Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Decisions Process in Trend Following & Commodity Trading

InvestorEducation / Learn to Trade Jul 16, 2009 - 01:30 AM GMT

By: Andrew_Abraham

InvestorEducation

To the inexperienced, the decisions process in trend following & commodity trading should be complicated. Since I have been involved in commodity trading since 1994, I have seen what stands the chance of succeeding over the long term and what does not. Besides being a Commodity trading advisor with a commodity pool I work as an AP ( associated person at a brokerage firm). I became an AP not to solicit business but to get a first hand over view who has succeeded ,who has not and what they were doing right.


We have had clients that were PHDs that could not earn a penny. If trading was equivalent to intelligence there should be alot more successful commodity traders. So what is one of the keys to success? As I harp on is discipline and patience, but there is more than that.

What I saw first hand succeed over long periods of time ( albeit with alot of aggravation ( if you let it)..& draw downs ) is trend following. As a trend follower in our commodity pool and commodity futures trading, we simply use price information and volatility to determine position sizing and entries & exits. I apologize but the truth is I have no idea regarding the future…my opinions mean nothing as everyone’s on CNBC or Bloomberg. ( as an example of an SP 500 trade we entered last week in which we exited..we entered due to a price break down…and covered yesterday with a loss of approx 1/2 of 1 % of our account). No one knows any more than me or you. So basing on the fact I do not use the future I have to use a simple mechanical trading system based on multiple time frames and markets to make low risk “BETS”.

More so …discussing knowing the future. Not just would I have to know what would be in any one market… I would need to know the future in numerous markets.. The reason being there are periods various markets are quiet and choppy. Not pushing the fact, the bottom line is I can not be an expert in 80+ markets. However realizing I do not know the future …not being an expert in any one market..I would say I am competent in my mechanical “simple” commodity trading plan based on entries..exits…and most importantly risk and money management. Hopefully over time I can grind out a positive return based on many years.

The fact of the matter is the less a commodity futures trader looks for the magic system, holy grail, indicator etc..or any complicated analysis the better off they are. ( what I mean there are less decisions to make). This is an example.. I would only enter when this indicator says this..but I need confirmation contingent on several other indicators ( same with an exit). The fact is PRICE is everything..When it moves…it moves.. It is pretty simple.. In commodity trading verbage I am referring to a Breakout or Breakdown. That is it. More so..the entries and the exits mean nothing.. the key is the money management..risk management..and position sizing. You can flip a coin and probably do as good as 50/50 with any entry..

Keep it simple but not simpler. Understand your system or plan. Understand how your commodity trading advisor thinks and puts on trades. This will keep you in the marathon of commodity trading. It is surely not easy.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in