So many times I hear clients when it retreats to say: "There are changes happening in the commodity trading and trend following." Commodity markets are changing. They are not as they once were. Trend following is dead. This retreat proves the trend following is dead.
Well, I'll give you my 15 years plus experience, and against these thoughts. First of all, nothing changes. You know what trend following, what causes it. Not trying to be funny, but the trade of goods, which lasts from the time of Joseph in Egypt, the sale of wheat. If you read your Bible, he cornered the wheat market, there was a trend in increased pšenici.Cijena. There will always be shortages, panics, fears and hedgers, and therefore the trends. One can look at the charts from the 1800s and look at the wheat and even cotton. What do you think happened to the price of cotton in the U.S. Civil War. Do I have to remind you what happened to crude oil during the first Gulf War. Human nature never changes ... Fear and greed never seems to change ... So the trends are. If you want to consider making money in commodities one of the ways I feel strongest about trend following. No predictions ... just reacting and trying to catch a trend or a surfer trying to catch a wave. Not too different.
Now, if you believe that there is a trend, then you must realize that it does not happen when you want them. There may be a year at a time ... nothing happens. At this point, most professional investors do not give up and say trend following is dead and commodity trading advisors stench. Well, many times after that trend following returns from the dead and commodity trading advisors New hit record peaks of trading. This brings me back to my holy grail of the word "patience." If you can be patient, disciplined, have a sound trading methodology based on risk management and money management, you stand the potential extension to grind some decent returns.
next thought ... again, those same inexperienced commodity traders say, "Commodity markets are changing. I change my system and its methodology." Again, with the experience watching it has a chance to do and see everything nije.Samo things you can do over time are simple ideas are based on robust risk and money management.
To give an example, Richard Donchian uses a very simple idea. Buy 22 days High ... 14 days to sell low. It is the foundation ... Not too complicated, but it takes more risk and money management filter. Not sure if it was John Henry from JWH and Dunn Capital ... they were referred to the rules of our system can be written on the back of the envelope. Pretty funny, because with them at various points in their careers are managing more than $ 1 billion. If you want to be a winner in the arena of trade goods to understand it takes time, discipline and patience. This is not a get rich quick. It is a combination of their way to riches if you follow the rules of risk management and money management. All this is easy to say, but when you get down or in your trading account or when the commodity trading advisor is down 20% or more, and you want to quit, remember:. Would you like to be a winner or a loser
to understand exactly how your mechanical trading system works. Do not think I'll buy the black box and make money. Ask questions to your advisor commodity trading ... what gets in the store .. from the store ... the loss or gain .. How much risk per trade .. how much risk by sector ... how a portfolio of open trade risk ... or margin on the capital. If you do your homework ahead of time, do not even think about trading commodities. These are hard truths about the merchandise. It is not easy. Futures and commodities trading involve significant risk. People can lose money trading.
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