TRADING FUTURES FOR A PROFIT

It is always the magic question, how do we trade futures profitably? Here is the before and after, that could be in my commercial in a video. The first chart is the one I displayed in yesterday's post, and the second one is what happened today. The basic entry is above the prior day's high, so it looks really easy here doesn't it? You just bought there went to work and came home to a nice fat profit. Not so fast. Take a look at the next chart, which shows the intraday action.

Here is my fatal flaw in the world of BS marketing and false hype, I tell you what I really did. I could have just left the top two charts there and crowed about how smart I was etc.. Well I think everyone knows at this point, that is not my style. I was filled on the buy with slippage, then stopped out on the drop. Then I was out of the trade when it ultimately ran up as I thought it would all along. Unfortunately in the world we live in now with the electronic markets, these spikes happen occasionally, and they mess up trades. In following my rules there is absolutely no way I could have avoided this. It does not bother me a great deal because my analysis was dead on. There are little things in trading that we just cannot control, and these death spikes are one of them. They do not happen very often, but they do happen.

There are certainly other ways I could have traded this and managed the stop, but I do not believe in having unlimited risk on a trade. For all we knew this could have fallen like a rock, and the loss could have doubled. For example, what if you had shorted below the low, and not carried an exit stop on the buy side? We use stops to protect from disaster, not to be so perfect with them that we have them in the exact perfect spot every day.

I am still happy with my setup, it was good, there was just a fluke here that "fluked" me. The one thing it does further demonstrate, is the value of my COT Synthetic tweak that I made. I also had called for a Crude rally, which has happened, but it has been very small. I took a small profit out of that trade, and it has gone a little higher since.

So, what about the title of today's post. The point I am making here is that this is a complex business, and we just have to focus on doing the correct thing, and live with what it brings. What it brings will not always be perfect as you can see above. Also, what I hope this demonstrates, is that if you have the right tools, this does not have to be overly complicated. I had one line on the chart and a moving average for window dressing on the price. There are details to using this indicator which I will cover in my newsletter, but you can see in general this is a pretty good tool to start with. We can't reinvent our whole structure of the rules we trade by just to accommodate a fluke occurrence like this.

The PFG update for today is a lot of noise. Basically, the trustee has more or less gotten the green light to distribute the money with a few qualifiers. He is going to shop the bulk to some FCM's to see if there are any takers. I do not expect that to yield much, but you never know. I think we will just have to wait and see. I for one, might leave my money where it lands because I want to spread it and I have accounts at two places now. If it lands in a decent third spot, I would likely stay there. There seems to be some type of battle going in over the loan on the building PFG built with some of our money. In the end I don't think it is going to fetch much it seems there is a guarantee of $6 Million by a company that Jr. is the 90% owner of. The loan is with of course US Bank. The trustee needs that released to sell it, and there seems to be a small pissing contest going on over that. The trustee thinks he can get $10 Million for it apparently.

There were some confusing comments about the forex accounts today that seemed to contradict each other. It would be nice if they would just issue state of the union types of bulletins, to tell us all where we stand, but they are not doing that. Go figure, I am getting tired of following it in all honesty, even though I have a ton of money at stake. The main reason I do this every day is because I think there are readers tuning in here to get my summary. For now it appears the first wave will go off as planned on 9/28, and they are trying to do a bulk transfer to make it less costly, and also more timely. At this point I will take my 30%, plan on taking the fraud tax loss on the 70% and call it a day. I think next year we will get another 20% or so, then possibly some trickles in over the next several years that the attorney's don't take in fees. If they don't have anything on JPM or US Bank, we are not getting much north of 50% here. You would think that US Bank who gave them a loan on that building would have thought it was odd the building cost more to build than the segregated account balance they had with them wouldn't you? To me that is culpability right there. How could a brokerage firm possibly generate enough revenue to run an operation requiring a building of that size, off only $7 Million dollars in customer funds?

You will notice I have rearranged a couple of things here. I know there are many beginners who read here, and I get emails on what to read. I am hoping to dial in specific books I think are good at Amazon, and I have not quite figured out how to get the exact ones I want featured. Bear with me on that. Some of the books that area is displaying I have not read, so I want to get the ones there I know are good. Some of the best ones are not expensive, yet they have very good teachings in them. I just thought it would be nice to be able to link directly to them from here, but I don't have it quite right yet. I will be trying to get the redesign here as focused to the best things I can, it just might take a bit of time. Maybe I should just write my own?

Good Trading