Commodity Trading & Trend Following

Countless traders flock to trend following stocks or trend following commodities. They think it is an easy way to pick up some extra cash or income. The truth could not be further. Most traders fail. Most trend followers do not have a trading plan or any discipline or patience to succeed. There are always losses and draw downs. It is a grudge match. That is why you need to work and have a complete trading plan and be consistent while following it. You must accept the loss potential on every trade. Do not think of the profits. Think about trying to keep your losses small and work on following your trading plan. You need courage, humility, perseverance and good judgement as a start.

Take out of your thought process this is easy. Most traders fail. More than 90% fail…However there are some unique trend followers who have compounded money over decades. They do not know anything more than you. They have a trading plan however and are willing to accept losses and not quit. They do not jump system to system. They know trend following is not retirement in a box!

Past performance is not indicative of future performance

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Innovative Service for Trading Signals for MetaTrader 4 and MetaTrader 5

Metatrader offers a very unique service for both traders and trading system developers. Metatrader offers a platform for developers to sell their signals as well as this same platform for traders to pick and choose signals which meet their profit & risk objectives. This a wonderful win win for both parties. Many traders either do not have the ability or knowledge to develop trading signals therefor need the guidance and assistance of professional system developers. Conversely system developers have a platform in which to demonstrate their services and systems. Thousands of potential clients are within reach for these system developers.
The process can easily be visualized by this diagram for trading signals

Signal Sellers Traders

Metatrader is diligent in providing transparency and security for traders looking to purchase trading signals. The goal of Metatrader is to provide a platform with security both traders and developers for best forex signals.
1. It is a very quick and simple process of buying and selling trading signals.
2. Full transparency of trading history as well as drawdown are available for inspection
3. Payments are regulated and have a fixed subscription fee.
4. Traders are protected by Metatrader by if there is a disagreement or conflict with a Signals Provider monies are returned to the trader.
5. Metatrader has no bias and simply runs the platform and charges a 20% commission.
6. There are no long contracts or obligations.
7. Your privacy is protected fully as No personal data on Subscribers is collected.
8. What also is unique that signal providers have no direct access to the clients. Their identity is unknown.
9. Work with any MetaTrader-broker, including regulated-ones.
10. Metatrader strives for a fraud free environment

Traders can research signal sellers very easily due to the transparency offered by Metatrader as in the below example.

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Once a trader has decided on a signal seller it is very easy for them to start trading. Traders need only three things to subscribe to a signal seller.
1. MQL5.com account. There is no need to specify a real name. Even a nickname is acceptable. h
2. Specify their broker. The list of appropriate companies will be automatically displayed upon entering the first letters.
3. Specify the account number on the broker’s server. Only the account number is required. Neither Investor nor Master password is requested, as they are not necessary for transferring trading signals into the trader’s terminal.
These are all necessary things required to subscribe to the Provider’s signal. The process has been streamlined and the amount of necessary data has been kept to an absolute minimum. Please note a single trading account can be managed by the signals of only one Provider at a time. Metatrader has deliberately banned using several signals on a single account to protect traders from unexpected losses, again just another example how Metatrader looks out their clients.

Even signup for signal developers is quick and easy. However to ensure the clients protection such additional steps are needed in order to become a signal developer. Signals Providers need to provide more personal data and pass a probationary period. Generating signals for other traders imposes some responsibility on Providers. To ensure Subscriber’s protection, Signals Providers should specify the following personal details: first and last names, address, contact phones and scanned copy of a passport or a similar document. This information may be necessary in case of any disagreements between a Subscriber and a Provider. This information will not be disclosed to any third parties. Some signal providers supply free signals however if a signal is not free, it should pass a one-month probation period, while the Provider should pass moderation and register as a Seller providing actual personal details
When publishing a new signal, Providers should specify:
1. Signal name
2. Trading terminal type - MetaTrader 4 or MetaTrader 5
3. Broker’s trading server name
4. Number of the account that will transfer the signals
5. Investor password. This password allows to connect to a trader’s account in READ ONLY mode and view the current trading operations, as well as their history. This password is enough for “scanning” the current trading operations and their further distribution among Subscribers. At the same time, this password does not allow managing a trading account and performing trade operations. If a Master password is specified, the signal is not enabled.
6. Subscription price

To the best of my knowledge I do not other services for traders as well as developers that make systematic trading so efficient. I suggest you check out Metatrader if you are a trader as well as a developer for best forex signal service.

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Everything boils down to risk per trade. What I have seen in this recent bull( parabolic) stock market move was some of the high priced stocks had tremendous moves. Look at $GOOG $REGN $PCLN. Follow your trading plan…Risk less than 1% of your account size on a position, watch your sector risk…as well as your open trade equity. More so watch the market. I use exponential moving averages. When the $SPY is above them…I have a green light to try to buy break outs or retracements. All stocks retrace. Today I am looking at $ALK $REGN $SBGI.

Past Performance is not indicative of future performance

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What, how can that be? You are telling me it is possible to lose money even with a manager who over long periods is profitable?

Yes…100%

I have seen it time and time again in my career now spanning close to 19 years. First of all trading is tough. There are no gurus or magic managers. Every manager has periods in which they lose money or go through draw downs. The way investors lose money even with these unique & profitable managers may happen with the following mistakes:
• It is Very Easy to psychologically to invest when a manager is having a good run. However as much as we are dealing with uncertainty buying drawdowns of managers who have gone through various cycles over decades can be a prudent concept.
• Too many investors “ Buy the Highs and Sell the Lows”
• It is Very Easy to allocate to a Large Manager with Billions of Dollar under management ( but they are not perfect and can lose money also)

Simple Rules to Consider
• Managers who have experienced various market conditions over the years
• Liquid & Transparent- Managed Accounts
• Set a goal of 15% CAGR ( Compounded Annual Growth Rate)
• Doing the Uncomfortable: Buying the Drawdown
• Performing Strong Due Diligence
• Allocating no more than 5% of assets in anyone manager
• Accepting there is nothing perfect, no magic manager and even following these rules there still will be loses!
• Past Performance is not Necessarily Indicative of Future Performance

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It Has Been a Very Challenging 2 Years for Managed Futures
For those that have invested in managed futures over the recent period, one word sticks out – TOUGH!
• Two Back to Back years of negative and sub performance
• Repeatedly Heard – Trend Following is DEAD!
• Received an Email – Find a New Line of Work!
• It is Never Easy!
• There are Always Losses & Long Durations of drawdowns.
The question is easily raised when will the sector return? The truth is no one really knows and as much as Past Performance is Not Indicative of Future Performance possibly we are at a new juncture? Natural Gas has been a strong performer as well as the stock indices in a bull move. To the contrary Gold has had a sharp selloff only to rebound sharply. The same can be said of the grains which caught some traders on the wrong side. Some shorter term traders however have benefited from this volatility while some longer term traders have been negatively impacted. The idea with managed futures is profits can be had on the long side as well as the short side. Depending on a manager’s time frame different results can occur.
Believe it or not, you only need several good trades over the year to produce positive performance. It is these outliers that no one expects. No one ever rings a bell when trends or favorable periods begin. The key is to be “Available”. I have been investing in CTAs since 1994 as well as became one in 2011. Periods in which we have encountered over the last two years are not unique. As stated above, there are always losses and long durations of drawdowns. Possibly this environment can continue for longer than we would like. Then again, possibly with every contraction there is an expansion. Wouldn’t it be nice to buy a unique CTA who has been around for various cycles on sale?
Don’t we all love to buy low and sell high?

Cover of Business Week in the late 1970s before a major Bull Market

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (”FOREX”) IS SUBSTANTIAL.

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past Performance is not indicative of future performance

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Marc Faber likes gold and is buying more. Faber keeps on adding to his position monthly however he refuses to leave gold in the USA. He tells the story how in 1933 gold was confiscated by the US Govt in the Great Depression…He only wants physical gold, not the EFT GLD.

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Firstly the vast majority of traders have no plan. They follow the news,CNBC or some guru whom they think knows the
answers. The reality is that no one knows the future or any answers. These traders who have no plan usually fail. The first step in attempting to avoid failure is actually putting to paper your complete trading plan. This clarifies your thought process. You need to think in terms of what to buy or sell…How much to buy or sell…as well as when to take a loss or a profit. If you do not have a trading plan you will not know any of these issues which are paramount to your trend following success. I became an AP years ago with one sole reason…to learn from others mistakes.

Learn from experience - look for high probability trades…look to “try” to risk only small amounts of your account on any trade…

Past Performance is not indicative of future performance

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I received an email this weekend asking for assistance in trading. In the email, he stated trading is a side job in order that he can earn side money. If you really want to succeed, Trading has to be your passion and trading success must be your goal. Would you want a doctor whose side job is medicine or a lawyer whose side job is law? Probably not!

Trading success can be had for those who are committed, passionate, dedicated, disciplined and patient. Look at Mark Minervini a stock market wizard with 220% annual returns, he does not go on vacations. BTW he was a junior high school dropout. Why did he succeed? He had the attributes if being committed, passionate, dedicated, disciplined and patient

Trading and trend following should never be a side job in which you think you can pick up some extra money. Trend Following is not retirement in a box. You will have to work…You will have to explore your own emotions and psychology.

Trading success & extreme wealth= moderate returns + time+ compounding of money with a complete trading plan.

Past performance is not indicative of future performance

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