6 replies to this topic

[flyers&divers]

I was a rookie commodity broker during the wildly bullish markets in the early seventies and I had no perspective yet but some seasoned people around me made absolute fortunes for their clients with little by knowing the beast. I just wanted to alert the board that we may be entering a similar time zone when for any number of reasons some of the commodity/financial/currency instruments will go into a freefall or go ballastic. One has to be prepare mentally and practice for the big one. Contrary to popular belief that kind of market is not hard to trade as long as one knows what one is dealing with and one has the right mentality. One has to have a position "you have to be in it to win it" (NY Lottery's slogan) a position followed with a stop rather then getting out at a fixed target. Even a small position can end in spectacular gains. One of the ways to position oneself for a sustained move - at least this seems to suit my personality -is scale trading in support areas, like the precious metals or energy now, and rather then trying for an exact low one should be scaling in and out - but never letting go the portion that one wants for the big move. This way when the paricular instrument breaks out one has a small but free position. At that point depending how the trade develops one can decide to pyramid the trade or not. The position has to be in such proportion to one's finances that one does not lose sleep over it. If it does not work the losses will be probably smaller than what one made scaling in the range. An other misplaced belief is that you have to watch the market every second. Wrong. Once the market broke out it is better to leave the micro scale and follow it on a time scale that allows one to keep an eye of longer term key points. I am not certain that the following markets will go ballastic but I started positioning myself this way in the Gold and Yen futures. If they run, I will be there and if they don't I can afford to scale in and out indefinitely. I am looking to start with enrgy futures next. An other candidate is Copper which I have not touched yet but it is very impressive how (with the US Housing slowdown priced in) Copper marches ahead. Massive demographic changes , reckless governments, higher energy costs, extreme weather patterns, and sometimes all together, are the fuel for some of these moves. Some people on this board trade running markets in one form or an other with great success (Gary Smith comes to my mind) I just wanted to expose this from a futures trader's perspective. I am a scalper these days in the ER2 and Crude oil futures. After a certain number of trades and some profit goals met for the day I quit doing that and I check on my scale trades and when da big ones happen I hope to be there. P.S. I did not get into some advance techniques like doing this with options or option spreads but only one's imagiantion is the limit. Regards, F&D

[hiker]

great post, F&D.

not to distract from the overall points you make, this is a specific example of the need to be " in " to win -

makes me think of uranium price move from approx. $9 to over $90 per pound in recent years, and the related rise in the miners/explorers...when uranium was in the $30's, only James Dines seemed to easily conceive how high uranium prices could go..

this one buys and stores the uranium commodity, and is not a miner -

http://stockcharts.c...llery.html?u.to

[flyers&divers]

Thanks Hiker, Certainly, there are more opportunities in securities. Man, what a beautiful weekly chart. Patience is the key. F&D

Edited by flyers&divers, 15 March 2007 - 11:53 PM.

[PorkLoin]

F & D, great post indeed, generous and topical. I traded futures for 20 years and was never very good at it, but your post made me salivate. Ciao, (Pavlov's) Doug

[flyers&divers]

Thanks Doug, No need to trade futures if you can catch a few ones like Uranium. Your catching the Uranium move and negotiating every phase certainly fills the criteria and it has been an inspiration for me. F&D member of MAS (Mutual Admiration Society)

[PorkLoin]

F & D, you're kind, and as far as uranium,

"you have to be in it to win it"

really applies, in my opinion. I wish there were futures contracts on uranium. I say bring on the ETFs too....

My question is when is "the big one" going to be over. Are we going to have a parabolic blow-off top, a steady drumbeat of news about U, Joe Six-Pack buying his odd-lot ration, shoe shine boys and cabdrivers on the watch, etc.? Does the market have more sophisticated tricks up its sleeve? Probably. Makes sense to me that the market "likes" to cause the maximum pain for the maximum number of participants.

Man, do I love this stuff.


Doug

P.S. Don't know if you place much stock in it, but the Commercial traders have been pretty heavily long copper futures for a good while. Interesting to me.

[flyers&divers]

Yes, I noticed the COT. In addition he front month in Copper is at premium, that alone is an indication of tight physical copper conditions. F&D