Trading commentary
It is NOT the goal of the Factor Service to teach people to trade like me. Nor is it my intent to teach you to become a chartist.
Rather, the mission of the Factor Service is to prepare novice and aspiring traders for the mental and emotional battles necessary to become successful speculators. Learning to trade – and to take COMPLETE ownership of your trading – is a three- to five-year endeavor.
Presenting trading scenarios in conceptual or philosophical form is one thing – presenting actual trading realities always makes for a clearer case study.
Eurocurrency futures, Japanese Yen, Bitcoin, FCX, SCCO, 10-Yr T Notes, Silver, SIVR, BRK.B, Gold, Nov Soybeans, Canadian Dollar futures, Brazilian Real futures, Dec Corn, S&Ps
Dear Factor Members
Welcome to the commodity markets I know and love.
The markets that existed in 1975 when I started my career at the CBOT (and for the next 15 years or so) were very much like the markets of the past few months.
The very nature of these types of markets are imprinted into my trading DNA. It is my hope that experiencing the current markets will provide Factor Members with better insight into various aspects of my trading style, including:
· An emphasis on risk-adjusted performance
· An unwillingness to chase breakouts past a certain level
· The eagerness to take money off the table at initial target levels
· The unwillingness to pyramid profitable trades, thereby putting my average entry price more at risk to a correction
· A “throw-the-mud at the wall” approach whereby I move quickly to other markets when a trade does not work quickly
· The desire to talk chunks out of a trend rather than being obsessed with catching tops and bottoms
Of course, every aspect of a trading plan is a two-sided coin whereby we give up things to get other things.
I do not consider the current markets to be overly crazy. In fact, they bring back good memories. We shall see if the current volatility in commodity markets will continue.
Peter
PDF of this Monthly
Markets of interest
The composite risk of an entire portfolio or grouping of trades can be measured in two ways:
There is nothing that exposes weaknesses in one’s trading plan like the week that just ended. That was a week that was – and I am glad it’s over. There were more limit ups and limit downs than I remember in many years. It reminded me of the grain and metal markets of the 1970s.
Trading commentary
There are some trades I enter that I REALLY believe will work. More often than not they do not work as I had planned. They are sometimes my biggest losses.
There are other trades I enter for which I have very LOW (even NO) expectations. In fact, if it were not for orders entered at least one day in advance I would have a very hard time pulling the trigger on these trades. Yet, these are the trades for which I am often quite thankful for having entered – because these trades, more than the aforementioned trades, have a better chance of becoming Pareto trades.
This is another way of saying that my expectation for trades is inversely correlated with their outcome. And, this is why it is important to have orders entered IN ADVANCE of each trading day.
It is no fun when some really good trades (interest rate markets, grains) must cover the losses of other trades, but that is how it works. Periodically I have a week when all cylinders are firing, but that is the exception.
PDF of this Monthly
Thoughts-on-a-Weekend-Afternoon-Mar-20-2022.pdf
