Commodity Trading Blunders II, PART 3 - My Early Days As A Novice Trader

Several years later, in the late '80s, I remember even as a mistake. I was using a new commodity cycle program I designed. In fact, it is the same one I used today to clients titled "Timeline". I feel comfortable with it. That's half the battle. In any case, I bought four of coffee futures contracts to about 58 cents. I was looking for an explosive cycle time move up. Sure enough, the coffee market began to creep over a week or so. After a few weeks he started to run and hit the coffee about 70 cents. This is a great result for me, something like $ 18,000. But this is not the end of the story.

Here is how an error occurred: in the morning I left, I had a resting GTC trailing stop at 68 sold four coffee futures closed out. I just had gotten one of those nifty hand-held citation devices with FM band. Remember that? It was a big mistake. Watching that thing just ruined my long-term perspective. But this time it's different. Somehow, I recognized the top and called the trading desk to sell everything on the market. I almost grabbed the top right. It was just luck. So I took the car thinking I was out of the market $ 18K points. Time for a celebration! I was so smart! Not so fast, Tom.

When I got home I heard a message on the answering machine from the trading desk. I called them and the officer said I forgot to cancel a GTC sell stop at 68 to sell four futures contracts. I sheepishly asked him what machine closed in. He said, "limit down" I was still $ 4,000!

But again, not so fast, Tom.Trgovanja Manager (with a hoarse, gruff voice, of course) got on the phone and said to be called before the market closed to see if I wanted to keep the shop. He said because he could not reach me, it covers four contracts without me. Then he barked, "This will be at the expense of an error!" He said it with such authority, I thought that was it. So it worked, I told myself. I was so pumped up to just create a $ 18,000 how could I be greedy and demand an additional $ 4,000 as well?

but ... What would happen if the coffee futures market went limit-up instead? Do you think that trading manager would require the loss goes to "error account" then? Not a chance. I would have eaten that as sure as day. In hindsight, I could have told him that my intention is to stop and reverse, and actually still be in the coffee market of the future and short. What is on the right are no signed contract management approval to assassinate me?

If it happened today it would be a different story. I'd probably offer to share it, as such a nice guy. [smile] But it was a long time ago and I did not know any better. Probably laughed and shook his head afterwards. As Robert Redford said at the end of the Sting ... "I would just like to blow anyway." Knowledge is learned is more valuable than money. Gann said something like: "Once you have knowledge, it is easy to make money in commodities." I guess I can rationalize it all.

So there you have it ... two stories to make mistakes. One we lost $ 1500, and the other me $ 4000 - well, I made $ 4,000 brokerage firms, I would say. It taught me the importance of having a novice commodity futures trader paired with an experienced, mentoring broker. It is so important to have someone at the other end who knows your situation and can flag errors before they get out of control. In these two cases, there is the potential to wipe out many years discount commissions savings.

If you are new to the commodity futures and options trading game, consider going slow for a while and work with someone you trust. Once you get the basics down, you can ramp with confidence. I know some experienced commodity futures traders will only work with a full-service commodity broker. There are a lot of traders like this out there. They know the risk of errors and what you can do to make your ego and your bottom line.

good trading!

There is a substantial risk of loss trading futures and options and May not be suitable for all investors. Only risk capital should be used.

READ MORE - Commodity Trading Blunders II, PART 3 - My Early Days As A Novice Trader

Commodity Trading Blunders I, PART 1 - My Early Days As A Novice Trader

There is always a "one year" for every commodity futures trader. I made ​​the mistake of mine, and every trader can do and more. Here is my story of how I stumbled into the lion's den, got Gored several times, and even made ​​some money. I hope beginners will read this and avoid some of the obvious things. Here's to all new traders!

It all began in the spring 1979th I was 28 years. I was in the office of my new retail electronics company. Let's go over some paperwork and got a call from a young and excited commodities broker from Boston, or some name like that. He must have a list of new companies and cold calling small business owners.

I had no idea, but at that time sugar was in a bull market trading at about 11 cents and sentenced to 45 cents later this year. Gold, silver and copper are also creating new records. Bunker Hunt was turning silver on the way to $ 50 an ounce. Gold is destined to hit $ 800. In any case, this kid from Boston was on fire and he told me that I miss the possibility of life in sugar futures contracts. He wanted to mail me some hot news from news wire goods. He was looking for a $ 15,000 bet, a lot of money in the late 70's. He said he would buy me four sugar futures contracts. I do not know anything about the goods at the moment, but told him to send more information anyway.

When it arrived, it was usually bullish hype about shortages, disease and reasons for sugar had nowhere to go but up. Somehow he knew to call the moment I got it. He was confident I could make a simple double or triple, so I agreed to send him $ 15K. Now, this part gets interesting. I have not opened the account or sent him money yet. He said he needed to put me on the phone with trading to lock in my four futures contracts for the next day. I was puzzled, but agreed.

The next thing I knew the answers-type phone with a gruff voice shouts: "Trafficking", I said I do not know if I should speak with him, because I did not know what to order. I think I was on speaker phone because I heard some guys laughing in the background. He said: "OK, you are locked in the October 4 sugar commodity futures contracts on tomorrow's open." I said, "OK, I guess," and hung up. By the way, why is that most aggressive brokers put naosoran, hoarse voice acting, as if you were in the trading pit yelling all day? I hear it all the time ... funny.

Kid commodities broker called me right back to you my congratulations on a smart decision. He sent me the forms of goods account overnight service. I must admit I was excited. I had no idea about the commission rates, the potential risk, the size of the place ... nothing! But I wanted in! I was the perfect sucker. When the bill arrived forms I fill them out and was getting ready to send everything back.

by accident, I got a call from my CPA on other things. I explained to him about this new venture. Somehow, he knew something wrong and told me to go. I called the Boston Children merchandise back and told him my CPC has given the green below. I had a hard time getting a child with a phone. He called me spineless, said we were supposed to be a real man, and I regret missing. He also said that the need to stop acting like a woman. For the next three days with their friends in turn we are working through trying to close the sale. In the meantime, I started reading about commodity futures trading. It was the first real move I made!

Part two of the four - next

There is a substantial risk of loss trading futures and options and May not be suitable for all investors. Only risk capital should be used.

READ MORE - Commodity Trading Blunders I, PART 1 - My Early Days As A Novice Trader

Commodity Trading Blunders IV, PART 4 - My Early Days As A Novice Trader

Speaking of sugar, and later I took the plunge. My swing is the sugar program is due for a big swing up. Trident usually follow a standard 1-2-3 zig-zag motion and entered a "3" wave. I went a long four sugar futures contracts on this signal.Trgovina started fine but stalled and reversed down.

Max suggested I continue to sell four of futures contracts as a hedge. (It does not make much sense, does not it?) He thus would be able to later remove the hedge. Otherwise, I can not get back in. Whatever. Of course, I put safety at the exact low as I was afraid. As sugar futures began to rally again, I removed the hedge and the race was on.

Maybe Max was right. Sugar futures contract ran up to my goal of Trident and I got a couple of big profits. I got cocky and stupid and decided to reverse and go short four contracts at the end of Friday. Trident is an apartment and doing "drunken sailor" trade. I was so pumped up I had two of my employees' share of potential profits. Monday came and sugar gapped up against me. At which point I gave back all its previous sugar profits. I got it and decided to never buck the trend again. Well, at least until I got greedy and stupid again. I told two employees to forget any losses, and that was it.

Max is making good futures commission from me, and I think I became one of his more active commodity traders. I loved that feeling. I even told some of the young women I met that I was a commodity futures trader. It went nowhere. Shortly thereafter, it was like saying I played poker or shoot craps for a living. But I could not leave sugar on miru.Nekoliko days after that loss, the market is still moving upwards. It was Friday ponovno.Ročno market had moved about 350 points that week. This is the kiss of 23 cents. I said to hell with Trident and told Max to buy a futures contract market.

After his "lightning fast" performance finally came back, I paid about 50 points higher than the last quote! I was stunned. But then it kept going in the immediate vicinity. It's closed borders, and I was a good $ 1000 on a contract. (The limits are expanded again) Monday came and it was a restriction to limit opet.Nekoliko days and I got a nice $ 5,000 profit. Too bad I did not buy the four agreements, but I still feel pain in the last loser.

Those were some fun days of trading futures. I still look back and realize my innocence was in many ways its strength. After all, this is a bull market in commodities, and "drunken sailor" trades usually work. But as the years passed, so the bull, bear and splitting the market. I learned that commodity futures markets could beat. I replaced my intense aggressiveness and became a conservative in the speculative arena. But that's the way it should be.

It's all about survival. Small positions that go away are a great way to shop. Ringing cash registers often with a high win / loss ratio is as well. Just remember that you must be flexible and willing to let go of old ideas that no longer work - and keep finding new ones that do not. I think that even the Boston Commodity Broker from Hell would agree with that. I know Max would.

good trading!

There is a substantial risk of loss trading futures and options and May not be suitable for all investors. Only risk capital should be used.

READ MORE - Commodity Trading Blunders IV, PART 4 - My Early Days As A Novice Trader