HOW I LEARNED TO TRADE COMMODITIES - Dave Reiter
The single objective of my letter is to share my trading experiences with other traders. Please allow me to provide a brief overview of my commodity trading background.
I graduated from the University of North Texas in December of 1990 with a B.B.A. degree in Economics. I was introduced to the world of commodity futures in 1989 by one of my economics professors. During our 6-hour conversation, this man taught me EVERYTHING I needed to know in order to become a successful trader.
During the previous 5-years (1985-1989), my professor/friend made over $500,000 trading commodity futures! Based on his own trading experiences, he simply told me what did work and what did not work. He did not provide me with a specific trading system or method. However, he did give me something much more important; his real-world trading experiences.
I left his office with about 6-pages of notes and a list of reference books,
which he suggested I read. Looking back, I now realize that I learned three
very important things from my professor/friend:
- A trading system should be simple;
- Develop a plan and stick to it;
- Maintain a long-term view. In short; keep it simple, stay the course, and be patient.
From 1989 thru 1991, I read several commodity books and tested several trading methods on paper. My goal was very simple; develop a system that would generate consistent profits year after year. In other words, I wanted a method that could "stand the test of time." Frankly, I didn't care if my system made money every week or every month. I simply wanted to be in profitable territory at the end of every 12 months.
After 3 years of research and analysis, I was thoroughly convinced that I had developed a trading system, which would generate profits. My next step was to begin trading on a real-time basis. Personally, that was a very difficult step for me to take. Everything looked good on paper, but how would the system perform in the "real world."
I decided to begin trading on January 1, 1992. Officially, I took my first real-time trade on January 2, 1992. Fortunately, my system immediately began to generate real-time profits and things have been going fairly well ever since.
During the past nine years (1992-2001), I've personally developed a number of profitable trading systems. All of these systems have one common thread; they're based on simple trading techniques.
It is possible to make money trading commodities on a consistent basis. I've been doing it for nine years. The key to making money is to develop a game good plan and remain patient.
Editor' s Comment - A very interesting story. It's really amazing how the Professor friend made over $500,000 trading commodity futures during those 5-years!
It's so very true that we need to keep our trading methods simple, stay the course, and be patient. Occam's Razor theory is something many here may not be familiar with, but very valuable to trading success regarding keeping things simple in all areas of your life, not just trading. However, it's very applicable to trading situations.
In fact, we are following Occam's Razor with our emails by sending them to you in text format. That's after lots of odd difficulties recipients reported reading it in more complicated formats, such as Adobe PDF and Microsoft Word.
Click-Here https://www.commoditytradingadvisor.com/occams-razor.htm for more on Occam's Razor and how it relates to trading.
REAL SUCCESS METHODOLOGY ASSUMPTIONS - Don Vito Jr
My experience in day trading has been with stocks, primarily scalping Nasdaq stocks using a Level II. I would be interested to know: a) if any of your customers have applied the Real Success techniques to day trading stocks and; b) how suitable you think your system would be given the price ranges, commissions, slippages associated with direct access stock trading.
I am in the process of building up funds for a trading account (currently $6,000) while working at my day job. I would also appreciate knowing if your techniques could be applied on an end-of day-trading basis that may help me accelerate the build-up of my trading account.
From what I can gather from your website, the first Real Success technique was based on pivot-point entry signals coming on retracements within a trend, all filtered through Keltner Bands. Real Success-2 seems to have introduced some new techniques as a result of some extended drawdowns the first one suffered. (Developers Note: Due to very choppy and/or volatile market swings at the time).
As best I can gather, the new technique has tried to correct this using charting multiple (4?) time period charts to establish trends.
There are a lot assumptions I have made, so I am probably way off base in describing your system. If my assumption about the multiple time periods is correct, I do have another question regarding end-of-day trading.
Given that multiple time period charts (1, 5, 10 min. etc.) are only possible for intra-day trading and that the chart periods for end-of-day trading for all practical purpose can go no larger than daily period (limiting the number of multiple periods), how suitable is Real Success-2 for end-of-day trading? Thank you.
Editor's Comment -- Actually, you were extremely good in your assumptions regarding both the RS-1 System of 1996 and RS-2 of 2001. As you said, with Real Success 2 we use a combination of Pivot Points (also known as Swing-Highs & Swing-Lows), Retracements within the trend and Keltner Bands.
The methodology is suited for longer-term overnight position type trades or short-term daytrading. You are right in our heavy usage of Multiple Time Frame Charts (intra-day or inter-day), perhaps our most valuable technique, and a new proprietary discovery.
Something else we use which you did not refer to (which is also quite valuable) is the use of Resistance & Support Levels.
Another change we have made, is even greater reduction in trading frequency. This reduces commissions, market watching screen time, and also very importantly - stress!
The method may generate 6 or more signals, but you should only follow perhaps 2 or 3 and only trade a few hours. That's likely why the broker said it was overtrading, when it really was not if followed properly.
By the way, we heard of 2 commodities brokers trading it for our clients. Both we have been told screwed-up by not following it correctly, including possibly over-trading, something to be avoided. Our traders said they believe it's possible generating of extra commissions may have been a factor in over-trading of the RS Methodology.
MAKING FIVE GRAND A WEEK - The Soultrader
The material on your (webtrading.com) website is exceptional in that you are committed to helping other traders. This commitment I believe is very genuine and comes through strongly. I think people like you are meant to be a blessing to others and I feel very privileged to be able to receive from you and your group. I have been trading the U.S. Futures here (overseas) for the last couple of years and loving every minute of it. I am addicted big time.
Trading has been in the E-Mini (S&P) Contract (staying up all night) but much prefer the Nasdaq E-Mini because of the long runs and not so much channeling. I trade off the 1-min and 5-min charts mostly, and use Elliott Waves for most of my trading. (Note: Elliott Wave-Counts are notoriously unreliable on short time-frames, but good for direction on the longer time-frames).
I have one protégé at the moment and the other person that I have taught is consistently making five grand a week. So something must be working??
Trading is a journey, I believe. A journey which is much more enjoyable in the company of friends and fellow traders. I think this is also what your club is all about. It doesn't matter how much I know, there always seems to be so much that I don't, and so I am constantly hungry for more knowledge and better ways to do things.
Your Traders Club has the ability to satisfy some of this hunger. I am continually amazed by some of the generous contributions and "secrets" given away by some of your members. By comparison I am much more selfish and guarded in this area. Shame on me! So there, you may quote me as much as you like and thank you for the opportunity.
Editor's Comment: This anonymous trader asked us to keep his name confidential and refer to him as the "Soultrader." Upon further review of some earlier (unpublished) emails we exchanged, it appears he selected this seemingly odd non-de-plume due to religious reasons. "Soul Trader" meaning "Soul" with a religious meaning.
A very interesting article! By the way, please consider explaining for everyone's benefit how your protégé and the other person you taught is making approximately $5,000 a week! I can understand you may not want to give secrets away but perhaps you could explain how they are doing it in general terms to help our Members out!
Sorry for imposing on you like this! It's just that I am really surprised those 2 traders are making money in terms of thousands of dollars in profit a week. That compares to our Real Success 2 Methodology which talks in terms of hundreds of dollars, rather than thousands!
DAYTRADING FROM AN 18-WHEELER Charles Opheim
Currently I am driving an OTR (over-the-road) 18-Wheeler. I have traded OEX & SPX in the past and for awhile I was successful. I cant currently do this trading. But eventually, when I have enough money saved I plan on getting back in to the game.
I realize I will need to refresh myself mentally. I read some of your information and I like what I see. I just have to prepare myself with some of the software and cash for trading.
Briefly, I was trading without a computer and calling my Broker from the road. Checking whether or not the market was up or down and making decisions based on that. Then buying Puts or Calls of the index and selling at 1/4 or more points. Sometimes, I couldnt get the 1/4, but that's the name of the game, isnt it? Enough on that.
For your information, I took $1,500 to $5,400 in two weeks. I basically was trading with the trend and when the market went contrary to this, I bought Puts or Calls knowing that it would eventually correct itself in about an hour or so. I was usually correct.
Got a little antsy knowing what I was seeing in the paper and not being able to play the market. Now it's just a matter of time before I get back in to trading. Thanks. WOW, I feel like a celebrity now.
Editor's Comment -- Isn't this great, an over-the-road trucker can daytrade successfully with no computer from the road and make $3,900 profit in 2-weeks! Perhaps this again reverts back to the principle of simplicity in your trading, a.k.a. "Occams Razor"
S&P TRADING, COSTS, STOPS & GANN COURSE - Gary A.
My CTCN Membership check is heading your way via mail. Sorry it has taken so long to get back to you but I have been negotiating with several of my clients, one of which I trade for now and hopefully soon will be trading for the other two as well. I trade the mini-S&P 500 and will soon go to the large S&P contract.
Started out with a full-service broker here locally, because I felt I needed the advice of an experienced broker. My day trading system is built to catch the small moves that happen more frequently. Consequently, trading the e-mini with a full-service broker at $50 a round-turn is not making my client very happy and the other two potential clients are also concerned about this.
Would be grateful if you could recommend a company for very fast execution of trades for the e-mini and for the large S&P, both of which I will be using depending upon market conditions that may suggest one over the other on any given day. My client mentioned that he doesn't think it's possible to place a stop loss on the electronic S&P mini when placing an order online and of course, he and I have to have stops.
It would seem that placing the e-mini would be faster because its electronic, but is placing a large S&P contract via an online order execution system about the same speed as calling a broker? It is my understanding that the large contract is still open-outcry and so it takes a certain amount of time whether done by phone or online--right?
Also, there is a company called NDX Trading here in Minneapolis who does direct access trading. Is direct access trading the best way to go in your experience?
P.S. Below is my short note as promised recommending your Gann Course I purchased last year. And my payment for membership to CTCN is heading your way via mail.
"I recommend CTCN's Gann Techniques Trading Course, having found Dave's Gann Trading Course very helpful and informative. His unique interpretation of Gann helped me to apply Gann's ideas to my own daytrading system in ways I had never considered.
One such way is the use of Gann Angles on small time frames in an unusual manner that was worth the price of the course just by itself. Also, it was helpful to see copies of Gann's own hand-drawn charts included in the course."
GREG DONIO'S SPREAD TRADING - Bill Costello
To (longtime valuable) CTCN contributor/author Mr. Greg Donio, I am in the process of reading each and every one of your articles on the Webtrading.com website. I am about to order your $75 options course, but before I do just one question please.
I was dead-set on concentrating on Butterfly Spreads until I came across your dedication to Calendar Spreads. As you know butterfly spreads can come cheap because of credit/debit reality. In addition, the take on butterfly spreads is that you positively can loose no more money than you input.
So my question is why do you not also tout butterfly spreads? Many thanks for exciting me once again about the possibility of profiting from option trading.
The only money I ever made in options was buying 3 seats on the Philadelphia Exchange (PHLX) for about $10K and selling them for $200K each!
Editor's Comment: GREG DONIO AND HIS OPTIONS COURSE - Yes, Greg is perhaps our longest running and most prolific trading article author. He is well known for his article from several years ago regarding how 90% winning trades are possible by following his unique options trading methodology.
We are somewhat concerned about Greg in that this is the longest time period he has gone without his long and interesting article submission and occasional phone calls from him.
Greg is from New York City and I believe had a broker in the vicinity of the World Trade Center he frequently visited. Therefore, we pray the Attack On America did not effect Greg. As our long time readers know, Greg was not computer literate and did not even own a computer or use email, so we can't email him.
We will try to contact him in another way and let you know the story in our next issue.
Gold Price - Irgold
Gold prices in real time are needed for the Hong Kong, London & New York markets. This site https://www.thebulliondesk.com updates gold prices every 3-minutes.
Could I ask you kindly to provide information regarding a website which enables me to have the gold prices less than 3-min apart, such as updates every 30 seconds or less.
If you can provide this information, I would likely become a paid club member. Thank you for your kind attention and will be waiting for your reply.
ABERRATION TRADING SYSTEM FEEDBACK WANTED - S.R.
I would like to request members' comments on the Aberration system, developed by Keith Fitschen at TradeSystems, Inc.
Nick Van Nices' Commodity Trend Service - C. Haas (A) - James (B) & J. Hayward (C)
(A) Does CTCN know what happened to Commodity Trend Service?
(B) I had a Future Market subscription for CTS, now they are gone. I am looking for a new charting service, also Elliot Wave chart.
(C) I don't know if you can help me but I'm based in London and used to subscribe to Nick Van Nices' CTS chart service. This enabled me to download each day, in PDF form, a daily bar chart of all the futures contracts, stock indices etc that appear in their weekly chart book. Unfortunately they seem to have ceased trading (closed-down?) and I am trying to find an alternative but similar service. I have tried CRB Futures but: a) they don't do PDF downloads of charts from their chart-book and; b) many of their charts are not full page (i.e. too small). They do offer a web-based service but I really prefer the type of charts that appear in chart books as they somehow seem bigger, better scaled and better for drawing trend-lines, Gann Angles and Boxes etc.
Do you know of any other companies that produce weekly chart books, ideally also on a daily downloadable pdf format? Commodity Trend Service was really good and its a big loss. Perhaps some of your CTCN/Ezine subscribers were also affected by their demise and may have found an alternative?
Browser Based Real-Time Charts - Kevin M.
I am trying to get real-time commodity charts, but they must be browser-based. I can not change my java settings or download from the internet. Is there a website that I can subscribe to which has real-time commodity charts, specifically 30-year T-bonds?
Must A Broker Comply To Close My Account By Wire Transfer? - Wayne M.
I faxed and emailed my broker telling him I wanted to close my account with him. I asked him to wire my credit union the money left after subtracting the wiring fee, and I sent him the wiring instructions which I had previously sent him and which he had previously used. How long can he wait before sending me my money? Can he decide to send me a check vice wiring me the money? Can I do anything to speed up the process. I have no open trades. Thanks. Wayne
Vantage Point Software Feedback - Ping Chu
Information request on VantagePoint Software please. A salesman of Vantage Point has spent a lot of effort providing information on how good that product is. Basically, Im almost convinced but I need third partys opinion. My friend told me that you are the best information source. As matter of facts, three years ago, I was a member of the old Club 3000.
If you have any feedback on the above requests, please Click-here and send the information to us.
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.
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