<s> T R
A D E
S E C R E T S
The FourBiggestMistakesin FUTURES TRADING
J AY K A E P P E LD I R E C T O R O F R E S E A R C H , E SS E X T RA D I N G C O M PA N Y, LT D .
The Four Biggest Mistakes in Futures Trading 1
THE FOUR BIGGESTMISTAKES INFUTURES TRADING
B Y J AY K A E P P E L
Copyright © 2000 by Jay KaeppelPublished by Marketplace Books.All rights reserved.Reproduction or translation of any part of this workbeyond that permitted by section 107 or 108 of the 1976United States Copyright Act without the permission of thecopyright owner is unlawful. Requests for permission orfurther information should be addressed to the PermissionsDepartment at Traders’ Library.(Phone #800-272-2855 extension T155)This publication is designed to provide accurate andauthoritative information in regard to the subject mattercovered. It is sold with the understanding that neither theauthor nor the publisher is engaged in rendering legal,accounting, or other professional service. If legal adviceor other expert assistance is required, the services of acompetent professional person should be sought.From a Declaration of Principles jointly adopted bya Committee of the American Bar Association and aCommittee of Publishers.
This book, along with other books, are available atdiscounts that make it realistic to provide them asgifts to your customers, clients, and staff. For moreinformation on these long lasting, cost effectivepremiums, please call John Boyer at 800.424.4550or e-mail him at john@traderslibrary.com.
ISBN 1-883272-08-4Printed in the United States of America.
The Four Biggest Mistakes in Futures Trading 3
T
o Maggie, Jenny and Jimmy
d
S
pecial thanks to David and Suzanne
C o nThet eFournBiggestt s Mistakes in Futures Trading 5INTRODUCTIONThe Bad News, The Worse News, The Good News andThe Better NewsWhy So Many FailWhat Sets Futures Trading ApartAttacking From The Bottom Up Versus The Top DownOne Word of WarningTopics To Be Covered
1112345
MISTAKE #1: LACK OF A TRADING PLANWhat is Mistake #1Why Do Traders Make Mistake #1The Recipe For Trading Success(That Nobody Wants To Hear)How To Avoid Mistake #1The Litmus TestHow Much Capital Will You Commit To Futures TradingWhat Market or Markets Will You TradeWhat Type of Trading Time Frame Is Best For YouWhat Type of Trading Method Will You UseWhat Criteria Will You Use To Enter a TradeWhat Criteria Will You Use To Exit A Trade With A ProfitWhat Criteria Will You Use To Exit A Trade With A LossA Word Of Advice: Adhere to the Four CornerstonesGo With The TrendCut Your LossesLet Your Profits Run / Don’t Let Big Winners Get AwaySummary
101112131416202122232525262627
MISTAKE #2 : USING TOO MUCH LEVERAGEWhat is Mistake #2Understanding LeverageWhy Do Traders Make Mistake #2How To Avoid Mistake #2The Role of Mechanical Trading SystemsDetermining The Amount of Capital RequiredSingle Market Factor #1: Optimal fCalculating Optimal fSingle Market Factor #2: Largest Overnight GapSingle Market Factor #3: Maximum Drawdown
2929313435373737394043
778
6 The Four Biggest Mistakes in Futures TradingOne Caveat to Analyzing Trading System ResultsArriving at a Suggested Dollar Value Per ContractArriving at an “Aggressive” Suggested Account SizeArriving at a “Conservative” Suggested Account SizeArriving at an “Optimum” Suggested Account Sizefor Your PortfolioDigging a Little DeeperSummary
45464849505152
MISTAKE #3: FAILURE TO CONTROL RISKWhat is Mistake #3Why Do Traders Make Mistake #3How To Avoid Mistake #3Risk Control Method #1: DiversificationAmong Different MarketsRisk Control Method #2: Diversification AmongTrading Time Frames and MethodsRisk Control Method #3: Proper Account SizingRisk Control Method #4: Margin-to-Equity RatioRisk Control Method #5: Stop-Loss OrdersPlacing a Stop-Loss Order In the Market PlaceUsing Mental StopsNot Using Stop-Loss Orders At AllThe One Important Benefit of Stop-Loss OrdersSummary
636566696971737475
MISTAKE #4: LACK OF DISCIPLINEWhat is Mistake #4Why Do Traders Make Mistake #4How To Avoid Mistake #4Overcoming The IQ ObstacleA Word of Advice: Don’t Think, ReactAvoid Simple TrapsThe Cure for “Woulda, Shoulda, Coulda”System Development versus System “Tinkering”Asking The Right QuestionSummary
7777818283858789919396
CONCLUSION
98
APPENDIX A: Mathematical Formula for Standard DeviationStandard Deviations
103103
5555565860
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
INTRODUCTIONThe Bad News, The Worse News,The Good News and The Better NewsFirst the bad news: best estimates suggest that 90% ofindividuals who trade commodity futures lose money doingso. Now for the worse news: This estimate may be too low.The sad fact is that somewhere along the way the majorityof traders make one or more critical mistakes in theirtrading, which cause their losses to exceed their winnings.The good news is that the mistakes that cause most losingtraders to fail are quite common and readily identified.These mistakes will be detailed in this book. The betternews is that by being aware of the potential for makingthese mistakes and by taking steps to avoid them, you canmake a great leap towards becoming a more consistentlyprofitable trader. The information contained in this bookwill help you to become a more successful trader – notnecessarily by teaching you to be a “good” trader, but byteaching you how not to be a “bad” trader.
Why So Many FailTo generalize using the broadest stroke possible, the highrate of failure among futures traders can be attributedprimarily to three factors:
1
TRADE SECRETS
• The lure of easy money• The lure of excitement• An utter lack of preparedness to deal with the potentialdownsideUnfortunately, it seems that many individuals are lured intofutures trading for a lot of the wrong reasons. To drawan appropriate analogy regarding futures markets andfutures traders, consider the following scenario.Suppose someone offered anyone who shows up theopportunity to drive an Indy race car around the trackwith the promise that the person with the fastest time willreceive a $10,000,000 prize. Will a lot of people showup to take a shot? You bet. Will most of them be trulyprepared for what they are about to do? Not likely. Willsomeone win the $10,000,000? Of course. Will 90% ofthe drivers fail to make it to the finish line?Welcome to the exciting world of commodities speculation!
What Sets Futures Trading ApartThe staggering rate of failure among futures traders raisesseveral extremely relevant questions:1)What is it about futures trading that causes such a highpercentage of participants to fail?2)Is there a way to avoid the pitfalls that claim so manytraders?3)If the failure rate is so high, why does anybody bothertrading futures in the first place?
2
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
What is it about futures trading that causes so many peopleto fail? People who have been successful in every otherendeavor in life start trading futures and quickly watch theequity in their trading accounts vanish. Why is this? Theanswer is really very simple. It is because futures tradingis unlike any other endeavor in life. If this sounds like anoverstatement, rest assured it is not.There are several factors that set futures trading apart fromother forms of investment. To begin with, unlike the stockmarket, where rising prices can make any number of peoplericher, futures trading is a “zero sum” game. This meansthat for every dollar you make trading, somebody else islosing a dollar. If it is true that 90% of traders lose money,then we must conclude that a small minority of traders aremaking all the money at the expense of the vast majority.Secondly, the futures markets involve a great deal moreleverage than most other types of investments. To put itinto comparative terms, if the stock market were a race car,then the futures markets would be a rocket ship. While acar going 200 miles hour is certainly “fast,” its speed palesin comparison to that of a rocket ship traveling 3,000 milesan hour. Finally, futures trading offers speculators theopportunity to generate spectacularly exciting rates of return,far beyond those available from other forms of investment.Maybe that is part of the problem.
Attacking From The Bottom UpVersus The Top DownMany outstanding books have been written that focus onsuccessful traders and how they have achieved their
3
TRADE SECRETS
successes. There is much to be learned from these books.The only real problem with books that focus on successfultraders is the reader can come away with a false sense ofsecurity. People may assume that by emulating the greatesttraders around they can be just as successful. But is thata realistic expectation? Just because you know howsomeone else succeeded in a particular field of endeavordoes not necessarily mean that you can duplicate his or hersuccess. Just because you read a book about how WarrenBuffet selects stocks doesn’t mean that you are destined tobe as good at it as he is. Yet this is how a lot of peopleapproach investing. They read a book or look at an adthat tells them “how easy it is” to make money and lateron they are that much more surprised when they find outthat it is not so easy after all. There is much to be gainedby learning from and attempting to emulate traders whohave enjoyed a great deal of success. The danger is inassuming that you will enjoy the same type of successwithout paying some dues along the way.This book takes the opposite view. Instead of focusing onthe traits that allow 10% of futures traders to be successful,this book focuses on the most common and costliest pitfallsthat claim the 90% of traders who lose money. Considerthis the “how not to” lesson. By avoiding the mistakesdetailed in this book you clear your path of the majorobstacles that doom the majority of futures traders tofailure.
4
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
One Word of WarningIf you are presently trading futures unsuccessfully or havedone so in the past, you may be about to take a cold, hardlook in the mirror and you may not like what you see.But as with anything else that might cause you to look inthe mirror, the most important question to answer is not“do I like what I see?” The more important question toanswer is “if I don’t like what I see, am I willing to changemy ways?” Generating a positive response to this question,as well as offering some guidance as to where to start, isthe primary purpose of this book.
Topics To Be CoveredI.
The Four Biggest Mistakes In Futures Trading1. Lack of a Trading Plan2. Using Too Much Leverage3. Failure to Control Risk4. Lack of Discipline
II.
Why Do Traders Make This Mistake
III. How To Avoid This MistakeFor each of the four biggest mistakes in futures trading wewill first discuss what the mistake is. We will then examineand try to explain why it is so common for traders to makethis mistake and why doing so causes traders to lose money.Finally, the last portion of each section will try to offersome guidance as to how an alert trader can catch himselfbefore he makes these mistakes and how to avoid themaltogether in the future.
5
TRADE SECRETS
6
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
MISTAKE #1Lack of aTrading PlanWhat is Mistake #1Fortunately, for the purposes of illustrating Mistake #1,there is a perfect analogy. Consider the following scenario.You hear others talk of a business with low barriers to entryand in which some individuals are getting rich beyondanyone’s wildest dreams. After some consideration youdecide to take the plunge and engage in that businessyourself. It is a fair assumption that you will begin to dosome planning before engaging in that business. In fact,if you are at all prudent the chances are great that you willdo a lot of planning before diving in. Furthermore, duringthe planning process you may learn things that you did notknow at the outset that could affect your business, and youwill build in contingency plans to account for these factorsas well.If you are like most people, and if you truly desire tosucceed, you may find yourself becoming consumed by thedepth and breadth of your planning. You may take pride7
TRADE SECRETS
in your efforts, and the extent of your preparation mayhelp you to build confidence in yourself and your chancesfor success. Finally, after much soul-searching andcountless hours of planning and preparation, you take theplunge and attempt to succeed in your new business. Thereis nothing surprising in any of this. It happens all the timeand is simply the way that people go about making theirfortune.Except when it comes to futures trading.In futures trading, a surprisingly high percentage of tradersenter the markets without the slightest idea as to how theyplan to succeed in the long run. Very few traders begintrading only after they have carefully thought through andplanned their foray into the “exciting world of commoditiesspeculation.” Most are so anxious to get started that theyjust don’t take the time to make the proper preparations.This phenomenon alone goes a very long way towardsexplaining the high rate of failure among futures traders.
Why Do Traders Make Mistake #1The answer to the question “why do traders make thismistake” could probably apply to all of the mistakes in thisbook. The primary cause of Mistake #1 is simply the lureof easy money. The underlying thought seems to be “whybother wasting a lot of time planning; why not start gettingrich right away?” This is understandable. There isprobably not a soul on this earth who works for a livingwho has never once dreamed of making some huge sumof money quickly and easily and then living a life of spoiledluxury from that day forward. And the fact of the matter8
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
is that futures trading offers just that possibility (which isexactly what makes futures trading so alluring, yet sodangerous).Consider these success stories:• In a trading contest in 1987, Larry Williams ran $10,000up to $1.1 million dollars in less than a year.• Michael Marcus started with a trading account of $30,000and over a period of years garnered over $80 million inprofits.• Richard Dennis became a legendary trader in the grainpits in Chicago in the 1970’s. Starting with a reported$400, Dennis ran it up to over $200 million dollars (hisfather is reported to have made one of the greatestunderstatements of all time when he said, “Richie did apretty good job of running up that $400 bucks”).Let’s face it; these numbers are staggering. Who in theirright mind wouldn’t want to achieve the kind of success thatthese individuals have? Unfortunately, most individuals tendto focus not on the “achieving” part of the process, butrather the “post-achievement” period. In other words, ifyou asked the question “could you imagine having thismuch success trading futures,” most people would not beginmentally drawing up plans as to how they would tradesoybeans. Quite the opposite. Most people would startdrawing up a mental laundry list of all the things they coulddo with the money. The “doing” part is not nearly as sexyas the “done” part.What is missed in this kind of thinking is the reality of thesituation. Like all top professionals in any business,successful traders, including the aforementioned individuals,are not lucky. They made mistakes, they paid for their9
TRADE SECRETS
mistakes, they learned from their mistakes, they learnedwhat was required in order to succeed, and they did thosethings no matter how difficult they were.• In 1973 Larry Williams published a book titled “How IMade One Million Dollars Last Year Trading Commodities”detailing his trading success that year. The next year helost the million dollars.• Michael Marcus started with $30,000, borrowed another$20,000 from his mother and then proceeded to lose 84%of their combined capital (imagine trying explain that toyour Mom) before becoming a successful trader.• In 1987 several commodity funds managed by RichardDennis lost 50% of their capital and were forced to stoptrading.The moral of the store is even the most successful traderssuffer tremendously from time to time. You will too. Thereal question is “how will you react?”One of the greatest dangers in futures trading is the dangerof high expectations. By focusing optimistically on howmuch money he or she is going to make, a trader caneasily overlook the more important task of planning outhow to deal with all of the bad things that he or she willinevitably experience. If you are walking down the streetand you trip and fall that is one thing. But, if you arestanding on a mountaintop and you trip and fall that issomething entirely different. And if you aren’t even awarethat you are standing on a mountaintop and you trip andfall, then the only words that apply are “look out below!”Traders who focus too much attention on how much moneythey might make run a very high risk of a frightening slidedown a steep slope.10
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
The Recipe For Trading Success(That Nobody WantsTo Hear)As with any other endeavor, successful futures tradingrequires a great deal of hard work. There is hard workinvolved in planning and there is hard work involved infollowing the plan. In the case of futures trading “hardwork” more often takes the form of making and followingthrough on difficult decisions, rather than on any type ofactual physical chore. If you hope to be a successful traderyou must be prepared to pay the price. The first stepbegins with developing a well thought out trading plan thatcovers all of the key elements involved.
How To Avoid Mistake #1The only way to avoid Mistake #1 is to devote as muchtime, effort and energy as needed to develop a trading planthat addresses all of the key elements of trading success,all the while knowing full well that doing so does NOTguarantee your success. This daunting task moves futurestrading back from the realm of fantasy squarely into therealm of reality. Your plan will serve as your road mapto guide you through the twists and turns that the marketswill throw at you.There are many factors to be considered before one delvesinto futures trading and which need to be revisited andpossibly revised as your experience and expertise grow. Yetfor far too many individuals these issues are dealt with onan “as needed” basis, usually when there is money on theline, and usually when money is being lost. This is exactlythe wrong time to be making critical decisions because they
11
TRADE SECRETS
are more often than not based on emotion rather than onsound thinking. In developing a trading plan there aremany questions to be answered and many different possibleanswers.
The Litmus TestThe first question to be answered is not “how should youtrade futures?” The first question to be answered is“should you trade futures in the first place?” One of thekeys to success in futures trading is being able to risk someamount of money which, if lost, will not adversely affectyour lifestyle. In order to assess your level of readinessin this regard, you should take the following test which willtell you if you are truly prepared emotionally andfinancially to trade futures.Step 1. Go to your bank on a windy day.Step 2. Withdraw a minimum of $10,000 in cash.Step 3. Walk outside and with both hands starting throwingyour money up into the air.Step 4. After all of the money has blown away, go homeand sit down in your favorite chair and calmly say,“Gosh that was foolish. I wish I hadn’t done that.”Step 5. Get on with your life.If you actually can pass this test then you truly areprepared, both emotionally and financially, to trade futures.If you cannot pass this test then at the very least you needto go into it with your eyes wide open (you may also takesome comfort in knowing that most new traders cannot passthis test at the time they start trading). Once you have
12
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
decided to go ahead and trade futures there are a numberof issues that need to be addressed.
How Much Capital Will You Commit To Futures TradingIf anyone asks you “what is the easiest way to make amillion dollars trading futures,” the answer is “start withtwo million.” All kidding aside this is unquestionably a truestatement. The more capital you can afford to lose withoutadversely affecting your lifestyle, the greater the likelihoodthat you will be successful. More initial capital affords yougreater flexibility and more cushion when the inevitable badperiods occur. This is so simply because having morecapital that you can afford to lose reduces your emotionalattachment to the money.Emotional attachment to money is deadly. Ask successfultraders about the money in their trading account and almostalways they will say “I don’t think of it as money.”Actually, thinking of it as money is not the worst thing.The worst situation is when a trader looks at the moneyin his trading account not as money, but as all of the thingshe could buy with that money. If you find yourself aftera winning trade saying “well now I can buy this or that,”or after a losing trade saying “well now I can’t buy thisor I can’t buy that,” you are in grave danger.After you make the decision to trade futures the next stepis to decide how much money you can realistically affordto risk. If you are going to open and trade your ownaccount it is recommended that the absolute bare minimumaccount you should open is $10,000. A commonsuggestion to traders is that you should always try to limit13
TRADE SECRETS
your risk on a single trade to an absolute maximum of 5%of your trading capital (and ideally a lot less). If you opena $10,000 account this means that you can only risk $500per trade. In most futures markets this would beconsidered a fairly “tight stop.” So if your timing is notexactly right you will likely get stopped out on a fairlyregular basis. This is another reason why “more is better”when it comes to starting capital.Whatever amount you decide to commit, you should placethe entire amount into your brokerage account. Foraccounts greater than $10,000 you can buy T-Bills with aportion of your capital in order to earn interest. If youdecide to commit $25,000 then you should place the entire$25,000 into your brokerage account. You may alsodecide that if you lose say 50% of your capital, you willstop trading. This may lead some traders to say “well ifI’m only going to risk $12,500 I’ll just put that amountinto my account.” This is a mistake. In the worst casescenario it is a very different situation to be trading a$15,000 account that started out as a $25,000 accountthan to be trading a $2,500 account that started out as a$12,500 account. Once your account dips under a certainlevel your flexibility is so limited that it is essentially likepiloting a plane in a death spiral. You are at the controlsbut you are no longer in control. One of the truest maximsin trading is “if you absolutely, positively cannot afford tolose any more money, you absolutely, positively will losemore money.” Don’t doubt this one for a second. Thinkseriously about how much you can truly afford to commitand then commit the entire amount.
14
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
What Market or Markets Will You TradeThe next decision is whether to specialize in one marketor to diversify across different markets. This is a verypersonal choice. At first glance it would seem easier tofocus all of your attention on a single market. However,there are pitfalls to such an approach. First, it is extremelydifficult to always make money in any single market. Soif you trade only one market and you go into a bad periodof trading, you have no other avenues for offsetting yourlosses as you might if you were to trade a diversifiedportfolio of markets. Secondly, experience has shown thatthe majority of traders who have successfully specialized inone market are floor traders who actually “make amarket” in that commodity. A little explanation is requiredin order to understand the benefit they enjoy.If you want to place an order in a particular market, youcan call your broker and ask for the latest “bid” and “ask”prices for that market. If you are trading SeptemberSoybeans for instance, he may tell you “the bid is 510, theask is 510 ˘.” This seemingly tiny spread has significantimplications. What it means is that if you immediately placea market order to buy September Soybeans you will buythem at 510 ˘. If you immediately place a market orderto sell September Soybeans you will sell them at 510. Theperson on the other side of this trade is the “marketmaker,” who is the individual who sets a bid and ask level(in reality it is not just one individual). In essence, for the“privilege” of getting a fill you are giving up a ˘ point,or $12.50 on one contract in this example. In other words,if the bid and ask are 510 and 510 ˘ respectively, andan order to buy comes into the market, the market maker15
TRADE SECRETS
stands ready to sell at 510 ˘. If an order to sell comesin the market maker stands ready to buy at 510. The retailtrader pays the difference between the bid and the ask andthe market maker pockets the difference. In theory, thedifference between the bid and ask is a risk premiumintended to give market makers some inducement toassume the risk of making markets.The purpose of this discussion regarding bid and ask pricesis to illustrate why traders who successfully specialize in onlyone market are usually market makers and not retailtraders. Simply stated, they have an “edge” by virtue ofbeing able to buy at the bid and sell at the ask. The retailtrader never buys at the bid nor sells at the ask. If youplan to be a market maker or if you truly feel you havesome type of edge in a particular market, fine, just tradethat market. Otherwise, it is suggested that you trade aportfolio of at least three markets.
What Type of Trading Time Frame Is Best For YouThe phrase “trading time frame” refers to the length oftime that you generally plan to hold trades. Will you tradeshort-term, long-term or somewhere in between? Also,what is your definition of short-term, long-term, etc.? Thisis a critical decision as each individual has a differenttemperament for risk. It is essential to trade in a mannerthat fits your own personality. If you have trouble holdingon to a trade for more than a few days it makes little senseto use a long-term trading approach. The aforementionedmarket maker (buying at the bid and selling at the ask) mayoften hold a trade for as little as 10 seconds (buying 20Soybean contracts at 510 and 10 seconds later selling 2016
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
contracts at 510 ˘ yields a $250 profit). There are offfloor traders who trade in and out using anywhere from1-minute to 5-minute bar charts. They are often daytraders who are always flat by the end of the day. On theother end of the spectrum, there are traders who might usefundamental information or monthly bar charts to trade.These traders focus their attention entirely on long termtrends. And in between there are trend-followers, countertrend traders, traders using Gann, Elliot Wave, volatilitybreakouts, moving averages, etc., etc.Day traders will tell you that day trading is the best wayto trade and will give you very good reasons why theybelieve this is so. Trend-followers will tell you that trendfollowing is the only way to go, and so on and so forth.The bottom line is simply this: No matter what anyone tellsyou, there is no one best way to trade. You must identifythe approach that is best suited for you personally. If youcan’t follow the markets all day, then it is unrealistic toexpect to be a successful day trader. Let me give you areal-life example.A pediatrician decided to day trade the S&P 500. At first,he would run back to his office between appointments andcheck the quote screen and perhaps make a trade, beforerushing to his next appointment. As the losses began tomount he would start saying “excuse me for a minute”during appointments to go check the quotes. Eventuallyhe started running late to appointments or would leaveappointments and not come back for 5 to 10 minutes whilehe tried to trade his way back to profitability. Would itsurprise you to learn that he lost money, stopped day
17
TRADE SECRETS
trading the S&P and had to do a lot of apologizing to retaina good portion of his clientele? Probably not. Inretrospect this was clearly a recipe for disaster. In thiscase, the lure of easy money—the idea that he would “tradein and out” a few times a day and pick up some extracash—was so enticing to this individual that he made themistake of not acknowledging to himself that his schedulewas simply not suitable for day trading.The purpose of this example is not to denigrate day trading(nor day-trading pediatricians). The real point is this: ifyou took a very successful day trader and forced him totrade only once a month using fundamental information hewould no longer be a successful trader. Likewise if youtook a successful long-term trend-follower and forced himto trade 15 times a day he too would be like a fish out ofwater and he would no longer be a successful trader.When starting out, making a well thought out decisionregarding the trading time frame is critical. Also, if youhave traded for awhile with little or no success it may betime to look at altering your trading approach to use ashorter or longer time frame. The bottom line is that thereis no inherent advantage to trading more often or lessoften. The question to be answered is simply to determinewhich approach works best for you.To get a feel for the differences in a possible trading timeframe, examine Figures 1-1, 1-2 and 1-3. Each figuredisplays the price action of T-Bond futures over a three anda half month period. The only difference is that eachdepicts the trading action using a different trading system,one long-term, one intermediate-term and one short-term.
18
THE FOUR BIGGEST MISTAKES IN FUTURES TRADING
On the graphs, an up arrow indicates buying, a down arrowindicates selling, and small diamonds indicate stop-lossstops. Trading the same market, the long-term systemmade 2 trades, the intermediate-term system made 9trades and the short-term system made 24 trades.Figure 1-1 – Long-Term Trading Method
Courtesy: Futures Pro by Essex Trading Co., Ltd.Figure 1-2 – Intermediate-Term Trading Method
Courtesy: Futures Pro by Essex Trading Co., Ltd.
19
TRADE SECRETS
Figure 1-3 – Short-Term