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Commodity Traders Club News

Commodity Traders Club News

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Published by Hall Of-fame

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Categories:Business/Law
Published by: Hall Of-fame on Aug 02, 2010
Copyright:Attribution Non-commercial

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10/25/2012

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Issue 1.Trading Discipline - Gerd Gwiss
I would like to introduce myself very briefly. I am involved in futures trading since 4-years. I am workingas a broker for half-a-year in Vienna, Austria. The topic I would like to discuss is a very old one:"Discipline"!I made a lot of trades in very different markets. My trading philosophy is basically 100% technical. I'm avery big fan of technical analysis and technical trading systems. My very special trading vehicle iscandlesticks combined with stochastics or sometimes a different oscillator, but I don't concentrate on theoscillators because they are more or less the same. I really concentrate on candles.I am also using Swing Catcher because I think it is a really excellent program, but I use it in connectionwith additional systems. Swing Catcher was the first software I used and I want to explain my experienceand show some big mistakes that I made.I received the software and installed it immediately. I had it run very quickly. The only problem I hadconcerned the data feed from CSI (Commodity Systems, Inc.), not due to CSI, but due to my modem. Atthis point, I want to thank Dave because he really supported me in an excellent way!I had a view at the performance of the last month and I was really surprised. I decided to trade the GermanDeutsche Mark and Swiss Franc futures (in low risk trading mode) because they showed a wonderful profit(the first nonsense, because these markets are highly correlated as I knew, but I was blind already seeingthe profit on my account).The first order was placed to buy DM. The dollar was around 1.49 and from the fundamental point of view,the buck was a buy but I decided to follow the system (that was ok).The dollar came down to 1.46 and my DM-position was perfect. One day after the long-DM, the systemcame up with a buy signal for SF and I decided to go long.I have to mention that it was ok because I strictly followed the system concerning entering the market andconcerning the stops.Both positions were winners, but on the same day the German Bundesbank crossed my trading plans. Bubawas intervening heavily by selling Deutsche Mark. I was stopped out on both positions with an absolutecrazy fill on the Swiss Franc.The DM locked in a profit due to an adjusted stop, but the loss in the SF was bigger and I suffered a netloss of about $1500. I was shocked. My account then showed a balance of $400 credit.Now I recognize my second stupid mistake: I simply overtraded my account. Two positions in highlyrelated currency futures in a $1900 account doesn't make sense!I stopped trading due to lack of money. As a poor student I could not afford to loose additional money.Iwatched the system and a friend traded some signals for his account.He made two loosing trades and then told me that the system is no good. After thinking about the wholeproblem, I came to the conclusion that he was absolutely wrong. He and I already made our third bigmistake. You have to follow a system strictly for a longer time and not stop trading after two loosing trades.These trades are simply not significant.Then we watched the following signals, which were excellent and resulted in big profits, but we had nopositions.
 
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My friend revised his opinion concerning the system very quickly and became a big fan. That was thefourth mistake, because these few winning trades were also not significant.He started to trade the signals again and although he would have made profit on the next trades, he actuallydid not because he did not follow the recommended stops!!! That was the fifth mistake. He generally is nofriend of stops, which is of course reflected in his account balance.After trading two years without using the system from the beginning of the before mentioned trade, he lostabout $75,000. Of course, the system was called no good again after doing the before mentioned last tradeusing the system but NOT using the recommend stop.That was the next big mistake. He always shifted his inability to make profit. Although it was obvious thathe made a wrong decision by not using the recommended stop, he said that the system is good for nothing.He then traded using his "feeling" and lost a lot of money. But of course, it was not his mistake. "Themarket reacted the wrong way," he told me, "they are playing against you with the target to get your hardearned money."I told him that this was by far the biggest nonsense I ever heard in my life and asked him why he does notstop trading if he knows this fact. He was not able to give an intelligent and satisfying answer. He is stilltrading and of course still loosing money.I won't continue, but believe me I could tell you a lot of stories which would make your hair stand.I really believe that a successful trader needs three things:1. Important - A trading system to find buy & sell signals that fits to the trader, which he is comfortablewith. (It need not necessarily mean a computerized system.)2. More Important - Money management techniques. That means you have to define your risk beforeentering a position and then place the stop and do not change it once the market is trading near the stoplevel. If you get stopped out, wait for the next signal to step in again, but do not alter the stop 20 times. Itdoes not make sense. Don't trade to big numbers in relation to the size of your account.3. Most Important - Discipline, discipline and discipline! Trade the signals as they occur. Use the stopsunder consideration of the risk you are willing to take and do nothing else! This "nothing else" is maybethe most complicated matter overall.The most successful traders are those who comply 100% to the system they are trading. If the system doesnot show the results you are looking for, choose or develop a different system with a new approach. Don'tmake the mistake of having a system and not complying with signals! If you can manage your mentalenvironment to follow these three points, you can bet on your trading success.
Amazing & Hard-to-believe it can happenComputer Problems - Peter Speck
I feel compelled to offer you an explanation of the predicaments/complications I've encountered during thepast two months chronologically:1. Late December 92 - Purchased Trendx2. Early January 93 - Purchased new 486/33MHZ/213MB etc, computer system and modem to run Trendx3. Early to mid-January 93 - a. Modem wouldn't function; b. Modem (FAX Type) would not connect toCSI; c. Computer store had incorrectly internally set jumpers wrong on initial set-up - hence modem wouldnot call out.
 
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4. Returned computer to store for investigation and repair of modem problem - after several days of trail/error, changes, etc. to no avail got modem operational (mid-January 93 plus 3-4 days)5. Retrieved computer from store - modem internal switches supposedly now operational and set correctly.However, CSI computer would not connect with my FAX modem and transfer data. After furtherconsultation and resetting some commands recommended by CSI, still no go.6. After several more frustrating days with numerous attempts with the FAX modem (FAX & commmodem more specifically). I finally removed the FAX/com modem and replaced it with a 1200 baud(commonly no FAX) modem I had at home. Low and behold, it worked and connected with CSI computerand downloaded data - a very bright day. (Now I'll not throw the $3,000 system out the window). (CSIindicated FAX TYPE MODEM wouldn't operate with CSI system).7. Several days TRENDX worked, getting signals following with my normal manual analysis in parallel togain insight as to TRENDX trading scheme. (One needs to do that daily to gain confidence before putting$$ on the line). Things were working for about a week. HAPPY!8. Very early February 93 weekend, Sunday, operating TRENDX for familiarity, reading manual, tryingdifferent options - all of a sudden everything shut down - Bottom Line - Lost HARD DISK - everything isgone - high degree of frustration. "I bought this system and software to save time. All it has cost me is $$and additional time devoted to get it operational, yet I still had to continue my manual analysis to keep upwith the markets."9. Took computer back to store - they replaced HARD DISK - assumed all was OK. I brought home andthen - modem which had worked, again would not operate. Several days of further consultation withcomputer store and CSI to try to get operational, ended in fruitless effort and failure.10. I had called Trendx, to inform him of my problems in obtaining old data and he indicated that he wouldsend me additional software updated parameters and data. Installed update upon receipt.11. Mid-February 93, I had to return computer to store to troubleshoot Modem not operating (note @9., Ipurchased a tape backup system, to backup all files, programs, data, etc., in case I again lost hard disk. Lossof all on hard disk results in insurmountable problems w/loss of data, software, etc. and time consuming toinstall everything). When hard disk replaced, several jumpers were not correctly installed/set, hence thereason the modem would not operate.12. February 12, 93 - I retrieved the computer from the store and supposedly all is OK. I had them checkoutoperations w/CSI and download data before taking system home. I'm very frustrated and tired of dismantling system. What a nightmare this has been, and I'm sure other obstacles lie ahead.I've only been able to operate the TRENDX program for about 1-week since I've received it. I've not madeone "DIME" so far, but I've spent >$4,000 for the system, software and data. The cost to me emotionallycannot possibly be valued and measured -but I am "fit to be tied."None of this is Trendx's "fault" all the circumstances of course are unfortunate. The hard disk failure isextremely unfortunate, but the other problems are human interface with components in the computer andlack of attention to details I'm sure, from people at the Computer Store. I'll have to chalk that up to "life" or"that's life." Quality of service is a rare commodity.
Back-Up and Hard Disks - Paul Kirchhoffer
I'd like to share a little story and say a few words about a nifty computer product that may be of interest tothe group:
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