SUCCESSFUL COMMODITY SPECULATION

SUCCESSFUL COMMODITY SPECULATION

by Peter Brandt

I believe that it takes a minimum of 3 to 5 years for a person to learn enough about speculative markets and the speculative process to become a successful trader. I also believe that every successful trader has his or her unique approach to trading. I have not know two successful traders that operate in the same exact fashion. each has found a special niche that seems to fit his personality. the major problem is that the vast majority of individuals (80-90%) either burn out their pocketbooks or their emotional will to continue trading before they figure out the rules of the game. this a cold and harsh reality, but a reality, but a reality it is.

FORMULA FOR SUCCESS

There are six components of a successful trading approach:

1) A method for identifying trades. it could be based on classical charting, moving averages, retracements, elliot wave, gann, seasonals, cycles, etc.etc. but one must have a methodical way to look at and study price. in my own trading I can look at a chart and immediately say " there is a trade here" or " there isn't a trade here" or there may be a trade here, but the market has to do such and such."

2) A method of entry . it is not enough to have a market opinion. one must also have a systematic way to enter a trade.

3) A method of establishing an initial protective stop level.

4) A method for taking profits and/or moving protective stops.

5) Overall money management rules. these include such things as % of capital risked per trade, treatment of highly correlated markets, trading into major reports, etc.

6) Patience and discipline. once all of the above elements are established, then the trader must have the patience to wait for a qualifying trade and the discipline to execute a trading plan after 6 or 8 losing trades. but it has to be done. it is difficult to ride a winner after 6 or 8 losing trades, but this also has to be done.