belt system in trading:
Red Belt (Level 1) - You blew out your account and owe $$$. You now work as a full service broker advising clients on how not to blow out their accounts. If you save enough money and get to trade again, you would be very happy if you become a break-even trader. The belt color is red because you are in the RED!
White Belt (Level 0) - At this level, you have
both good and bad news. The good news is that you are very consistent. The bad
news is that you lose money consistently. If things don't change soon, you will
be demoted to red belt. You dream of being a millionaire in no time at this
level. The belt color is white because white is a pure color. A color of
innocence (an euphemism for you don't know what the heck is going on). It is
the same color as sheep and you act like sheep sometimes. Some characteristics
of sheep are:
lSheep are followers
lSheep can be taken advantage of easily, especially with "wolf in sheep's clothing."
Blue (Level 1) - Congratulations, you now have enough wins and losses to sort of break even most of the time. You are a break-even trader! The belt color is blue because you keep holding your breath every time you trade. The reason you hold your breath is because any one of the trades you make can break you, and you won't be a break-even trader any more.
Black (Level 2) - At this level you are consistently making some money. You don't make enough money to live on, but you are at least in the positive. Anyway, at this level you are really glad to be able to pay taxes since that means you are making money. The belt color is black because you are consistently in the black!
Green (Level 3) - You start to make enough money to make a halfway decent living. Now paying taxes starts to bug you a little, because you would have made a decent living instead of a halfway decent living if you didn't have to pay taxes. The belt color is Green because it is the color of money!
Yellow (Level 4) - You start to make a very good living (even after you paid your taxes) trading. Actually you are unemployed since you quite your job. But you don't care about being unemployed, since you are making so much money trading at this level that you don't care how much you pay in taxes.
Stock Market Decennial and Election Year Cycles - Robert Miner
A lot has been published this year regarding the so-called Decennial and Election Year cycles. Several publications have shown composites of each of these cycles which seem to project a stock market top in 1996 or 1997 followed by a decline to 1993-2014 or later. These so-called composite cycles are simply statistical averages of the percentage price change of up and down closes for their respective years since the turn of the century.
Traders and investors should be very careful of giving credence to any analysis that relies on averages without being fully aware of all of the data that generates the average. For the most part, averages have very little value to traders and investors. A graph of the Decennial composite cycle shows the 7th year of a decade as a down year. Yet, since the 1890's, five 7th-years have closed up and five have closed down.
In other words, there has been no bias what-so-ever in almost 100 years for a 7th year to be an up or down year. The decennial composite cycle always shows a 7th year as a down year because those years that closed down did so by a greater average percent than those that closed up which results in showing the average close of 7th years as a negative number. Statistics don't lie. But, they can be very misleading when the whole story is not told.
A comprehensive analysis of election year statistics is very valuable. Since 1952, only one election year has closed below the close of the prior year. That was in 1960. Even more revealing, and profitable, is that the Dec. close of each election year since 1952 has been higher than the preceding May close in every year! The May 1996 close was very near the May 24 high. If we crunch a few other election year numbers we would find that if 1996 performed by the absolute minimum amount of all election years since 1952, the May high should be exceeded in the fourth quarter of 1996. Average statistical projections place the 1996 high for the S&P 500 at 730 or higher.
Do you know how many post-election years made new highs and closed higher than the prior election-year? How many post-election years exceeded the election year low? Take a little time. Check this out for yourself. You may be surprised.
How does the bull market that began with the 1974 low compare to prior super bull markets like those that began in Aug. 1896 and July 1932?
Ignore the fundamental and traditional technical analysis drivel that we are all bombarded with and check the data out yourself. The media and most newsletter advisors generally provide very misleading, incomplete and poorly researched information. Probably not intentionally. It simply doesn't pay them to do the necessary work to provide accurate information. They know the public will forget their analysis and forecasts in a matter of weeks.
In light of the stock market volatility in July and projections for "super-cycle tops no later than July" and other non-market, non-data driven forecasts and panic reactions to short-term events, traders and investors may want to consider taking the time to make a rational and comprehensive look at historical, market activity themselves. I have been lucky. Over a decade ago my most influential teacher of market analysis and trading, Dr. Gerald Baumring who has since passed away, taught me to not only look at the market from radical new perspectives, but to prove everything out myself.
When I see graphs of the Decennial and Election Cycle that provide a very misleading picture of the stock market during these periods, all that I can do is hope that traders examine the data themselves and come to their own conclusions. If it is your money on the line, be very careful of the source of your decision-making information. Check the data out yourself before accepting any conclusions.
I have learned to take nothing for granted and to take the time to check all of the data out for myself. Not only because I provide an advisory service for traders and investors, but because I have my own money on the line as well.
Tick Player S&P Simulation Program - Tom Schlobohm
Here is my tick player/S&P simulation (at almost real time).
First, some history. Like many CTCN readers, I'm sure, I was motivated by the anonymous trader to pursue a day trading endeavor into the S&P's. It went without much reasoning that real-time quotes were a prohibitively expensive way to learn how to daytrade or at least just experience real-time trading.
With the foregoing as my motivation, I set out to quickly (ha, ha) build a tool that would simply play back ticks at almost real-time. All I wanted to see were the ticks being painted at either a 3, 5, or 15-minute basis with Keltner bands and key reversal lows and highs labeled accordingly. I think I succeeded. I even went a bit farther and stuck in the RSI on top of the price bars and Keltner channels.
The program runs the simulation at just a few percent slower than real-time. The program requires one day of historical data, preceding the actual day of tick data which gets played back (at almost) real-time. The two data files which I refer to as "historical" and "tick" data are of standard ASCII format. They are most readily generated by SuperCharts/TradeStation and Tick Data Inc's. software.
I have enclosed one sample day, 9/6/94, to view the simulation. Of necessity, the preceding day, September 2, is also included in 5-minute format. The data of September 6 must also be played back as 5-minute bars. This can vary per the user's discretion, but my enclosed historical data file was generated on a 5-minute basis.
The historical data file is created by the Chart Status tool (in Supercharts and Tradestation) with the Send to File - option. Of course, the chart window must contain the appropriate one day of historical data of interest. As you will see, the ASCII file that is generated by Omega's software could also be generated by anybody who can operate an ASCII-capable file editor and has the intraday data.
The tick data file is created by Tick Data Inc's. TS.EXE program dated 6/8/94. Basically, once the desired day of the simulation is chosen, the user sends the output to a file (labeled in the program as ASCII) and the resulting data file is used verbatim.
At the time I was working on this simulation, one problem existed with Tick Data's program. Basically, the ASCII file output option did not work property (The tick data did not include the exact second of the time of day of the trade.
The hour and minute of the time of day were there, but not the seconds - useless for what I was after). When Output was directed to a printer, it worked fine (the printer's output DID include the exact hour, minute, and second of the day of the trade).
To circumvent the problem, I used a shareware utility, PRN2FILE.COM to redirect my printer's output to an ASCII file. This works perfectly, but it is a bit confusing to the uninitiated. Hopefully, their bug is now history and the TS.EXE program's ASCII output option works . . . but I have not confirmed that! Anyway, a convoluted solution does exist if their software is not fixed.
Sorry for the preceding confusion, but those are the facts as I know them and the resulting constraints that I worked with to reach my solution.
The software is very much a tool and not a commercial quality product. It is meant to train neophyte cheapie traders, like myself, who want to experience real-time tick data.
There are at least two known bugs that I have not taken the time to fix. The first problem occurs when a new high or new low is made. The price axis scaling is not working property. The scale is not correct until the next price bar is painted, so it can start to look kind of weird under those circumstances. Unfortunately, I cannot remember the second known bug! As I do recall, it was of a less serious nature than the previously mentioned one.
When the program is run, it prompts the user for: 1. The time frame of the historical data, like 3-minute or 5-minute etc.; 2. the number of bars to display on the screen at any one time; 3. the previous day's historical data file name and; 4. the simulation day's tick data file name.
The Program then begins by calculating the historical Keltners, key reversals, and RSI. Next, the screen is graphically Painted and the real-time ticks get played off the PC's timer.
The only interaction the user has with the software is the movement of the numeric keypad arrow keys (left and right, only). These keys move a green vertical cursor (line) beneath the respective historical price bars. As tick data becomes price bars, those too may be examined by the cursor.
The data at the bottom of the screen basically yields two lines of data. The line of yellow numbers are the real-time price bars (time of tick, tick, open, high and low) and the Keltner channels and RSI. The second line of numbers in white and other colors represent the same (previously mentioned) values as indicated by the location of the cursor. It's all rather simple.
At present, I have hard wired the RSI to 14 bars and the Keltners to 9 bars with a 2.0 multiplier. Those could be changed to inputs or hardwired to other values as well.
I think that covers the highlights (lowlights?) of my program. Let me know what you think. Be honest and critical, but please bear in mind I will not have much time to make significant changes. I think it could be a useful tool in the hands of some readers, but I just don't know. Please let me know what you think. If you believe that it merits availability to readers, let's talk and see what arrangements need to be made to see that it's a win/win situation for all parties involved.
Editor's Note: Tom's letter is published here so we may get feedback on his simulation program. Please write, Fax or e-mail your opinion on the value of this. Thank you.
Louis Cornell at 612-290-0754
will like to have answers to the following questions:
1. Are there ratings available for commodity brokers (concerning level of professionalism, integrity and other criteria) anywhere in the US? 2. If the answer to question one is negative, then could anybody recommend a few broker firms in the Twin Cities, MN matching the above mentioned criteria or anywhere in the USA?
Dave Quiser would like to correspond with any reader who has taken the home study course by "The Craig Stevens Company." Contact him at 120 N. Vermilion Dr., Cook, MN 55723.
Cyrus S. Patel - I use SuperCharts for my technical analysis. I would appreciate help from any trader on how to build continuous futures contracts in SuperCharts.
Jim would like info/feedback from members who has taken Joe Ross courses.
A Member asks, how can I get a new binder for my Commodity Traders Club News issues? Editor's Reply: Send a check or money order for $10 to CTCN. USA only - Canada add $4. No credit card or phone orders. Our new binder is blue and has our name printed. It's 2" wide and will hold 2-yrs of CTCN. Order yours today.
Werner Indergand asks: Please tell me if the "CSI/Trendx 37 market custom downloading portfolio" is still available, including the 18-month continuous disk? At the time when the contracts automatically "rollover" - how does it work with back-adjusting? Do I have to do this myself by "QuickTrieve"? or does it work out itself? Is it possible to back-adjust close to close?
Editor's Reply: Yes, the 37 market CSI/TRENDX/CTCN portfolio is still available. It's actually now 100 markets and cost $22.95 mo., prepaid portfolio. I can sign you up for it if you want me to. Yes the 18-mos. free data is still available from me. The rollover back-adjusting needs special software. Only my Swing Catcher System has the ability to do it as far as I know. That Rollover Utility is included with the program Yes close to close can be done also.
On June 26 we called John Hill at Futures Truth to ask them if in fact the Anticipation System did have a return of 3,934% over the past 12-months. They checked and advised it was a typo error in their performance reports.
The actual return was significantly lower than they reported in error in their April/May 1996 issue. Unfortunately, CTCN published this erroneous data in our last issue. At the time, we did not know it was an error reported to us by FT. Please call FT direct at 1-704-697-0273 for more: details and Anticipation System's revised data.
A Questionnaire Page is also enclosed with this issue. We would greatly appreciate your completing the questionnaire, including the comments section, and returning it to us in the enclosed envelope. The results of the Questionnaire will help us deliver better products and services to help you on the road to successful commodity futures trading. We will also publish the Questionnaire results in our next issue. Thank you in advance for your help.
About the Futures Truth controversy. Please note there are several positive and supportive articles, along with some negative articles about FT. With this fairly balanced coverage you should realize CTCN wants to cover both the positives and negatives on all issues, including Futures Truth.
Unlike allegations made about a well-known competing commodity traders network type of newsletter, we are not afraid to give full exposure to both sides of all issues and welcome all contributions, be it positive or negative.
About CTC's Real Success Video Tape Trader Training Course. We still have some videos left on successful day trading the S&P 500 market. In addition, our Real Success Tradestation compatible software is also available without limits on the number of disks available. This unique software is perhaps the most comprehensive and easiest-to-use Resistance and Support type of software available at any price. Please refer to the enclosed Real Success Software flyer for additional details on CTC's own software program.
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.