Not enough corn being produced, frost on California oranges, and oil rebounding!

Trading Success Lesson 1: What kind of trader are you?

There have aleady been many interesting opportunities to profit from. Corn hit above $4, FCOJ at all time highs, Oil has found a plateau at the $50/barrell level with an opportunity to skyrocket from here. We have seen these long term trends developing in the metal, energy, and grain commodity sectors for years. It is important to have the necessary tools at your disposal to catch any new long term trends as well as the capability to identify short term trends.

“Fortune favors the prepared mind.” Louis Pasteur

In order to succeed at futures trading you must take a philosophical stance. Often times the mistake is made that the philosophical stance revolves around “Fundamental and Technical Analysis”. In the truth the philosophical stance revolves around your role as a trader in the markets. The question you must ask yourself is “Do I interact with the market or do I react to the market?”

Depending on your answer you will approach both your fundamental and technical analysis in a different way. If you say “I interact with the market” what level of obligation have you committed yourself to as a trader?

1.You have put yourself on par with the Hedgers and the Large Speculators
2.You operate in as a market predictor
3.You view your actions as an integral part of the markets

If you say “I react to the market” you create an entirely different level of obligations for yourself as a trader.

1.You don't put yourself on par with Hedgers and Large Speculators
2.You operate in a defensive mode, becoming a market follower
3.You view the market as self contained

Their have been tremendous failures by those that felt that they could “interact” with the markets by "moving" the markets. LTCM (bond yield curve fiasco) , Nick Leeson (Nikkei futures fiasco), the Hunt Brothers (silver fiasco), Amaranth (natural gas fiasco), are just a few. The core problem in each instance is not the “interaction” but the level of “ego” and hubris that accompanies the feeling that you can "move" the markets. The futures and forex markets have trillions of dollars influx . Disaster comes when you believe that you are right in spite of what the market may be doing. In each of the instances above a simple change in behavior could have diverted disaster. Instead all the Phd's, Nobel Prizes, hundreds of years in business, and billions of dollars at stake did not change the simple fact that the market is always right.

When you say “I react to the market” you subsume your ego. You realize first that there are people, Hedgers and Large Speculators, with more book knowledge, technical knowledge, capital, and faster computers that are still failing. This alone can help a trader sleep better at night. Which reinforces the fact that as small speculators you don't have to be perfect. Which means that you don't have to predict the markets. Simply use those tools that help you best identify the overall momentum of the market. When the market shifts in that direction jump on. Which reinforces the concept that your money doesn't matter in the markets, just to yourself. The market doesn't care about your success or failure it's self contained it simply consumes those that are foolish enough to go against it and powerful enough to propel those on its side forward.

As a trader you have felt this. Some days it seems that you are doing everything wrong and you cannot catch a break. Other days trading is the easiest thing in the world. What's changed? You. The days that you feel that you are “interacting” with the market are the same days you have tendency to struggle with your decisions. The days you simply “react” to the market and let it flow are the days your decisions are the simplest.

From this point of view, “reaction” without ego is the only way to trade.

Purchase our $1,500 8hour course "3 Steps to Trading Success" for just $497 to learn the ins and outs of money management, technical analysis, and risk management or sign up for our one-on-one Speculator mentorship course regularly $997, just $695 for our Trading Success Lesson Subscrbers.

TRADING ISN'T FOR THE FAINT HEARTED!