Commodity Trading & Trend Following

Having Commitment & Discipline When Trend Following

Andrew Abraham — Fri, 17 May 2013 08:09:16 +0000

Some times…actually rare times do traders really succeed. The way they have succeed is by utter commitment and discipline. However those rare traders who reach the elusive goal of success have a hard time maintaining the commitment and discipline. Failing to redefine goals can limit continued success. I always refer to trend following as a marathon. It is never easy and is a major commitment. Think how many really are committed to marathons? Really not many. How many traders can continue when they have 2 years of trading and they did not make any money? VERY FEW…There are those of you who think trend following is easy..You read a book…or you take a course over the weekend and Shazam..You are a successful trader. Not reality. I am teaching several students and one was absolutely shocked when I showed him Bill Eckhardt’s trading record. How can the father of the famous Turtle Traders not make money not just in one year..but several years…How can that be? Well this is the reality…It is never easy…Even the unique commodity trading advisors who have survived over the decades are not promised a profit or a way to avoid a draw down. Things need to put into perspective. Trend Following is not for everyone…Trend following is not easy. It takes commitment and discipline. There are no short cuts. There are no short cuts even investing in successful trend followers. Trend Following is truly a marathon. Millions in up markets and down markets is encouraging but very tough in reality.

Past performance is not indicative of future performance

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$SPY $RMD $PKG $ALK

Andrew Abraham — Fri, 17 May 2013 07:59:49 +0000

The $SPY hit an upper channel. It is about time we saw some red.

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Trend Following Positions 5.16.13 $PKG $ALK $HTZ $QIHU $SPY

Andrew Abraham — Thu, 16 May 2013 03:51:43 +0000

Current Trend Following Positions

Past Performance is not Indicative of Future Performance

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Successful Trend Following Has Nothing to Do with Predicting or Forecasting

Andrew Abraham — Thu, 16 May 2013 03:44:27 +0000

Successful trend followers do not trade their opinions. Actually once I realized my opinions do not mean anything nor will they make me any money, I stopped. I am always asked what do I think about this market or that market. I say I do not know! Honestly no one knows. We are dealing only with uncertainty. I joke around if you want to know what gold or the SP will do watch the so called experts on CNBC or Bloomberg. They seem to know the future!

All that is needed for successful trend following is a complete trading plan that is simple and robust that is based on strong principles of money management along with the courage to follow the plan. Courage is where most people fail. They do not want to accept that they were wrong or a trade does not work. The reality is that there will always be losses and trades that do not work. If you can not accept these facts you will never succeed as a trader. You need to accept the risk of losing money when putting on a trade. You need to make this small enough that you are not bothered by the loss as well as big enough to profit if the trade works. I risk less than 1% of my account size on any trade. Depending on the program I am consistent. I do not raise it or lower it.

This is what successful trading boils down to.

Past Performance is not Indicative of Future Performance

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Focus on When to Get Out of a Trade as a Pose When to Enter

Andrew Abraham — Thu, 16 May 2013 03:33:27 +0000

Most beginners only focus on entries. Getting out is more important in my opinion. I always state, you need to know when you are getting out with a loss or a profit. You must have a complete trading plan and be consistent following it. You must have a stop loss. This prevents disasters. There are those that disagree however I have seen more traders blow up by not having a fixed stop loss that they can adhere to. If the market does not confirm your expectations..GET OUT…Follow your trading plan. You need to have the patience to let the trade work. As Jesse Livermore stated more money is made by being patient on a trade and simply letting it work.

Past Performance is not indicative of future performance

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Newedge CTA Index 20 Month Draw Down Worst on Record

Andrew Abraham — Wed, 15 May 2013 15:29:28 +0000

How do you take this fact… Newedge CTA Index 20 Month Draw Down Worst on Record …a time to exit managed futures …or a time to be a contrarian? Personally as much as past performance is not indicative of future performance this statistic encourages me even more. The truth is we are only dealing in uncertainty, however when articles like this present themselves in conjunction with so called Market wizards leaving the space I am encouraged. I do not have a crystal ball and this draw down can easily continue, however human nature also continues. Trend following is not dead. Trend following worked for Richard Donchian for almost 50 years. I am sure it was never easy or a walk in the park. I am sure he always had losses and long duration’s of draw downs…however …when he least expected it…Donchian stumbled into trades that trended more than he expected. Statistically which really means nothing, it is not abnormal to have 2-3 periods of not making money in managed futures. Time will tell …however I am betting on managed futures and trend following.

Past performance is not indicative of future performance

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Trading Opinions or Comfort Levels When Trend Following

Andrew Abraham — Wed, 15 May 2013 04:24:25 +0000

I have to admit, I really do not understand how the stock market is going up all over the world. I see things that make me very uncomfortable such as now interest rates starting to move. There are economic indicators which are starting to flash to the negative, however the trend is still up. Do I want to be right or try to make money? I learned along time ago to park my opinions and ego and simply listen to the market. I use simple tools to “Try” to keep me on the right side of the market. One such simple tool are moving averages. The fact is as of this post the stock market levels are all above all the moving averages I look at. So if that is the case, I need to follow what the market is doing. Maybe it is a parabolic blow off…or maybe not. Either way…If you want to trade your opinions or comfort level I doubt you will succeed in trading. It is never easy! There are always challenges and losing periods. Successful traders put in a tremendous amount of time and energy in their trading. This is not a weekend job or a hobby. I am up at 5am and work till many times 10pm. You have a choice…if you really want to succeed in trading & trend following you need to work. It is not retirement in a box…& in order to succeed you will have to take trades that surpass your comfort level or logic.

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One of the Main Reasons Traders Succeed

Andrew Abraham — Wed, 15 May 2013 04:13:05 +0000

I teach others because it reinforces my own thinking and mental fortitude. What stands out to me is that too many are searching for ways not to lose money. They are looking for better indicators…or better systems. I believe that successful traders who are consistent accept the losses that they encounter and know they are inevitable. They risk a small enough amount on any trade which does not cause them any mental anguish yet big enough to provide potential returns. There is never a way not to lose money. Some of the most successful traders over decades go through long periods in which they do not make money. They do not quit or start looking for a new system ( enhancements yes).

I really believe that in order to succeed one has to think in terms of the next 1,000 or 10,000 trades. Putting on these trades must be without any emotional baggage.

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Trading Success When Trend Following

Andrew Abraham — Tue, 14 May 2013 04:06:20 +0000

Believe in making it happen

Be Committed to achieve trading success

Being committed is more important than a goal

You must take every trade and leave your comfort zone

Follow your trading plan exactly

Be willing to take a loss

There is nothing about being right or wrong…Trades either work or they don’t!

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Trend Following Trades 5.14.13 $CI $DDD $LL $PKG

Andrew Abraham — Tue, 14 May 2013 04:01:50 +0000

These are my current positions. Got taken out of $KR yesterday. Keep the winners..Sell the losers( QUICKLY)

Past Performance not indicative of future performance

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