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The Commodity Trading Forum is a presentation of |
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Commodity Trading Discussion Forum
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How Profits Are Made
Posted By: Rick Ratchford
Date: Monday, 2 November 2009, at 11:58 a.m.
No matter where you go on the net, when it comes to trading and making profits, you usually read the same old hashed out rhetoric. It is as if these are all simply copying their 'advice' from some other page on the site.
There is NO set time as to when a trader can become profitable. It always depends on the seriousness and dedication of the trader as to the speed of his/her progress.
Advice also about the minimum amount you should start with is also old school and out-dated. While years ago starting with less than $10,000 would have been deemed unwise, today you can start with as little as $300 and be just fine. Take for example the mini-accounts available in Forex trading. In addition, you don't even need to use it while you practice with a Demo account to get your strategy down.
In order to make profits, you need to have good timing. Period. You must have good timing to enter and to exit.
Some may suggest that timing is not as important as exiting. And you'll see many object to my suggesting that it is, if not more. It's all about TIMING.
For most traders, especially newer traders, holding onto a losing position can be difficult. If you enter the market too early or too late, this is the situation you are likely to be in quickly. Keep doing this and all the exit strategies in the world are not going to keep your account from vaporizing. You need to develop the skills to time your trades so that you do not have to withstand the initial deep moves against you, or the constant stop-outs.
I've tried many different approaches to trading and market timing in my 20+ years of trading. Starting in fundamentals, moving into Technical Analysis, Fibonacci, Gann and a whole slew of others. Dozens have shared their methods with me over the years, and I've had the privilege to work closely with many.
There are two main things I can state with extreme confidence:
1. Timing the markets with CYCLES as the core indicator has proven to be the most effective for minimizing risk exposure and is a LEADING INDICATOR.
2. No one, including myself, knows everything about everything. There is so much out there to learn. However, you don't need to know everything to make trading profits.
While my trading started back in the last 80's, I did not become a staunch 'cycle' trader until around 1995. And even then, its real power didn't become evident until a few years later as more and more has been learned. With greater understanding came the pushing off of the ways that most traders rely on today, the heavy use of charting indicators.
While charting indicators have their uses, and I employ lightly in different ways from time to time, CYCLES have always won the day and continues to pass the test of time.
Opponents to using cycles are always those that do not understand them or have never learned how to analyze and employ them. Those who understand and know how to use always support their use. Those who do not, know not.
Case in point, is back during the mid-90's I allowed myself to be swayed by the opposition to Gann methods. I still recall back when I would say "Gann? Phooey!". As if I had a real clue about Gann back then. And that's the case with most who today would say "Cycles? Phooey!". What do they know about? About cycles, nothing. Fortunately, I did take the time to learn more about Gann to lose my ignorance about some of his methods. And by doing that, my eyes were opened to things beyond Gann.
The key to profiting in the markets is not to be led by the nose by those who follow the status quo. Hey, if the status quo of doing things was so great, why then do these also talk about how 95% fail? These are the same people that will tell you to stay away from things 'Gann' or cycles, etc. I could just see some quietly laughing as they keep to themselves, use cycles to profit, or publicly bash cycle analysis while all the time using them. Hey, as some will tell you, it's a zero sum game. Why not throw off the competition?
I've given the same advice for years. Learn to TIME the markets with precision in order to keep your risk exposure low and to enter at the best times. Lagging indicators are going to get you into trouble more times than not. Leading indicators are what you need. Cycle analysis IS a LEADING INDICATOR. You know in advance WHEN to expect the market to change direction. If it does, you're golden. If it does not, you quickly know to exit. What could be better than that?
While this advice has been given year after year, it's a small voice amongst a loud and rowdy crowd that will say 'nay fool!'. So year after year, only a few will break free of following the masses and group-think and to start acquiring more trading profits.
Good trades!
Rick
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