Saturday, October 6, 2007

Commodity Investing Targeting 30-50% Annual Profits

There are plenty of people who will manage a commodity investment for you, but you need to choose carefully as most lose!

This article is all about picking a manager or doing it yourself via a software program and targeting the big gains that make commodity investing so lucrative.

Risk & Reward

Commodity investing by its very nature is risky, however with risk goes reward. The real key is management of risk and this is what separates out the great performers from the losers.

Reducing risk and increasing returns

Commodity investing is popular as you are investing in a non correlated investment to stocks.

Within the commodity or futures markets you have great diversification and fantastic profit potential.

There are managers who target and make 30 50% gains per annum in commodity investing, so lets find out how we target them.

Lets look first at managers to avoid:

1. A broker

On the desk of commodity firm who will help you trade to make money. Keep in mind, he is a broker not a money manager and chances are he wont make you money.

If brokers could make money they wouldnt be brokers

2. Managers with hypothetical track records

These managers simply launch a performance graph that looks great in hindsight (lets face it we can all make money in hindsight) and then very often collapses in real time trading.

Forget this group.

3. Managers claiming real time track record but no audit

Not only do you want the track record verified, you want a statement that the account you are investing in is representative of all funds under management.

4. Drawdown

Watch out for highly volatile performance the bigger the drawdown the bigger the risk of ruin.

Generally, look for manager who has smooth equity curve.

Many managers have drawdowns of 50% or more avoid them. Look for drawdowns of around 30% max.

5. Conflict of interest

Check your manager does not earn a proportion of the dealing fees, as this sets up a conflict of interest. They may deal for commission, rather than profits.

Try and get managers who have confidence to be paid on performance only.

Keeping the above in mind you need to look for managers that are professional, or buy a software program follow the signals and do it yourself

This latter option is a great way, you are your own manager and of course dont pay fees!

Discretionary managers

Real time performance, audited figures and responsible money management, as mentioned above. You may also like to check the following:

Find out about how much money they have under management, their methodology and how long their track record is 3 5 years is enough. Beware of short track records as they could have been lucky!

Make sure your comfortable with them, their investment approach and money management.

Like all managers they will have losses, you should stick with them through these periods and confidence in them to get it right will help.

Software be your own manager

Most commodities trend and there are a lot of good software programs you can buy that, can target 30 50% in annual gains.

This means you dont have to pay a manager and have control over your investment.

With the internet and the power of computers and the recent developments in software, more and more investors are taking this route.

You need a simple system; you can understand, can apply with confidence, with real time track record and your all set.

Note: You may want to read our other article futures trading software for in depth way to pick a system to invest in commodities for big gains.

Commodity investing Which way is best?

Commodity investing in this way if you have the right trading system, can be very lucrative. You have the potential to out perform the bulk of managers and keep all the profits yourself.

You can give it to a broker to execute it for you, or place the signals yourself.

Read our other article on Futures trading software for more information.

More FREE information on targeting 30 - 50% annual profit potential via commodity investing and a system that has been producing outstanding results in realtime, from a company doing business for 25 years, visit our website =>

Success Trading: Yet More Basic Terminology for New Traders

In this day and age of online brokers for virtually every market out there, there are some very useful tools that will help protect your account and lock in profits when you have them. It is our recommendation that you use a good online broker and take advantage of not only the low commissions they offer, but also the automated tools that are available. These tools are virtually idiot proof if you use them. The number one reason that peoples accounts go belly up in the markets is because they lack the discipline to stick with their trading plans and let emotions drive their trading decisions. This approach is a guaranteed way to lose in the markets. Oh, you might get lucky on occasion, but eventually the market will take your money. Let discuss some of the trading tools were talking about.

Stop Loss Also called a stop, this is the price at which your position will be automatically closed. If you buy IBM at $50 per share, and then enter $45 as your stop level, then your position will be sold when the price hits $45. So this enables you to protect your account from a large loss. Bear in mind, however, that this stop level only triggers the closing of the position and doesnt guarantee youll get out at that price. A quick price drop might mean your order was executed at $42 instead of $45 because of market volatility but this would be an extreme case. Also, if you carry the position overnight and IBM opened at $40, then thats the price it would be sold. Keep in mind that if you had shorted IBM at $50, then your stop would be placed above $50 to protect your account. When the stop is triggered on a short position, you would be buying to cover the position.

Buy Stop The description above pertains to a sell stop, but there are also buy stops that can be very useful. These are used to enter a position at a certain point. Suppose youre using a trading system requires that you buy when a stock breaks above a certain price level. Lets say that you are waiting for IBM to break out of a channel and to do so, it would need to reach $51. In this case, you simply place a buy stop at $51 for the number of shares you desire and your online brokers system will buy that for you automatically whenever IBM hits $51. The only thing you would have to do and check back occasionally to see if the order has been filled.

These two tools, the sell stop and buy stop are invaluable to traders especially those who are just starting out. Make this a habit from day one in your trading ALWAYS place a stop loss immediately after getting an order filled. Obey this rule and the market will never hurt you very badly youll take a hard sting every now and then, but youll stay alive to come back another day!

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website,

Currency Forex Trading - Betting The Ups And Downs

Total the amount of money involved in a days trading on the US stock and Treasury Bills markets by three, and youll still have less than a third of the amount of money which exchanges hands on the currency Forex--foreign exchange--market. The currency Forex market is where the money of one country--US dollars, for instanceis exchanged for that of another, like Japanese yen.

But unlike the worlds other economic markets, currency Forex trading is not centralized. There is no Wall Street or Throgmorton Street with an historic exchange building; Currency Forex trading exists only over telephone wires and Internet connections.

But exist it does; and it involve a global network of financial institutions, individuals, and banks all working around the clock and unhampered by international borders. Time and physical distance have no meaning in the currency Forex market.

At one time currency Forex trading was the domain of banks that held large amounts of money in various currencies so that they could participate in global investment and business opportunities. Individuals could participate in currency Forex trading only by going through their banks. But when exchange rates became unregulated the volume of currency Forex trading began to mushroom.

What Is Currency Forex Trading?

When either a private corporation or government wishes to either buy or sell products or services in another country, it has to engage in bartering its national currency against the currency of the country where it wishes to do business. There are also large numbers of investment firms who trade the currency Forex market as a more speculative part of their portfolios.

And even individuals can participate in trading the currency Forex market, provided they have sufficient risk capital and are willing to do the homework necessary to master the art of currency Forex trading, which can be extremely complicated.

Currency Forex Trading At Home

Many individuals are drawn to the currency Forex market because they see it as a lucrative business which can be run from the convenience of their homes. All that is required is a personal computer with an Internet connection and a workstation organized with to create a minimum of distractions. They see the currency Forex market as both inflation and deflation proof, and a way to make money regardless of the worldwide economic situation.

Investors make or lose money when trading the currency Forex market depending on the fluctuations of the currency exchange rates. All currencies are constantly appreciating or depreciating in value when compared to one another, and it is up to the individual investor to understand how conditions around the globe will increase of decrease currency values before risking his or her money trading those currencies.

You can also find more info on Currency Forex and Forex Brokers. is a comprehensive resource to know about e-Forex Trading System.

Texas Invests In Its Future - The Young See Hope For Retirement

No wonder so many of us run from discussions on financial matters, ignore our bills, and spend too much money, as if in rebellion. It's scary out there.

Last year, the Employee Benefits Research Institute released the results of a study concluding that the majority of Americans are unprepared for retirement, are not saving enough for it, and have unrealistic expectations about how much they will need to live comfortably in their golden years. Texas is no exception. With its high poverty rate, and even higher rate of those going without health insurance, it's lucky many can get through day-to-day life.

Being one of the millions in debt myself, I can understand this. The rising cost of housing, food -- even clean drinking water -- can drive anyone with a limited income to distraction. I decided to stop changing the television channel with every new disastrous financial report, and to start researching, when an investment counselor said to me with matter-of-fact conviction, "You know, young adults now just may need a million to retire." After the initial (and expected) incredulous gasp, I decided gulping air wasn't going to do me much good. As usual, knowledge and simple planning gave me hope. Here are a few tips on digging yourself out of the panic.

Checking and Savings Accounts:
The first step in building a sound financial future is practicing money management skills with both checking and savings accounts. Most of us have at least one of them; keeping track of their balances is an entirely different matter.

Free checking accounts are fairly easy to procure. At one point, it was common for financial institutions to charge monthly fees for the privilege of stashing money with them, but the banking industry rakes in so much profit from successfully luring their customers into other investments that it's just not necessary anymore. The theory is that if one has a free account with a particular financial institution, there's a good chance that person will return to that institution for other investments as his or her income grows -- investments that will make both the customer and the bank happy.

By all means, take advantage of this. Texas abounds with students -- students needing any freebies they can get -- so it shouldn't be difficult to find a bank offering free checking and savings accounts, especially in cities like Dallas, Houston, and Austin. Look for a checking account without a minimum balance requirement, and one that doesn't, of course, charge monthly fees.

Free checking accounts are not usually interest-bearing, so put only enough money in it every month to cover your monthly bills, plus a little padding. Keep track of your balance; the greatest risk with these accounts is the astronomical overdraft fees most of them charge. Once all of your bills are paid at the end of each month, stash extra income in an interest-bearing savings account. The average APY (Annual Percentage Yield) on low-balance savings accounts hovers somewhere just around 0.5%, but at least it's something

Short to Middle-Term Investments:
Once you feel you've established a healthy pattern of money management -- no overdrafts, a properly balanced ledger, and all bills paid in full -- start looking into other investments. Most of the time, you'll need at least $500.00 to invest in other types of accounts, and, at least initially, look for those with better APYs than your current savings account, but will not inflict penalties for withdrawing funds whenever you need them.

Money Market Accounts:
Money market accounts are great investments at any age, but they're particularly advantageous for beginning investors simply because there are no penalties for withdrawing any amount at any time, no waiting period to continue investing (you can, likewise, deposit money at any time), and the funding is usually only a check away. There are several types of money market accounts, so be sure to investigate the minimum investment required, interest rates, and restrictions on each before making any commitments.

Money markets work by pooling investments from thousands of contributors into an assortment of (usually short-term) funds from municipal bonds, to stocks. The result is a fluctuating interest rate that is almost always at least a few percentage points higher than that of a standard, low-balance savings account. According to USA Today, non-bank money market funds are currently at about 5% APY.

Certificate of Deposit:
Certificates of Deposit, or "CDs" have been around longer than the replacement for the tape cassette. Interest rates are fixed, rather than fluctuating, are usually comparable to money market accounts and can be purchased at a bank or other financial institution, including many sites online, for terms as short as three months. Of course, the longer the term you lock in, the higher the rate you will obtain under most market conditions In other words, whatever interest rate you lock in at the beginning will remain the same throughout the course of the investment. Once you've invested in a CD, however, you cannot continue adding to the same one during the life of that investment, until renewal -- which is one reason you may want to go with a shorter term.

The primary disadvantage of CDs lies in the substantial penalties inflicted if the investor withdraws his or her money before the allotted time. The average APY for a six-month CD is currently 3.59%; for a one-year CD, 3.77%; for a five-year CD, 3.96%, although some banks may offer better deals. CDs are a good idea if their current APYs are higher than contemporary money market accounts, and you don't expect to -- or perhaps don't trust yourself to -- handle the money for a while.

Health Savings Account:
Health Savings Accounts, or HSAs were created by a 2003 Medicare bill, and are, without a doubt, worthy of consideration for many individuals and families. HSAs strive to address the growing problem of underinsured Americans (Texas knows this well, with over 25% of its population going without any insurance) by allowing investors to save for qualified medical expenses and future retirement health expenses, on a tax-free basis. These accounts are only made available to those with qualifying high-deductible health insurance policies, and are a great choice for many young, middle-class Americans. HSAs provide incentives for saving towards healthcare, and a bit of financial padding in case of disaster. The major disadvantage is that penalties are inflicted if the money is withdrawn for unqualified expenses prior to the age of 65.

Retirement Accounts:
The types of retirement accounts available to Americans are too numerous to mention, and are highly dependent on employers in most cases. Entire sections of libraries and many websites are dedicated to this subject. The first, and most important thing to do, is to check with your employer to see if, or what, retirement plans are offered. Some companies offer employee benefits, including flexible 401(k) plans and matching funds. Look seriously into these options.

However, rather than briefly attempting to delve into the plethora of accounts that may, possibly, be available to you, this article will focus on an account available to all, regardless of employer -- the Roth IRA account which has become increasingly popular since becoming law in 1997.

Now, IRAs have been around for some time, but traditional IRA accounts require funds going in, and coming out, to be taxed. This means that whatever dividends or proceeds an investor earns over the years will be taxed upon withdrawal. Considering that IRA interest rates are compounded, this could (and is intended to) add up to quite a bit over several decades.

Roth IRA accounts, on the other hand, do not tax funds upon withdrawal. Funds invested into the account are considered taxable income going in, but the compounded interest or proceeds can accumulate tax free, until the age of 59, at which point they can be withdrawn without penalty or taxes. A Traditional IRA, on the other hand, is not taxed going in, but is subject to tax coming out, at whatever rate of income will apply to you at that time -- the assumption being that you will withdraw most of this money during retirement, when you will not have other earned income driving up your tax rate,. This means that whatever your Roth IRA account balance statement is, is the amount you have for retirement, free and clear. No more taxes. If an investor begins an IRA account in his or her twenties, and contributes a modest amount every month (possibly matched by an employer), principle and compounded interest could conceivably yield a million or more dollars over four decades. The way to think of a Roth IRA, as opposed to a Traditional IRA, is that you are paying taxes on the seeds instead of on the crop.

Now, that's something to think about. Maybe retirement is possible...

See, that wasn't so hard. Respect yourself (and your anxiety levels) enough to seriously investigate financial opportunities. There's a good chance you're missing something you have the funding for -- right now, sitting in a no-, or low-, interest-bearing account. If you have any kind of steady income, financial security should be within your grasp. A comfortable retirement is in your future. Just take a deep breath, open your bills, and start acting like the adult you always dreaded you'd have to be someday.

Taking care of your financial responsibilities can have a positive effect on your anxiety levels, sense of security, and overall health. Being aware of your health, and what you can do to safeguard it, will certainly affect you as you age, and eventually your wallet as well. If youre a young individual who tries to keep informed and maintain a healthy condition and lifestyle, you should take a look at the revolutionary, comprehensive and highly-affordable individual health insurance solutions created by Precedent specifically for you. Visit our website,, for more information. We offer a unique and innovative suite of individual health insurance solutions, including highly-competitive HSA-qualified plans, and an unparalleled "real time" application and acceptance experience.

Precedent puts a new spin on health insurance. Learn more at

Forex Millionaire Reveals His 5 Most Secret Strategies!

1. You should not execute trades, as a general rule, in between pivot points. That area is NO MAN'S LAND. Wait for price to make up its mind on direction at a support or resistance level, supplemented by other indications of price direction "reading bars," MACD divergence, reaction to pivot point, trendline breakouts.

2. Don't use MACD for anything other than divergence. Recently, MACD on the 15 was trending up, leading unsuspecting traders to believe that price was headed north. However, price did a u-e at the main pivot point, and headed south to find the other end of its range at S1. You wouldn't see this sudden shift in MACD, because it is a lagging indicator. So, to summarize, just use MACD for divergence and nothing else.

3. You should only take trades in and around pivot points not in between, as stated previously. When price action centers around a pivot point, then take a look at the five minute to see what's going on behind the scenes. Because, you should have been focused on only the 15 min up to the point of price interaction with the pivot point. Now, you want to pay attention to what price has up its sleeve. In the above example (40), price faked out unsuspecting trades when it trended up through the main pivot point, only to tank as it did a price rejection bar on the 15 min chart. Of course, you wouldn't have seen this coming if you were only looking at the 15 min. You would have seen the price reversal on the 5 min, and been ready to head south with price.

4. The absence of divergence between MACD and price simply suggests that MACD is confirming that the price trend is intact. But, don't be fooled by this synergy. Please review strategy number 40 to see what I mean.

5. Resistance levels (M3, R1, M4, and R2) are levels (or sell zones) where sellers can be expected to outnumber buyers, and push price lower. Correspondingly, support levels (S2, M1, S1, and M2) are levels (or buy zones) where buyers can be expected to outnumber sellers, and push price higher. These expectations are based on my program's interpretation of buyer/seller interaction in the last session. I think you will agree, after close inspection of the results of my pivot point calculations, that price hesitates, pauses, and decides on its course of action in and around pivot points. That's why you should never enter trades in between pivot points, while price is in transit, and in a state of transition.

Learn More About This Forex Millionaire By Going To:

Please check out for more free Forex tips & secrets.

Sense And Sensex

Sensex is the name coined for the Bombay stock exchange sensitive index. Sensitive index abbreviated as Sensex, is the yardstick index for stock markets in India. The sensex is designed scientifically based on a particular universally accepted methodology. It was first put together in the year 1986 and with 30 ingredient stocks. These 30 stocks symbolized gigantic and rich organisations. 1978-1979 was taken as the base year and the base value was taken as 100. The same method continues till date. It is in face, very popular globally.

Whenever we express the state of the market, we look for the sensex reading. It is the most comprehensive indicator of the market. The Sensex echoes the price movements of various stocks and also indicates market soundness. Sensex rises and falls in a market. In case the sensex rises the investors or traders in the market can look forward to booking profits. While a sensex on the downside may lead to a loss for investors. Therefore if the corporations listed on the stock market are financially and managerially sound.

Sensex- Ingredient companies.

The sensex in India is made up of 30 companies which have a direct bearing on the economy. These 30 companies are selected by a group of academicians, fund managers, financial journalists and many other stock market participants. They form the index committee.

Parameters for selection of the 30 companies.
-The stock of a company must be traded all through out the financial year to be amongst the 30.
-The particular stock must be amongst 10 top companies whose stocks have been traded every day in the financial year on the BSE.
-On the Bombay stock exchange listings the particular stock must have its listing since a year.
- The company must have a good and sound record in the eyes of the committee.

SENSEX calculation strategy and method.

"Free-float Market Capitalization" method is used to calculate the sensitive index. According to this method, the sensex valuation mirrors the free float market value of the 30 stock ingredients relative to the (1978-79) base year. When we multiply the number of shares the company has issued by the price value of the stock of the same company we arrive at the Market Capitalization of the particular company. Later on we multiply it further with free float factor to come up with free-float market capitalization. The Free float market capitalization of the 30 key corporations is further divided by the Index Divisor, a number. The index number is the sole link to the first and base price of the sensitive index.

The sensex journey

The sensex has been on the increase ever since early history. From 1000 points on July 25thg, 1990 to historic 10000 mark on February 7 th, 2006 after which it rose to 14000+ on December 5th 2006.However it has been fluctuating between 13000 to 14000 since then. But there have been several downfalls due to high volatility. In such cases the government adapts policies that are friendly to investors and curbs down panic.

Written by Charles Smithston. Wondering which form of financial asset will provide you maximum income to achieve financial freedom? At The Team Wealth Builder Forums you can learn about the best investment to make sustainable money that will work for rest of your life. Log on to TeamWealthBuilder for expert tips regarding wise investments to get out of the rat race and become financially free.

Trading Stuff For Free Vs. Free Stuff

Swaptree is a great service that I came across recently. It lets you trade books, music, movies, and games with others for free. You tell the system what you have, and it figures out what you can get in exchange. Note that it supports one-for-one item trades only, but allows for three-way trades.

How Swaptree works
Swaptree does a good job laying out the ground rules simply and clearly. There is also a wonderful walkthrough here. Ebay users will find a similar buyer/seller rating system that they are accustomed to.

The site has been out of public beta since July 4th (so its no longer invite only) and seems to be gaining steam. Way to go, guys!

Freecycle would be a good alternative if you were looking for an item outside of books, music, movies, and games - such as apparel, computers, and furniture. The concept is that someone wants to get rid of something, while another person want s the same item. Rather than throwing the item away or trying to sell for a minimal amount, the item is given away, provided that a local person comes to pick it up.

The Freecycle website - contains a short animation of how Freecycling works as well.

At the time of this posting, there are a total of 4,041 Freecycle communities throughout the world. Chances are, you are either in or near one of them.

See this article's original posting at:

Another quality article by NowSourcing.

To see more of my articles, please visit

Trendline Forex Entry Signal - Two High Probability Setups

A reliable Forex entry signal usually involves a combination of factors which all come together at the same time.

No single indicator can provide the ideal entry level and the new Forex trader has to grapple with this stark reality. Many find this hard to accept and spend countless weeks and months and hard earned cash in search of what could be termed the 'holy grail.'

Learning to trade the Forex is hard work and needs to be treated like a business, the same as any other business. It requires a large investment of time, energy, mental discipline, and a cautious investment of cash until the necessary skills are acquired.

Trendlines are just one of the tools seasoned traders use along with other indicators to provide a reliable Forex entry signal.

Here we spell out two distinct ways in which trendlines can be used safely. Using a higher time frame candlestick chart such as a 60 minute, 4 hour, or even daily chart, a trendline is drawn along the most significant lows in an uptrend or across the most significant highs in a downtrend.

1. Momentum Combo

As price moves upward in an uptrend or downward in a downtrend, it will retrace and bounce off the trendline at certain times. However, using a trendline bounce by itself as a Forex entry signal is too risky. There have to be other factors.

Once you have drawn the trendline you now have a graphical representation of price movement and you will be able to see where price has to retrace to test the trendline once again.

Now use other indicators to see if that level where price would need to retrace to test the trendline combines with other factors.

Calculate your daily pivot points and draw horizontal lines on your chart to mark them.

Run your eyes left on the chart and note if there were any significant highs or lows that formed support or resistance within the last few days. Support and resistance on higher time frames usually provide more substantial reference points.

Use the Fibonacci tool on your charting software and mark retracement and/or extension levels on a variety of swing highs and lows and see if any intersect the trendline.

Also make sure you have the 200 EMA (Exponential Moving Average) line shown on your charts and note whether this also intersects near or at the trendline.

Now if you have a combination of two or three of the above indicators meeting at the same place you have now identified a Forex entry signal that can be regarded as high probability.

Put in your entry order to be take in long at this point where the trendline intersects with the other indicators and set a reasonable target limit for what probably will be a profitable trade.

For a downtrend, simply use the above indicators going the other way.

2. Break Combo

The second way to identify a reliable Forex entry signal using trendlines is to watch for a break of a trendline on a higher time frame such as the 60 minute, 4 hour, or daily chart.

Some traders sent an entry order to go long or short once price has broken the trendline by a few pips. That works for some.

There is however a safer way to trade a trendline break.

It will be observed that often (not always, nothing is absolutely certain when trading the Forex) once price has broken a trendline and moved 15-30 pips, it will come back, retrace, and test the backside of that trendline.

This is where again you use the combination of factors mentioned in the previous strategy.

Look to see if the point at which price may come back to test the backside of the trendline coincides or combines with factors such as:

  • Pivot points
  • Previous swing highs or lows marking support and resistance
  • Fibonacci retracement or extension levels
  • 200 EMA

Now when you place an entry order to be taken in at that level you are doing so on the basis of a clearly defined Forex entry signal.

For a graphical example of the above, see the resource box below.

Be aware that trading trendline signals on lower time frames such as 30 minute, 15 minute, or even 5 minute charts are very high risk trades. Price will break these short term time frames frequently during the course of a day and catch a new trader frequently by luring them into a trade they later regret.

Be patient and wait for things to setup as described in the two methods above for high probability trades triggered by a combination Forex entry signal.

For an actual trading example using the trendline strategy above click here:

Click here to learn how to use another indicator, the 200 EMA, in a simple yet powerful way:

For the best free economic calendars plus a free pivot point calculator and Fibonacci calculator click here:

Online FOREX Brokers A Brokers View Of Why Novice Clients Lose

I write frequently on how to trade but my observations on the markets here I will go back to may days as a broker and give you the view from the dealing room on client behavior and the major reasons traders lost.

I dealt with several thousand traders over 8 years and here are my observations.

This was the late eighties and early nineties and online FOREX brokers of course did not exist, clients behave no differently today as they did then.

Here are the top reasons traders lose with any FOREX broker and that includes online FOREX brokers

1.Methods traded were illogical

The first reason was simply methods did not work as logic they were based upon was not relevant to market movement.

Today, day trading is more popular than ever with online FOREX brokers, but it was around 20 years ago and the same results were obtained which were:

A wipe out of equity in a short time.

Day trading did not work then and it doesnt work now- Volatility is random in short time frames.

Any support and resistance seen in a daily time frame therefore is useless for trading purposes.

Online FOREX traders just like we did must love day traders lots of commission generated!

As a broker your balance sheet is based upon commission to equity.

You generally assume all clients lose anyway, so if they pay lots of commission while losing all the better.

There were other methods that lost especially the ones that clients bought that promised regular money or an income from trading.

These methods were normally bought tested in hindsight and the trader threw in the towel after a few losses, or was wiped out.

Another group that lost were the ones with complicated methods.

They figured the more complicated a method was the more likely it was to succeed, this of course is totally wrong.

Simple systems work best as there are fewer elements to break.

We had one trader who bought a system which he proudly boasted was based on artificial intelligence and the same technology used by NASA to put a man on the moon

Unfortunately, it did not help him in the market!


What always struck me was how few clients could trade in a disciplined fashion.

They had jobs where they had to be disciplined everyday, yet in the markets they simply behaved irrationally as soon as a few losses came along.

-They would chop and change methods looking for the perfect one. -They would revenge trade to catch up losses. -They would blame the markets and call them stupid

When money is on the line we all know its hard to be disciplined, but the emotions that we saw ranged from crying to total despair, including one suicide.

3.Money management

Many clients were good at picking market direction but could never make any money due to poor money management.

This was problem for them not only in cutting loses ( they very often removed stops or never placed them) of course, a small loss soon becomes a big loss, the trader cant take that, then he was handed a loss he had to take.

He would have been better of taking the small loss in the first place.

What surprised me was how few traders could accept big profits.

The bigger the profit became the more they wanted to take it even if their system indicated further gains.

The argument given was:

you dont go broke taking a profit

Of course you do, if profits dont exceed your inevitable losses.

This was perhaps more important than taking small losses.

Traders I saw could not allow trades run to $10,000 or more, a couple of thousand and they banked.

There are more reasons but they above are the ones that caused most losses and of all the traders I traded less than 1% made money longer term.

In part 2 of this article we will look at different personalities we traded, who won, who lost and the traits of the traders who won.


On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at