This blog is being written for two primary reasons:
1) for personal trading accountability as I attempt a pretty difficult challenge, and
2) to be a practical handbook for any of my kids who might be interested in learning the craft of trading commodities in a discretionary manner sometimes when the craft is completely forgotten (i.e., robots will do it better).
Trading accountability: publishing the thoughts, decisions, and results of my trades provides the mirror that is needed to maintain the proper trading integrity and not get carried away with emotions, which lead to excessive trading and risk taking. If I can’t explain a trade and be consistent with my explanations across various trades, it means that I’m not sticking to my trading plan. Not using a trading plan is a recipe for disaster.
Handbook for the next apprentice: Journeyman were men in the middle ages who had graduated from apprenticeship and were ready to work on their own. It often involved a particular craft, such as an ironworker or a carpenter. In many cases, it was a craft passed from fathers to sons, from mothers to daughters. Trading commodities on the screen is no different than any other craft: with practice and experience, a person can become a professional trader and live from the profits. The right amount of beginning capital is critical. I’m starting with $10,000, which is extremely small for trading futures. It’s all my wife and I were willing to risk for this project. And I like the challenge. A proper trading account shouldn’t be smaller than $50,000, better if closer to $100,000.
This is not a get-rich-quick manual. It’s just a journal of my trades and other musings that go along with them. The musings might be even more important than the X’s and O’s of my trades, because trade decisions done discretionarily are the fruit of all inputs into a trader’s brain, processed through a soul that has lived through many experiences, which have created filters that interpret those inputs. Some people call this the “gut.” I believe developing a trading plan and executing proper risk management are the cornerstone of any trading business. However, that gut feeling is what sets discretionary traders apart from each other and the algorithms. You should not take my words as trading advice, but as “craft development” advice. You have to develop your own trading plan.
This blog assumes that you have a basic understanding of some of the terminology used in trading. If you don’t, just Google the word, look it up in Investopedia.com, or read the first few chapters of Jacks Schwager’s A Complete Guide to the Futures Markets to get up to speed.
It has taken a long time
Give yourself 3 to 5 years to learn how to trade consistently. I’m on year six and I owe much of my current ability to the willingness of a friend to invest in me and risk millions of dollars on my learning curve. He let me trade his own money. I made and lost many hundreds of thousands of dollars. I ended my time with his business with a positive trading balance, albeit small. But I fulfilled rule #1: Primum non nocere. Do no harm.
I’ll be forever grateful for that opportunity.