Truth in trading--
Posted: Tue Jan 20, 2004 5:33 am
c.f.--
I know you did the right thing when you told the unvarnished truth about trading. It does take money, and/or many correctly applied trades to have a reasonable expectation at profiting from trend trading. By being forthcoming about the realities of trend trading, you can only gain in credibility with those to whom it will matter the most.
To trade long term you have to be able to probe (read: spend money attacking a market) over and over until a trade gets under way that you can ride for a little while.
Timing is everything. That is, the time you start this whole process might be just before a lot of markets start exhibiting trending behavior, or a couple of years before they move. If your timing isn't very good (which is normal---no one knows for sure when profitable trades are going to happen in advance or the markets in question wouldn't exist) you make up for it with capital and persistence.
There is one way I know of to get started trend trading with small capital that almost assures victory. It is the method that I used to get started trading over 25 years ago.
Like most in this forum, I was not born to money.
It was the early '70's. I started my own business when I was 18, reclaiming silver from fixer solutions, x-ray films, printing developing chemicals, etc. Due to the obvious monthly fluctuations of selling the physical silver that I separated from the chemicals, I realized that there was a lot more money to be made by buying and selling silver in the futures markets at the right time than just the reclaiming alone.
Silver had great trends in the late '70's but in the early '70's it swung wildly back and forth while the Hunts were manipulating the prices and quantities for delivery.
This was an era when there was very little easily available information about trading. I did find books by Gann, and read about Stanley Kroll’s exploits and research by Donchian, which verified my own ideas about trading breakouts.
I had been researching markets for many years anyway, mainly ags, and then as now I realized that the only way you could deal profitably in the markets was by having sufficient capital. At the time, "sufficient capital" was $20K to $40K.
I only had $600. After numerous wins and losses in silver, beans and wheat, I was able to increase that stake to $1800.
I decided that to build a stake I would have to find a market which would inevitably have a large trending move. And low enough volatility to start with so I could build a relatively large position quickly with little money. I settled on one market that had a very long term upward bias but had been in a sideways range for more than 2 years. Cotton.
Things turned out better than I expected.
I was only interested in an up move, so the intent of my plan was to buy breakouts at new highs and if the breakouts didn’t hold on the day of the breakout I would exit by the close and wait for a new high to enter again. I was willing to keep at this for as long as it took, even if it took 5 years.
Cotton had been trading in a 2½ cent range for those 2 years and was dull as puddle ice. No one at the brokerage house I traded at had ever traded cotton and they all thought I was an incredible idiot for watching it, much less trade it. (If I would have traded pork bellies and beans more I would have been considered at least somewhat “respectableâ€
I know you did the right thing when you told the unvarnished truth about trading. It does take money, and/or many correctly applied trades to have a reasonable expectation at profiting from trend trading. By being forthcoming about the realities of trend trading, you can only gain in credibility with those to whom it will matter the most.
To trade long term you have to be able to probe (read: spend money attacking a market) over and over until a trade gets under way that you can ride for a little while.
Timing is everything. That is, the time you start this whole process might be just before a lot of markets start exhibiting trending behavior, or a couple of years before they move. If your timing isn't very good (which is normal---no one knows for sure when profitable trades are going to happen in advance or the markets in question wouldn't exist) you make up for it with capital and persistence.
There is one way I know of to get started trend trading with small capital that almost assures victory. It is the method that I used to get started trading over 25 years ago.
Like most in this forum, I was not born to money.
It was the early '70's. I started my own business when I was 18, reclaiming silver from fixer solutions, x-ray films, printing developing chemicals, etc. Due to the obvious monthly fluctuations of selling the physical silver that I separated from the chemicals, I realized that there was a lot more money to be made by buying and selling silver in the futures markets at the right time than just the reclaiming alone.
Silver had great trends in the late '70's but in the early '70's it swung wildly back and forth while the Hunts were manipulating the prices and quantities for delivery.
This was an era when there was very little easily available information about trading. I did find books by Gann, and read about Stanley Kroll’s exploits and research by Donchian, which verified my own ideas about trading breakouts.
I had been researching markets for many years anyway, mainly ags, and then as now I realized that the only way you could deal profitably in the markets was by having sufficient capital. At the time, "sufficient capital" was $20K to $40K.
I only had $600. After numerous wins and losses in silver, beans and wheat, I was able to increase that stake to $1800.
I decided that to build a stake I would have to find a market which would inevitably have a large trending move. And low enough volatility to start with so I could build a relatively large position quickly with little money. I settled on one market that had a very long term upward bias but had been in a sideways range for more than 2 years. Cotton.
Things turned out better than I expected.
I was only interested in an up move, so the intent of my plan was to buy breakouts at new highs and if the breakouts didn’t hold on the day of the breakout I would exit by the close and wait for a new high to enter again. I was willing to keep at this for as long as it took, even if it took 5 years.
Cotton had been trading in a 2½ cent range for those 2 years and was dull as puddle ice. No one at the brokerage house I traded at had ever traded cotton and they all thought I was an incredible idiot for watching it, much less trade it. (If I would have traded pork bellies and beans more I would have been considered at least somewhat “respectableâ€