I have labored long to find a solution to this ostrichsyndrome that afflicts so many traders. I realize that the samemethods and techniques will not be sufficient for all traders.While a great deal can be said for books, tapes, seminars,group therapy and one-on-one therapy, these methods donot guarantee success no matter how strongly their propo-nents extol the virtues of their methods.
How You Can Benefit fromTrader Psychology
After many years as a trader and an observer of traderbehavior in the futures markets, lam convinced that a tradermust know which behaviors must be changed to achieveconsistent success. A trader must also know which newbehaviors must be learned to replace dysfunctional or nega-tive behaviors.4 ¢ Market Masters
Knowledge from the Experts
While I could easily bend your ear with lists of sugges-tions and observations, I think that the better approach is toshare with you the knowledge I have acquired through theanalysis of a series of interviews with individuals who arerespected for their achievements in the stock and futuresindustries. In futures trading, as in most endeavors, nothingsucceeds like success. The key is to isolate what constitutessuccess and to learn from the triumphs of others as well asfrom one’s own achievements.
han
The key is to isolate what constitutessuccess and to learn from the triumphsof others as well as from one’s ownachievements.
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The Trader’s Worst Enemy
Theidea for this book originated many years ago but wasnot developed until recently because of my belief that trad-ers would eventually find their own way and improve theirability to profit consistently from the markets. Time hasproven me wrong. Time has shown me that for one reason oranother, traders and investors continue to trip on their own emo-tions and fail as a result of their own shortcomings. Sad but true,the trader’s worst enemy is, has always been and probablyalways will be his or her own self. [have observed hundreds,perhaps thousands, of occasions when traders have takeneffective trading systems, outstanding recommendations,highly successful advice and otherwise solid analytical in-formation, and used them not only ineffectively but todistinct disadvantage. If this had occurred infrequently
1/ The Market Masters 5
or accidentally, I could write off my observations to chance.However, the pervasiveness and repetitiveness of such be-havior in virtually every individual at one time or anotherhas lead me to conclude that as an experienced trader I musttry to rectify the situation or at the very least improve it.
a
... traders and investors continue totrip on their own emotions and fail asa result of their own shortcomings.
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A New Focus
Before writing this book, I focused on recognizing, ana-lyzing, eliminating and replacing behaviors that limit per-formance in the market. Though I have received manyletters and telephone calls through the years praising myefforts and thanking me for results achieved due to myinformation, it is still not enough.
At this juncture, the best approach is a positive one thatfocuses on recognizing and accentuating behaviors thathave facilitated the success of others. Why not study suc-cessful market analysts and traders to determine preciselywhat they have done, either externally through behavior orinternally through thought processes or attitudes, to suc-ceed at speculation and investing, two of the most difficultundertakings that traders and investors can attempt?
The Interviews
Who should I interview? I avoided interviewing mar-ket professionals who have already been featured in bookssuch as Jack Schwager’s Market Wizards. Rather, I searchedfor individuals whose experiences, understandings and6 Market Masters
insights can be used effectively by futures and stock tradersinasmuch as their perspectives are somewhat different,given their varied positions in the futures industry. Further-more, I chose individuals who I have known personallyeither as colleagues or as business associates.
George Angell
George Angell is highly skilled in technical analysis. Hisextensive experience as a floor trader, day trader and spreadtrader offers valuable insights to newcomers and seasonedtraders alike. George's personal experiences during his yearsof trading can serve all of us well.
Gerald Appel
Gerald Appel is known as the father of moving averageconvergence divergence (MACD), an indicator he developedfor the purpose of trading stock index futures. He is anaccomplished professional trader who has achieved boththe respect and recognition of his peers as a highly disci-plined and innovative trader. He brings to Market Mastershis skill, insights and observations.
Bruce Babcock
As “watchdog” of the futures advisory industry, Brucehas seenall too many traders, systems, advisers and hotlinescome and go. Bruce is an active trader and devoted re-searcher. As long as I have known Bruce (at least ten yearsnow), he has been direct, analytical and deeply dedicated tohis workas well as his trading. His observations and insightsare offered herein with the hope that you will find them asvaluable as I have.
George Lane
George is the father of stochastics. He is indeed the fore-most authority on stochastics and a keen observer of futurestrading and futures traders. I have known and respected
1/ The Market Masters @ 7
George for more than 20 years. Few individuals can matchhis level of expertise or, for that matter, his iconoclastic,“shoot from the hip” style. He is indeed the granddaddy offutures trading with much to offer.
Conrad Leslie
Conrad Leslie and I go back many years as players in thesame difficult game. Yet Conrad has experienced muchmore than I have in terms of fundamental research. His roleas an authority on crop forecasting has not prevented himfrom growing both philosophically as well as technically.Conrad can teach us a great deal—all we need do is to listenand act accordingly.
Robert Prechter
linterviewed Robert Prechter of the Elliott Wave Theorist,aman] have known for many years and one for whom I havegreat respect as an individual doggedly dedicated to hisanalytical methodology. For years, | have felt that Bob’sknowledge of trader psychology is perhaps equal to, if notgreater than, his vast achievements as a market technician.I had been convinced that the Elliott Wave, Bob’s lifework,is primarily an emotionally inspired pattern, and his inter-view confirmed my belief. My questions to Bob thereforefocused precisely on his understandings of market psychol-ogy with only passing mention of his preeminence as anElliott Wave analyst.
Welles Wilder
Welles Wilder is known throughout the world for hisdevelopment of numerous trading methods, as well as therelative strength indicator (RSI), which has become synony-mous with Wilder's name. In the early 1980s, Welles and I,along with a group of other traders and analysts, toured theFar East presenting a series of futures trading seminars. Irecognized Welles’s true talent asa trader, and I admired his8 Market Masters
ability to remain detached, calculatedly analytical and ex-ceptionally realistic about the markets.
Larry Williams
Larry Williams has found himself in the midst of numer-ous controversies through the years, many of which havecentered around his aggressive promotion of trading sys-tems and seminars. Quite candidly, as Larry will be the firstto admit, he is a hero to many and a villain to others. I willalways remember Larry’s aplomb and confidence as hemethodically parlayed $10,000 to well over $2 million in theRobbins World Cup of Futures Trading Championship,only then to give back about $1 million before the contestended.
Larry has been a great contributor to futures and stocktrading not only in terms of techniques and methodologiesbut as an individual whose approach to futures trading must serveas a model to all traders aspiring to succeed.
The Elements of Success
Tam fortunate, indeed gratified, that these individualsagreed to be part of Market Masters. | know that their contri-butions will be appreciated by every reader.
My hope is that the analyses that follow each interview,as well as the overall analysis of the interviews collectively,will help pinpoint specific areas of commonality among theexperts interviewed so that you can extract and eventuallydevelop within yourself the personal skills that have facili-tated the success of these well-known individuals. You willnote that the people interviewed for this book have dis-tinctly different backgrounds and substantially diversepoints of view about most matters, yet they share in com-mon elements that I feel are inherent to successful tradersand analysts.
Offered herein are the quintessential elements of successas a trader or as an investor, and I urge you to explore,
1/ The Market Masters ¢ 9
understand and integrate them into your trading approachso that they may facilitate and enhance your success as theyhave done for so many other traders and investors.
Methodology, Assumptions and Techniques
My interview techniques were simple. To obtain thegreatest amount of useful information from each individ-ual, my questions were as general and open-ended as pos-sible. In some instances questions related to the individual'smethods or achievements and therefore were more specific.The general list of questions were as follows:
« What precipitated your desire to trade, and when?
« What qualities do you feel contributed most to yoursuccess as a trader?
¢ Do you use specific techniques for coping with losses?
¢ Estimate what percentage of a trader’s success is a directresult of a good system as opposed to trading skills.What would be the split?
« What is the greatest lesson you learned in your life as atrader?
¢ Do you feel your success was inspired by any famoustraders? If so, who, and how so?
¢ Areyouintouch withany specific experiences that either
facilitated or inhibited your trading success?
Do you have any favorite techniques for emotionally
dealing with periods of drawdown?
¢ Whatadvice would you give to new traders interested inusing some of your techniques?
a
Some questions were altered to accommodate specificinterests of the individuals being interviewed; however, forthe most part, this is the core of questions presented. Acomplete list of questions is included with each interview.10 # Market Masters
My GoalsMy goals in each interview were as follows:
¢ To extract as much information as possible on the sub-jects covered.
¢ To obtain answers that were as specific as possible inrelation to each question.
« To engage each expert in a thought process that wouldyield responses meaningful to my readers.
« To provide responses that would lend themselves to anoverall analysis to ascertain any common elements orlack thereof among our different experts.
Assumptions
Although I entered into the interviews with certainbasic assumptions regarding what I might find, I allowedfor the option of changing them if I should discover that myoriginal assumptions were incorrect. Some of my moresignificant assumptions follow:
¢« Common elements among the experts would exist notonly in the areas of emotional response to the marketsbut in areas of discipline and experience as well.
¢ The experts would agree generally as to the importanceof psychological issues in forming successful traderbehavior.
¢ Most experts would attribute their success to the samebasic qualities.
¢ The experts would share similar learning experiences inthe markets that helped shape their successes.
Format
To evaluate the interviews objectively, each interviewchapter has the following format:
« Anentire chapter is devoted to each interview.
1/ The Market Masters ¢ 11
« Each chapter begins with a brief biography of the indi-vidual, as given to us during the interview.
« Each response is evaluated in terms of common elementsin the following general areas.
Similarity of experiences. Were any experiences importantin shaping attitudes, behaviors and expectations? If so, howwere they similar? If not, how were they different? What canbe concluded about the experiences that shape winningbehaviors?
Similarities and/or differences in attitudes and opinions. Howdo the attitudes and opinions of each individual compare toone another? Are there common elements?
Methods of dealing with emotion. What methods does theindividual use in dealing with emotional responses to vari-ous market conditions and events? How are these similar toor different from those of other experts interviewed?
Recommendations to other traders. What general recom-mendations are given to other traders by our experts to helpthem achieve and maintain trading success?
Importance of a trading system. How important does theexpert feel a trading system is in the overall attainment ofsuccess as a trader?
Evaluation
After the presentation and discussion of the interviews,you will find an evaluation of the important common ele-ments and differences to determine what can be learnedfrom the experts’ experiences. You will also find specificsuggestions in every major area of investor and traderbehavior.
The Chosen Few
You may wonder why I interviewed market analystsand traders as opposed to interviewing only traders.My goal in writing this bookis to assess particular behaviors12 @ Market Masters
and attitudes within a concise theoretical framework. Theindividuals selected are, in many cases, public figures andtherefore easily identified with. Given my many years oftraining and experience as a psychologist, I felt that mymethod of analysis would be quite meaningful to traders ona personal level.
My reasons for selecting these individuals are as follows:
¢ They are known by traders throughout the world andhave achieved a significant public following of theirwork during the years.
¢ Given their lengthy experience, both in market method-ology and as traders, these individuals are in a betterposition to identify with the “average” trader than arethose who strictly trade or manage money. They havehad significant contact with the trading public and arefamiliar with the problems that face most traders today.
« They have experienced many different types of marketenvironments through the years and by virtue of theirlongevity are capable of expressing meaningful opin-ions derived from their vast experiences.
¢ It is important to understand the psychology of thosewho have had more ups and downs, more trials andtribulations than have money managers who becameovernight successes or who were not subjected to asmuch adversity.
Open to Change
To truly master trading, an individual must be open toevaluation and change, and to adjustment if necessary,based on the observations and recommendations of thosewho have been successful over time. Herein lies the key tobetter trader understanding and learning and, as a result, toprofits.
1/ The Market Masters ¢ 13
Perhaps the single most important fact that enduresthroughout the lifetime of the trader is that much of whattranspires in the stock and futures markets is totally unre-lated to the systems or methods that have been chosen forthe purpose of market timing. Even the most inexperiencedspeculators or investors soon discover that the emotionaland psychological makeup of traders is more significant inthe equation for success than is any single method of analy-sis, system or timing indicator. The millions of dollars(possibly billions) spent annually in the development ofmore effective timing techniques are, in the final analysis,wasted unless their costly conclusions can be translated intodefinitive market action in a consistent, disciplined fashion.
Successful Trading
Successful traders and investors are known to possesscertain qualities that facilitate and enhance their achieve-ments in the markets. While some may argue that theseindividuals were born to be successful, this is in fact not thecase. More often than not, success is achieved by trial anderror with few overnight rags-to-riches stories. Successfulindividuals in virtually any field will tell you that it tookthem years to be “overnight successes.”
a
Successful traders and investors areknown to possess certain qualities thatfacilitate and enhance their achieve-
ments in the markets.
w
Human behavior is so complex that determining whichelements, behaviors or learning experiences are most im-portant to achieving successful investing is exceptionally14 ¢ Market Masters
difficult, if not impossible. Ultimately, as observers or evenas social scientists, we have no choice but to judge the inputson the basis of the outputs. In other words, we can onlysurmise and conjecture as to the quintessential ingredientsthat constitute successful investing, speculation and trad-ing. But, before we delve too deeply into this subject, themore fundamental question is: Why should we be concernedabout these issues?
ro
Bernstein’s BuildingBlocks to Success
 
During my years as a futures trader, I have made per-haps 10,000 to 15,000 trades in the markets. Yet I am stilllearning; Every trade is another lesson no matter how smallthat lesson may be; every trade is a challenge no matter howmajor or minor the task; and every trade is as likely to be aloss as it is a profit. It’s not that I haven't learned a great dealas a trader, but rather that there is so much to learn, it makeswhat I have learned seem small in comparison.
Actually, only a few things must be learned, but literallythousands of behaviors must be unlearned if success is tofollow. A trader can do many things wrong and so very fewright! The trader must constantly watch for weaknesses andreflexive responses that inhibit success and ensure failure.Consequently, the relationship between the trader and themarkets is a never-ending learning process. This has cer-tainly been true in my case!
1516 ¢ Market Masters
The Constant Struggle
1 often wonder whether this fact of market life means thatthe skill of trading can never be totally learned or that thelearning process will never end. For many years, I refused toaccept the possibility that trading would be a lifelong strug-gle. I refused to admit that I must forever be on guard toavoid what Jesse Livermore called “the constant enemiesstruggling from within . . . fear and greed.”
As I gained trading experience, I expected my task tobecomeless difficult, more predictable, less anxiety-provok-ing, more tolerable and, above all, more profitable. How-ever, I have learned through long, hard experience that thisis not always true. The process of becoming a successful trader isindeed without end. No trader is immune to the possibilityof a psychologically motivated error in judgment. No trad-er can constantly win, rarely lose or live his or her trad-ing life in an eternal uptrend. Trading is a stepwise processthat generally proceeds in a two-steps-forward, one-step-back fashion.
a,
Trading is a stepwise process thatgenerally proceeds in a two-steps-forward, one-step-back fashion.
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Trials and Tribulations
If I were alone in my trials and tribulations as a trader,the pain of suffering failures would certainly be more in-tense and interpreted more personally. However, manytraders find themselves in the significantly worse situationof being unable to profit consistently from their experiences
2 / Bernstein's Building Blocks to Success @ 17
in spite of “following all the rules.” Unfortunately, mosttraders are not aware of the rules that lead to success, notdisciplined enough to follow the rules if they know them orunable to understand why they lose when they lose. Hereinrests the heart of the matter.
More to Futures than Expected
My education and experience as a clinical psychologistfrom 1968 through 1982 convinced me that there is more tofutures trading and investing than any of us suspect, eventhose of us with years of experience in this venture. For alltoo many years, traders have wondered why there is suchadisparity in trading results even among those who followthe same systems and methods. Why can two traders, eachwith the same amount of starting capital, the same basictrading philosophy and the same computer and/or quota-tion system, produce such markedly different results to theextent that one may win while the other may lose? Thesimple fact is undeniably: Human behavior, as learned throughlife’s myriad experiences, life's failures and successes, shapesattitudes and opinions, thereby mediating action.
The ability to perceive market opportunities and, aboveall, to act upon such opportunities without the hindrance ofpsychological or behavioral restraints distinguishes win-ners from losers. Winners not only act differently thanlosers, but the process that ultimately results in action is alsodistinctly different for winners than it is for losers. Integralaspects of the process are such factors as perception, atti-tude, interpretation of reality as well as the ability to consis-tently formulate and implement plans.
Three Building Blocks
Although some traders will vehemently disagree withme, I have concluded that profitable trading and investingdepend on the following three variables (not necessarily inorder of importance):18 ¢ Market Masters
1. A trading system, method or indicator that has shownconsistency and profitability both in historical back-testing and in real time for a significant length of timeor for a significant number of trades. A significantnumber of trades is defined as at least several hundredtrades. A significant length of time is defined as at leastfive years and preferably five years in different types ofmarkets (e.g., bull market, bear market, sideways mar-ket, etc.). Yet, as you will see from the interviews thatfollow, most recognized trading authorities place moreemphasis on the trader than on the system. The systemis important but not of primary significance.
2. Discipline. Discipline is the ability to formulate andplan, to implement that plan with nearly 100 percentconsistency. I will discuss this aspect in great detail inChapter 12.
3. The ability to cope with losses. Although winning inthemarket hasits attendant demons, losing isa much greaterevil. Losses are the precursors as well as the correlate ofliterally hundreds of potential trading blunders, not theleast of which is the trader’s unwillingness to follow thesystem that produced the losses. Because systems taketime to perform, the trader who abandons a system oftendoes so prematurely, frequently just before the systemwould have started to perform as it did in back-testing.Traders must work through losses without abandoningtheir system(s) if success is to follow.
The ability to integrate these variables into an overall responsestyle or trading approach is ultimately what separates winningtraders from losing traders. Other factors that fall under thesethree building block variables will be discussed in Chapters11 and 12.
Different Scenarios
In addition to the importance of these three factors, theirdistribution in terms of weighting is also important. Con-sider the following three scenarios:
2/ Bernstein's Building Blocks to Success ¢ 19
1, A highly disciplined trader without an effective tradingsystem. Extremely profitable results rarely will beachieved (other than through chance). Although thediscipline will be there, the truly great trades may not beentered due to the lack of an effective trading system.
2. A trader who has developed, discovered or purchased aneffective trading system but who lacks the all-impor-tant self-discipline variable. In such a case, systemperformance willbe either partially or totally denigrated,and the trader will find that his or her system, no matterhow promising, is undermined by inconsistent and un-disciplined application.
3. A trader who not only has developed a trading systemthat meets the indicated criteria but also has achievedcompetence in the other two areas (self-discipline andthe ability to cope with losses). Thisis, of course, the bestof all possible worlds for the trader and the most likelycombination for consistent success as a trader.
My Story
My lifelong search toisolate, understand and remedy thefactors that limit trader success has taken me in manydirections. I have investigated thoroughly the teachings oftraditional psychology and psychiatry as well as their con-temporary offshoots. I have thoroughly studied the cogni-tive and learning theory approaches to human behavior andpersonality. My readings and experiences have taken meinto the areas of new age psychology, self-realization, self-actualization, guided imagery, positive mental attitude, roleplaying and neurolinguistics. I have learned many lessons.My intention is to share them with you through the inter-views and analyses in this book.20 Market Masters
An “Overnight Success” in 20 Years
Asa child, I was raised ina very poor family in Montreal,Canada. Speculating in the stock and futures markets wasnot only the furthest thing from my mind; it was the furth-est thing from my ability—financially and educationally.When my academic career was about to end in my first yearof high school due to poor scholarship, my family wasfortunate enough to leave Montreal and to move to thenorthern suburbs of Chicago.
Within one week, my world was transformed. In Canada,I was raised on a street that was infested with gangs,violence and abject poverty. In the United States, spe-cifically, Winnetka, Illinois, I was exposed to tremendouswealth, high society and unlimited opportunities. Althoughthe move to the United States improved my family’s finan-cial resources considerably, they were never on a par withwhat was typical in my area.
As a high school student, I frequently was told by vari-ous friends that their fathers were “commodity traders.”The term meant nothing to me other than what was plainlyevident—the major trading families possessed tremendouswealth. Chicago, I soon learned, was the world capital offutures trading, the home of the Chicago Board of Trade andChicago Mercantile Exchange, and a hotbed of tradingfamily money.
Destiny
Although I did not know it at the time, my life wasdestined in the direction of futures trading. If anyone hadtold me that I would make my fortune in the futures mar-kets, I would have looked at them in utter disbelief. Notonly was I totally disinterested in stocks or futures; I hadvirtually no idea of what they actually were. But time has away of changing things for people, and I have learned in mylifetime never to say never and never to say that my life willnot go in a particular direction.
2 / Bernstein's Building Blocks to Success @ 21
In my second year of college at the University of Illinoisin Champaign, Illinois, as an undergraduate student inclinical psychology, I met John, a younger man whose fatherwas an avid investor in stocks, futures and precious metals.Although the subject was of no interest to me, my friend'sfervor intrigued me. For months he lectured me on the stockmarket, and for months his words made no impression onme. Yet John persisted in his efforts to recruit me as a trader,and ultimately his hard work paid off. I joined him in hismarket studies although, I admit, without his unique enthu-siasm and verve.
The First Account
John convinced me to open a brokerage account so thatwe might invest in and trade gold mining shares. This wasin the late 1960s when the gold and silver markets were inthe infancy of their bullish moves. John himself was influ-enced by his father, a shrewd man who had survived theDepression and who had become prosperous in his ownright by developing his skills as an independent investor.In those early days of my trading education, I failed to seethe obvious similarities and sharp contrasts between fatherand son.
Today, however, with the aid of 20/20 hindsight, I see itall so clearly. John was highly technical in his approach. Asa young investor, he was very excited about the technicalapproach to trading. He studied all the “right things”:technical indicators, charts, earnings reports, governmentstatistics and, of course, a plethora of investment newslet-ters. His reading was far-reaching and intense. John wascapable of reciting the history of major market moves, theprice trends of many stocks and the biographies of numer-ous legendary traders and investors.
John’s father, on the other hand, wasa quiet, methodical,almost compulsive individual who measured his wordscarefully. Through the years he had developed not onlyvarious highly precise attitudes aboutinvesting but had also22 @ Market Masters
developed a keen sense of patience and a marvelous per-spective of economic history. While his son was aggressive,jumping in and out of quick-moving stocks, the father wasslow and methodical. He accumulated large positions instocks and precious metals, respected the importance oftime and was clearly aware that the big money is made in thebig pull.
Fags, Fags, Eggs
After my college days, I worked at a hospital treatingchronically ill psychiatric patients. The work was difficult,the hours long and the rewards few and far between. Attimes, when I worked the midnight shift and the patientswere finally in bed, there was little to do, On those peacefuloccasions, I pursued my graduate studies, working on mymasters thesis.
One fortuitous evening, I glanced at a copy of Barron's,which contained several advertisements for commoditybrokerage firms. One particular ad attracted my attention.The ad discussed futures trading in shell eggs and boastedthat egg prices were likely to skyrocket “to the moon” thatyear (1968). In those days of lax regulations and “wide openfutures trading,” ads could promise virtually anything withimpunity, Unaware that I would soon be seduced by themarkets, I wrote to the brokerage firm and requested moreinformation.
Fast Talker—“Send Money!”
Soon thereafter Dan, a commodity broker, called andattempted to fast-talk me out of what little money I had. Hedangled many carrots before my eyes, one of which was thepromise that if sent him $1,000, he could “make me a veryrich man.” In spite of my persistent refusal, Dan continuedto call. I must admit that finally, after several weeks ofbadgering, | relented and agreed to send money. This wasnot an easy promise for me to make since I had virtually no
2/ Bernstein's Building Blocks to Success @ 23
money of my own, With loans from several friends, I raisedthe necessary $1,000 in capital to open an account.
After several days, statements began to arrive in themail. “For your account and risk, we have bought today 1September ‘68 shell egg.” It was meaningless to me. All Iknew was that within several weeks, my account had grownto approximately $2,500. My account partners were under-standably nervous about this game. They decided to “cashout,” leaving me with my share of the profits. My broker wasunhappy but agreed to work with the small amount ofmoney that was left, and he did so admirably. The moneycontinued to grow. In fact, | was so impressed with whatDan was doing that I asked more questions and wonderedwhether this was something | could do on my own. Dan didnot encourage me. He indicated to me that his approach tothe market was seasonal, that his method of making moneywas based on weather forecasting. He continued to assertthat “when chickens die, we get rich.”
Roasting Chickens
Knowing that chickens are extremely sensitive to hightemperatures and that their egg production rapidly declinesas temperatures increase, Dan bought egg futures in ad-vance of hot temperatures, hoping to capitalize on de-creased supplies. Dan told me that when temperaturesbecame even higher, “the chickens would roast and the priceof eggs would go bananas.” Indeed, he was right. | watchedmy account continue to grow as Dan traded egg contractupon egg contract for me, while the weather continued toheat up and the chickens roasted.
A Lesson in Greed
Before long, I fell victim to an ailment that, at one time oranother, afflicts all futures traders—greed. It wasn’tenoughthat Dan was earning me several hundred percent on mymoney. It wasn’t enough that Dan was trading actively for24 Market Masters
me. And it wasn’t enough that Dan was making all thedecisions. I was convinced that what Dan was doing waseasy. I felt that by reading a few books, I would soon be anexpert trader. I was unaware that there was much more totrading than merely knowing what to trade. I was ignorantof the psychology of trading, the importance of traderemotion and the undermining forces of fear and greed. ButI soon discovered them firsthand.
te
... I fell victim to an ailment that,at one time or another, afflicts allfutures traders—greed.
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Becoming a Statistic
For several weeks, I became an avid student of futurestrading. | started with the classic text, Modern CommodityFutures Trading by Gerald Gold. After a few readings andseveral sample charts, I was convinced that I was an expert.After studying a pork belly chart, I decided that my next bigmove was going to be in the belly market. With trend lineson charts and a clear understanding that within the nextseveral days my account would easily double in value, if notmore, I confidently called Dan and asked him to buy porkbellies for me. Dan was fl