My Investor's Place

One of the vast differences between the results of trend following in commodity futures trading lies in which markets a trader invests in.

The number of markets usually depends on account size. The larger an account the more markets possible to be traded and vice versa. Do to this constraint smaller accounts can not trade as many markets. One of the principles of commodity futures trading is that is a known fact between commodity trading advisors…and professionals…that no one knows the future and anything can happen. So if we take this fact it is quite possible to miss one of the most trending markets just solely on portfolio selection.

This is a solution in which I use in my trading. It is called Tactical portfolio selection. What this means is, identify the strongest and the weakest markets once a week. Once these markets are identified I look for low risk trades, usually less than 1% of my account. This way I make myself available for oppurtunities when they are available. In my opinion this is the truest example of trend following. Why would I want to try to trade a market that is not highly ranked. This would mean it is not truly trending and my goal is to trend follow the strongest and weakest markets with low risk bets.

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This week investors who thought they were avoiding risk saw their worst nightmare sentenced to 150 years, Madoff. Who are these investors, while attempting to avoid risk, were they simply naive, stupid or just plain greedy. How can one really expect to generate returns that were simply too good to be true. I was lucky to have invested with Trout and his draw downs you could count on two hand. However with Maddoff… NO DRAW DOWNS? Where were the so called experienced experts, the financial advisors, the fund of fund managers,accountants that all knew that everything has risk and anything too good to be true is not? It is very interesting to me as a long term investor in commodity futures trading and trend following these so called experienced experts shun trend following and commodity futures trading as risky. Yes,commodity futures trading can be risky, so does driving a car. However when money management and risk management are applied some of the risks are manageable. Even though I had a chance to invest with Madoff and be one of the lucky few he would take money from…it did not make sense how he could not have losses. I have really yet to meet a manager who never has losses. Losses are like breathing. You make some money…you lose some money… the difference with commodity futures trading… there are only 4 things that can happen… big losses…small loses… big profits…small profits…that is it…

The risk averse Madoff investors only got BIG LOSSES… Accept the risk..Risk is all around us…when we drive..when we eat..we can not prevent the most basic virus… Trend following is similar to life…. Risk is all around us… but we attempt to manage the risk.

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The common thought is that everyone lost money last year as in every Stock Market Bear Market. Well happily to tell you, this is not the case. Numerous trend following commodity trading advisors had great years. To give one even more confidence in the strategy is the 2008 Bear Market is not an outside event. Again numerous trend following commodity trading advisors made money in the bear market of 200-2002 …as well as even in 1987. I will give you some examples of some of the commodity trading advisors that I have money as well as others.

Trend Following Commodity Trading Advisors 2008

Robinson Langley 30.65%
Tactical- David Druz 48.35%
Abraham Trading 28.77%
Accela 16.48%
Argus 45.44%
Beach Horizon 59.82%
Blackwater Global 55.90%
Blue trend portfolio 43.34%
Clarke Capital Worldwide 62.90%

I can post the same not just for stock market crashes..crisiss … 1987..1998 ( Asian Categion)..Gulf War1..Gulf war 2… Enron.. Barings… Whenever there is a crisis…there are oppurtunities. Investing as a trend follower or investing in a commodity trading advisor is not about these great returns. It is more about staying in the game …being patient…having the discipline to go through a long draw down.

Take a look as an example of Clarke Capital. There were 2 years back to back with losses…unfortunately investors gave up just before a massive move over 2 consecutive years..

Click here is see the report

Nothing comes without risk. Those who tried to avoid risk as in the case of Madoff learned everything has risks. When one considers a portfolio of trend following commodity trading advisors they stand the possibility of smoothing out their overall performance.

If you want to be a long time financial winner. Have patience and discipline… allocate less than 5% of your net worth to any idea and you stand the potential of compounding your way to long term wealth.

PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. PLEASE NOTE : PRIOR YEAR AND YEAR TO DATE PERFORMANCE NUMBERS ARE NOT INDEPENDENTLY VERIFIED, AND SUBJECT TO CHANGE, UNTIL COMPLETION OF AN AUDIT. THERE ARE SUBSTANTIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THIS PRODUCT. FOR A SUMMARY, SEE THE “RISKS & CONFLICTS” SECTION OF THIS WEBSITE. READ THE OFFERING MATERIALS CAREFULLY AND CHECK WITH YOUR OWN ADVISERS BEFORE DECIDING TO INVES

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I am sure you have seen those late night informercials how to make a million dollars in commodity futures trading. How about an option strategy buying heating oil in the summer because it has to go up in the winter. Well guess what, it does not work that way. Commodity futures trading is the hardest yet easiest thing to do. Too many think this is a get rich quick idea. Well, it is a quick rich slow idea, boring, aggravating at times and simply one has to have enough money to survive the most common choppy directionless markets. Only once in a while are there big moves, unexpected powerful ones. Where were the experts predicting the recent stock market crash( however trend following commodity trading advisors made a fortune). How about the experts who were calling for crude oil to go to $200 ( who knows it might..but again trend following commodity trading advisors made a fortune).

After being involved as an investor as well as a commodity trading advisor in commodity futures trading since 1994, I can tell you if you think to start trading with less than $100k you might be better off flushing it down the toilet. This is just my opinion, but as Ed Seykota a legendary trend follower has stated there is no dollar amount too big or too small. The key is following your system or staying with your commodity trading advisor during the eventual draw down. The volatility is so great in the markets currently if you do not have enough money in your futures trading account and you attempt to run a tight stop, just the noise can take you out.

In summation, there is no magic number… however in my first hand experience I would not even suggest with less than $100k

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