Do You Want Easy or Technical Ways
to Trade Commodities for Profits?
During my 15-plus years trading of Futures and Commodities, and now 10th year
managing a Trading Membership, I have come to note that a great majority
of less experienced traders are searching for the "Easy Way to Trading
Riches Plan", which simply does not exist. Most often, telling them
this gets nowhere. As has always been and always will be, most will not
learn until they have been met with enough discomfort due to great losses
to get their attention. Unfortunately by then, many are unable to recover
either financially or psychologically.
FUNDAMENTAL and TECHNICAL GROUPS
When it comes to determining what to trade or not to trade, and when
to trade it, we as traders are faced with the problem of how we are going
to go about making these decisions. The path we decide to take falls within
two camps of thought, that of using Fundamental Analysis or Technical
Analysis.
Although many who learn about trading Futures and Commodities start
out thinking that making decisions whether to buy or sell starts out with
knowing if there is a drought, flood, big or small harvest (Fundamental
group), most end up looking for answers within the Technical group using
indicators on price charts. Naturally there are those that will glean
from both groups to help them make trading decisions.
But whatever group one subscribes to, whether it be Fundamental Analysis
or Technical Analysis, there are no easy answers to what one should buy or
sell, or when. In other words, you are not likely to find
a trading plan that is both consistently profitable and requires no effort
on your part as a trader.
SUCCESS is NOT INTENDED TO BE EASY
Let's face it. If trading success were to be easy to attain, everyone would be
successful. Can we agree on that? In reality, the percentages clearly
show that only a minority of those who trade can be considered successful
at it. This small percentage of traders had to do something that most
traders are not willing to do, they had to be willing to sacrifice their
time and resources in order to achieve.
It is a sad picture to see on nearly a daily basis individual traders
who do not wish to put forth time, effort and money to get ahead. Many,
strangely enough, expect everything to be handed to them with a nice pink
bow on top. At least for most of these, when they do not get what they
want handed to them, they simply fail at trading and go do something else.
Unfortunately there are a few that project their failures onto others,
become like a child throwing a tantrum, and blame every party but the
actual source themselves for their inability to achieve trading success.
One recent example of this was the result of a special article that
I posted on one of the trading forums dealing with W. D. Gann. Within
that article, I provided all the information one needed to come to a conclusion
that exposed what traders should focus on when it comes to all the things
taught by W. D. Gann. Within that article, however, I did not simply say
what that was. Rather, as it took me some time to realize the answer myself
by studying the material presented in that article, I simply shared the
material and let all those who wish to do the same know that there was
indeed a valuable trading gem within its message. One person started out
by asking directly "what is the secret within?" Again I reiterated
that this was to be known by only those who wish to study its contents
with careful thought. In other words, only those with a true desire to
put forth effort and had true desire to learn. The individual then made
a few bad guesses and became inflamed when
I refused to just 'hand him the information'. Of course I again suggested
he study the material carefully only to be accused of 'playing games'
and 'not knowing the answer myself'. To this day he spends a great deal
of time flaming my public contributions rather than spending all that
time towards getting past doing nothing to become successful.
W. D. GANN
There is little doubt in my mind after years of studying the materials
I have acquired of W. D. Gann's teachings that the man was a genius when
it came to market analysis. While many will debate far into the future
whether he was truly worth $50 million or only $300,000 back in the 1950's
still a large sum by today's standards and his works speak for themselves.
Part of W. D. Gann's approach to teaching had much to do with veiling
key points to his most prized techniques. Rather than just telling it
all in easy to follow steps:
- Step 1: Use my Squares of Nine to solve price off major lows and
highs.
- Step 2: Divide X by Y and add to Z and you will know the exact day
for the low or high.
He provided bits and pieces that required the student to put forth a
great deal of time, effort and careful thought before anything would be
revealed. It is my understanding that he did this on purpose because he
felt that this information should only go to those who are willing to
give it all they have and not be looking for hand outs. In this I have
to agree with Mr. Gann. In all my years in this business, I have found
that many who just want everything handed to them make lousy traders anyway,
and often they tend to be the ones that whine and complain about their
trading or that of others more than anyone else. Jesus Christ is quoted
as saying in Matthew 7:6: "Do not give dogs what is holy; and do
not throw your pearls in front of pigs, or they may trample them and then
turn on you and tear you to pieces." (Jerusalem Bible).
W. D. Gann, being reported to be a religious person, no doubt subscribed
to these words of wisdom and so was careful in delivery of his most prized
knowledge. He gave just enough to prove that he was indeed in possession
of these rare gifts, did some forecasting that further proved his insight,
and then gave others the opportunity to discover more if they were indeed
appreciative of his works. Those that would not would remain in the dark,
and as I have also experienced over the years, will be subject to ridicule
and flaming on public discussion forums and then turn on you and tear
you to pieces.
TECHNICAL ANALYSIS
Like most traders, I started out thinking that making money in Futures
and Commodities was all about crop numbers, weather patterns, and other
fundamental data. The subject of Technical Analysis was new to me. Because
of my background in computers, I was naturally drawn to Technical Analysis.
From my transition from Fundamental to Technical Analysis, I suffered
like most new traders did in actual trading. My early failures and occasional
successes became the most important teachers I had at the time. With each
failure I learned what did not work and with each success what might work.
What I did not do was to allow myself to quit just because of all the
setbacks I experienced. Instead of getting upset at myself or others,
the desire to master market timing and to get control of my emotions burned
hot inside me to push on with an open mind and tireless drive.
What I discovered first is that success was not meant to be easy. It
only came to those that believed it was possible to achieve and who did
not quit in trying to achieve it. My desire was to become extremely good
at market timing and to find for myself the best ways of achieving this.
Once a person is able to do this, half the battle then has been won. The
other half, which is much more difficult to achieve although not impossible,
is mastery over the emotions involved with trading.
As an emotional being, this aspect of trading continues to interfere
in many of my personal trades in spite of excellent timing. There are
many, many times I had forecasted a major new market trend in advance
only to capture a very small percentage of the overall move. While my
analysis was spot on, and there are some gains to this, much is left on
the table due to the emotions getting in the way. If you are new to this
idea of emotions being a part of trading, just think of FEAR and GREED
and perhaps you will go "a-ha".
When an inexperienced trader, or one with lots of experience (but in
losing) says they are looking to win trades without a whole lot of effort,
it becomes apparent to me that they are likely doomed to fail in the end.
Just think about this for a second: When you think of the word "Technical",
does that conjure up in your mind "easy"? When someone thinks
an explanation is a bit over their head, you'll often hear them say "can
you be less technical in your explanation?" Less technical or not
technical at all must equate to EASY then. Therefore, you have a choice
to make.
EASY or TECHNICAL
You either want do to things that are easy or you want to use Technical
Analysis. That is not to suggest that Fundamental Analysis is easy. Far
from it, Fundamental Analysis may actually be more difficult than Technical
Analysis. There are just too many variables to consider.
Yet most traders tend to be drawn to technical analysis while many of
these are looking for an EASY way to use it. The question then that aches
to be asked is: "Do you want EASY or do you want TECHNICAL analysis?"
It is my personal opinion that Technical Analysis offers an excellent
way to time the markets. Yet Technical Analysis is not a standard set
of rules or tools. It encompasses many different indicators, different
uses and interpretations for these indicators, many different techniques
and approaches including those considered esoteric (i.e. W. D. Gann and
related). With all the different indicators and all the variables of how
they can be used, who in their right mind thinks that using them is going
to be easy? Bottom line is this: Once you have determined that Technical
Analysis is the path to take in order to become proficient in market timing,
you then have many more forks in the road as to which way you intend to
further your education. If you think this is all going to be figured out
by tomorrow, then stand in line with the majority who will struggle and
eventually be out of this business the following day.
Bottom line, you will have no choice but to spend endless hours and
a good sum of money in order to achieve your goal of market timing. And
if you do not think you need to be good at market timing as a trader,
then you are sadly mistaken. Sure you can let someone else trade for you,
but then you better hope that person is good at market timing or you'll
not see your money again. But if you want to be your own trader and make
all the decisions as to what and when to trade, then you need to find
the right tools and the right way to use those tools to achieve your timing
goals. That will take time. That will take money. That will take desire.
That will require that you do not quit. Those that quit never make it
to the finish line.
Once you come to realize that the path to market timing is not going
to be an easy one, and once you have decided you are willing to work hard
to become better at timing each and every day, then you will be ready
to overcome all the hurdles along the way. Do not be mistaken to believe
there will not be any hurdles. You will likely come upon many of them,
including those internal to you such as discouragement, frustration, creeping
impatience, and many other enemies from within. Your emotions will be
your worst enemy. It is like that little devil that appears on one of
your shoulders that tells you to give up, to go easy on yourself, to not
try too hard. On your other shoulder will be that angel within that tells
you to ignore the little devil's bad advice, to keep at it, to not give
up. Oh the inner struggles will definitely be your biggest hurdle and
one that you may have to deal with for most of your career as a
commodities trader, assuming you make it that far.
So try to keep this simple thought in mind: Success requires that you
separate yourself from how the majority thinks. The call to 'take it easy'
is the theme of failure. Do you wish to have this as your banner? If not,
then push ahead. Every inch you gain in knowledge due to putting forth
effort is indeed an inch closer to the goal line. Pushing forward itself
suggests effort and persistence. Nobody can win a race of any kind without
effort and persistence. ENDURANCE and DESIRE must be your calling card.
You must have an open mind to ideas before foreign to you.
Look at how many dismiss the ideas of W. D. Gann, for example. Yet history
testifies that Gann was a market-timing genius. Is it wise to dismiss
Gann's market timing ability because some question whether he was rich
from trading or selling his books? Again keep in mind that market timing
is only part of the equation. You'll need to master your emotions and
you are not likely to be able to do this with 100% control. But you need
to keep at it anyway.
So keep working towards becoming a better market timer. And keep working
on getting control over your emotions to the best of your ability.
by - Rick J. Ratchford - ProfitMax
Trading, Inc
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