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Posted By Doug Tucker On July 7, 2007 @ 10:13 pm In | Comments Disabled
My journey to gain trading knowledge began thirty years ago, prior to the use of the personal computer and the slick charting packages we have today. I was mainly interested in the newly traded Comex gold contract. I didn’t have a clue how to trade it other than listening to the gold bugs saying to hold on because gold was going straight to a thousand dollars an ounce. At the time it was in the $100 range. It got close. My charting was of course done by hand and simple moving averages were done on a hand calculator. I read every book I could get my hands on, although most dealt primarily with fundamentals. I was very young, but thought I should get a job inside the business. My first job was with a bond firm that was about as far from my real interest in commodities as you could get. I eventually moved to a major firm where I was a bit closer to the action. I pictured myself as a market timer, but soon realized that I was really a salesman. This was well before the stock market took off in the long bull run.
Precious metals and other commodities were having good runs, but the public was not the least bit interested. And they were even less interested in stocks. It was a hard time to be a broker. However, the hot money seemed to be in managed futures accounts. This was a great time for trend following systems. Indeed many trading systems were designed and sold based on the trending characteristics of those days. Of course they don’t work well in today’s markets, and they probably didn’t work well in past markets, but they worked well in those few years. The firm I worked for handled the Donchian system managed accounts, and many of those had waiting lists to get in. This inspired my interest in studying technical trading systems. Soon the PC became available and I was one of the first to purchase a crude charting program called CompuTrac. There was no hard drive on the computer so I had to switch floppies constantly. At first I had to hand input data. Eventually I got daily updates via modem at a cost much greater than I’m now paying for real time tick by tick quotes. I soon learned to code the great systems of the past few years. I became quite disillusioned to find that none of them made money in the current environment. I thought I could plug in what had worked and it would continue working, but that was not the case.
At that point my real education began as I started searching for a methodology. I read all the new books coming out on technical analysis. At this point there were many books being written on the subject. The Welles Wilder book seemed to open the way, as well as the PC, as complicated indicators were now much more accessible as the calculation didn’t have to be done by hand. Soon the stock market started it’s huge bull market, but the indicators that caught those beautiful smooth trends in gold, sugar, soybeans, etc just didn’t seem to work well on the new S&P. I was purely interested in futures at that point. I was not a stock picker. I’ still not. I started studying momentum and flew to Chicago to study stochastics with George Lane. After spending much time with that, and attending many seminars and conferences, I decided to go in a completely different direction and studied for a time with Peter Steidlmayer learning the Market Profile. That seemed to be the new Holy Grail of the moment. I could not make it work for me after much exhaustive study and research, but did learn much about price behavior. It has helped indirectly. I explored many different methodologies during this time and was able to put together a trading plan that worked for me. I was still not satisfied that I had what I was looking for. One thing that became apparent was that no single indicator or approach, no matter how well touted, worked all the time. Many methods worked in certain environments and at certain times, but there was not an approach that worked consistently.
My hope for finding a mechanical system that I could turn over my decision making to was quickly fading. I realized that I would have to think and make the decisions myself. The only way to trade was with discretion. There were no magic indicators. There were no real gurus. This was a time when there was a guru of the month. But the next month there was a new guru and the old guru quickly became discredited. Remember Prechter and his little waves. That was the hottest thing around for a time. Some of the big traders I knew would await his every taped message and hang on every word. None of them that I know of made a dime following his advice. People still use Elliot wave. I don’ know if anyone has ever made a dime using it, but it is still being taught and discussed.
Now there is a new crop of gurus in chat rooms telling everyone they have the answer. You must of course trade the way they say if you want to succeed, at least that’s what you’re led to believe. Is there any accountability for their performance? Are they successful traders, or just successful in promoting an indicator or a black box system, and getting people into their chat rooms? The same game goes around again. I see the same hype and promotion and the same dismal results. New traders come into this environment and don’t know how to separate the useful information from the mass of clutter and useless techniques and hype. So the purpose of this blog is to try to make some sense out of all that’s out there. It’s a place where I can post my ideas and my past research to try to help sort out what works from what doesn’t. No guarantees of course. I don’t have the answers. I have many questions looking for answers and by having a forum to be able to post my thoughts. I will hopefully better myself as a trader and possible help a few other people along the way. I am not a financial advisor or a CTA. I no longer work for a brokerage company. I’m simply an independent trader. I have no chat room. I have no system or indicators to sell. I am not charging any money for anything here.
I plan to post articles of a more general nature on this tab, and more technical indicator related articles on the indicator tab. On the main page there will be discussion and examples of current markets. I believe in watching just a few markets closely rather than trying to expose myself to many markets. I miss many big trends in markets that I’m not watching, but probably have a better chance catching the moves of the markets that I am focused on. My interest is in the stock indexes and gold. That’s subject to change if these markets go quiet for an extended time. One has to match their trading style, methods, and markets to their own temperament and personality. What’s right for me might not be right for another trader. Everyone has to find his or her own way. Still, many concepts can be applicable to many different trading styles.
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