A similar constraint is needed when trading from the daily oscillator. Avoid trading into extremely overbought or oversold oscillators. The bottom line of all your trading should be the dollars won over dollars lost ratio.

About Advisors, Brokers and Such

I never listen to my Broker(s). I use a minimum of two. They love to chatter and do Monday morning quarter-backing. I am firmly of the opinion that everything 1 need to know about a market is sitting right there in front of me on my chart. Here is an example: After coming out of an hysterical, weather driven trading range. Wheat made 1-2-3 low. Following my plan for 1-2-3 lows, I entered the market. One of my brokers let me know that I ought to be buying Wheat Puts. The other warned me that I was in congestion area and was taking my life in my hands. Both advised me to get out or get killed. Yet, there was Wheat rising nicely along a beautiful 45 degree trend line, well above the offset moving average, making higher highs and higher lows and very predictable Fibonacci retracements.

I dont listen to the news when Im calling my trades via my methods. It throws my trading off. When I am contemplating a trade, I avoid CNBC-FNN, CNN, PBS, and an other source of opinion on the markets. I do NOT want to know what they or any of their guests think. I want to emphasize that everything I need to know is right there in front of me. The only thing that can mess up my plan is a Chernobyl incident, or an "ac-of God." Then I have my stop in place to bail me out as quickly as possible. No human can predict such incidents.

I cannot stand to watch the weather reports, the crop reports the consumer price index, the producer price index, the wholesale price index, the trade balance, the money supply, the discount rate, the prime rate, or any of the host of other reports spewed out by dozens of government agencies and the like. These reports (and they are forever increasing) cause huge blips, gaps, runs-up and runs-down on the intraday charts. Its enough to give anyone ulcers. Hardly a day goes by that someone, somewhere, isnt releasing a report that makes the market jump. Its too nerve-wracking for me. Thats why I ignore all these reports, and all the opinions concerning their implications. However, I am aware of them as a matter of safety and self-protection.

i have come to realize that my own opinion of the market is as good as any. One of the advantages of longer term trading is that these reports are not important to the longer term trend. Outside influence serves only to take away the courage of my convictions, therefore I ignore such influence as much as possible.

That is not to say that these reports are not valuable. They are important at the right time and in the right place. However, they are of no value to me in futures trading when I am utilizing the methods that I use to enter and exit futures markets.

Im convinced that the small trader should trade as long term as possible to avoid the lumps and bumps seen in shorter term market moves. Trade the mini contracts, or use options until you build an account.

I am dead set against all prognosticators, prophets, most advisors, and anyone who tells me that they "think" the market will do such and such. I have enough trouble getting rid of my own "I thinks" which invariably lead me into trouble. I dont want to know what they think when Im busy making my own decisions based on my own methods.

I do my best when I follow my method, diligently working like a good mechanic, showing myself adept at following what! know works. Its like golf. All you have to do is to hit that little ball into the hole, but few there are who can do it well. Few, too, are the traders who can diligently, with persistence and consistency, follow a trading system or method that works. I hate myself when i dont follow my method. 1 aggravate, go into self-abasement, call myself all kinds of names, feel ashamed, and get terribly depressed. Yet it happens all too often to suit me. Here are a few things I do to help out. They, too, are hard to do;

I keep a log of all my trades, why I made them, and what I was thinking about when I made the decision to enter them. I do this in part to help me with future trades, and in part to keep myself too busy to overtrade. I have a tendency to take too many trades.

I keep a fake account of al! my trades, real and paper (yes I still paper trade}. I chart an account equity. It is made up of every trade i make, real or paper. When my fake account equity goes below the 3x3 MA, I begin to pull my real trades out of the market, i ease up on my commitment to the market. I get out when my fake account equity goes below the 7 bar offset 5 MA.

I get away from the markets for at least a week, preferably two. When I return to trading, I paper trade until my fake account equity reaches back above the 7 bar offset 5 MA, At that point, I start lightly trading again. When my fake account equity goes above the 3 bar offset 3, I make a full commitment to the market. That way I paper trade away my losing streaks, and tend to be in the market only when I am winning,

i force myself to take at least two vacations a year, far from any knowledge of the markets.

If I have been trading intensively, I try to take one day a week off, besides the weekends. If not, then I try to take one week out of four away from the markets.

Good Advisors

I used to think it might be a good idea to trade from an advisory. I would still get to do the trading, but someone else would do the research and the grunt work for me. I no longer feel that way. I have not found an advisor in the futures markets who is worth following.

The feedback i receive from my many friends, students, and fellow traders has overwhelmingly set me against all advisors and advisory services.

I strongly urge anyone to learn to do his own thinking. It is virtually impossible to truly follow an advisory.

What is wrong with using an advisory? Invariably you do not enter exactly as the adviser does. You miss some trades. You are tempted to take trades the advisor has not advised. You are not able to execute in the same way the advisor does. You may find it difficult to place stops where the advisor recommends placing them,

You do not have the same mind set as the advisor, you do not have the same comfort level, and you do not necessarily know the rationale behind every trade.

Trading By Tlie Boole - Part VI

For many reasons, the results are not the same as they are for the advisor.

If you want to use an advisor, use one who will teach you to trade his way and then follow along with his trades until you can do it on your own.

I have attempted using advisory services as my system, blindly following every trade exactly as they called them. It can work, but usually only for awhile! Few advisors have consistently good years in the markets.

1 have not found many advisors who will teach you their methods so that you car truly trade as they do.

One way to use an advisor is to use one in an area in which you have a lack of knowledge.

For example, I know practically nothing about seasonal spreads. I dont have tim to follow them, chart them, or make decisions about them.

Yet there are many good seasonal spreads. For varietys sake, i like to try them from time to time.

One advisory that I receive in the mail {when I can get my broker to send it} is or spread trading. Offered are spreads that have been successful 75% or more of the tims Some are even 100% winners - and that is over a period of 12 years.

I trade those spreads when I am able and if I get bored and need a change of They have been profitable.

In the past I knew little about options. I am in the process of remedying that situation, I have used options and am starting to use them more than previously.

\ had always felt that options are for people who are a lot smarter than I am. Tht are all kinds of strategies involved with options. I did not have the time, patience, or ability to figure out most option strategies, but Im learning that they can be valuable.

Ive always thought of myself as a checker player, not a chess player. My opinio of that is changing. Trading futures is like playing checkers. All I wanted was to just march down and get kinged. Options trading is like chess; there are many strategies, plays, and intricate thinking. Im beginning to find out there is great value in becoming chess player, or at least learning some of their tricks.

Part of being a good trader is in knowing yourself and your strengths and weaknesses. Know your comfort level.

i have an option on right now. Two different advisories called this one. It is base on a cyclical low in the Hog market. Who knows, maybe theyre right. Its going to me only $210 to find out.