Diary of a Professional Commodity Trader E-Book

Peter L. Brandt

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 347

Veröffentlichungsjahr: 2011

Beschreibung

Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading

Trading is generally far more difficult in practice than in theory. The reality is that no trade set up or individual trader or system can identify profitable trades in advance with complete certainty. In A Year of Trading, long-time trader Peter Brandt reveals the anxieties and uncertainties of trading in a diary of his 2009 trades. He explains his thought process as he searches for trading opportunities and executes them. Each trade includes charts, an analysis of the trade, and a play-by-play account of how the trade unfolds.

Leseprobe

Contents

Cover

Title Page

Copyright

Dedication

Acknowledgments

Part I: Foundations of Successful Trading

Introduction

The Invention of a Commodity Trader

Why I Wrote This Book

This Book’s Audience

The Book’s Road Map

Chapter 1: The History and Theory of Classical Charting Principles

My Perspective of the Principles

Three Limitations of the Principles

Summary

Part II: Characteristics of a Successful Trading Plan

Chapter 2: Building a Trading Plan

Trader Personality and Temperament

Adequate Capitalization

Overall Risk Management

Points to Remember

Chapter 3: Identifying the Trades and the Trading Vocabulary

Trade Identification

Vocabulary of the Factor Trading Plan

Points to Remember

Chapter 4: Ideal Chart Patterns

Reversal H&S Pattern in Copper

Reversal Rising Wedge in AUD/USD

Continuation Wedge and Reversal Failure Top in Soybean Oil

Reversal Triangle Bottom in Sugar

Continuation and Pyramid Patterns in USD/CAD

Reversal Top in Silver

Continuation H&S Pattern in the Russell 1000 Index

Continuation Rectangle in Kansas City Wheat

Continuation Rectangle and Pyramid Triangle in Crude Oil

Continuation H&S Top in the Dow Utilities

Continuation Triangle, Reversal M Top, and Flag in the EUR/USD

H&S Reversal Top and Three Continuation Patterns in the GBP/JPY

A Reversal Symmetrical Triangle in the AUD/JPY

Two Continuation Patterns in GBP/CHF

A Triangle and Running Wedge in Sugar

An H&S Bottom in Apple Computer

A Major Continuation H&S and Symmetrical Triangle in Gold

A Series of Bullish Patterns in Copper

A Failed Ascending Triangle in the USD/CAD Crossrate

A 12-Week Rectangle in the Dow Jones Transport Index

A Rare Horn in Brent Sea Oil

An H&S Bottom Launches the 2009 Bull Market in the S&Ps

Summary

Points to Remember

Chapter 5: How the Factor Trading Plan Works

Trade Identification

Trade Entry

Trade Risk Management

Trade Order Management

Points to Remember

Chapter 6: Three Case Studies Using the Factor Trading Plan

A Remarkable Technical Event in the Dow Jones

A Year Trading Gold

A Year Trading Sugar

Points to Remember

Chapter 7: Characteristics of a Successful Trader

Intimate Knowledge of Trading Signals

Discipline and Patience

Analysis of Self and of the Trading Plan

It Takes a Leap of Faith

Points to Remember

Part III: A Five-month Trading Diary: Let the Journey Begin

Chapter 8: Month One

Trading Record

Summary

Chapter 9: Month Two

Identifying Trading Opportunities

Amending the Plan

Trading Record

Summary

Chapter 10: Month Three

Sticking to the Plan in Choppy Markets

Trading Record

Summary

Chapter 11: Month Four

Trading Record

Summary

Chapter 12: Month Five

Relying on Classical Charting Principles

Trading Record

Outlook for the Future

Summary

Part IV: The Wrap-Up

Chapter 13: Analysis of Trading Performance

How the Trading Plan Performed

How the Plan (and the Trader) Evolved

Summary: Best Practices Going Forward

Chapter 14: The Best Dressed List

A Seven-Month Double Bottom in AUD/USD

A 14-Month Coil and Nine-Month Descending Triangle in EUR/CHF

A Six-Month Wedge in EUR/USD

A 16-Week Horn in GBP/USD

A Four-Month H&S in Bottom NZD/USD

A Six-Month Ascending Triangle Failure in USD/CAD

An Eight-Month H&S Bottom in the S&Ps

A 14-Month Symmetrical Triangle in Sugar

A Seven-Month Triangle in Gold

A Series of Continuation Patterns in Copper

An H&S Bottom in Crude Oil

Summary

Postscript

Final Performance

Performance Compared to Other Benchmarks

Putting it in Perspective

Appendix A: Factor Trading Plan Signals

Appendix B: Quick Reference to Charts

Appendix C: Recommended Resources

Author’s Note

Index

Copyright © 2011 by Peter Brandt. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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ISBN 978-0-470-52145-8 (cloth); ISBN: 978-0-470-94724-1 (ebk); 978-0-470-94725-8 (ebk); 978-0-470-94726-5 (ebk)

This book is dedicated to my wife, Mona, and my children, who for more than 30 years have tolerated the ups and downs of the life of a commodity trader.

Also to some very dear folks I refer to as the Factor family, about two dozen fellow commodity traders who, since 1980, have served as a sounding board as I developed my trading plan and honed my craft.

Acknowledgments

Iowe a debt of real gratitude to my friend Dave Forbes, CEO of Petra Financial in Colorado Springs, who allowed me to use his office and staff to prepare this book.

I am also in debt to Glen Larson and his awesome team at Genesis Financial Technology, who provide me with assistance in preparing the charts for this book. I use the Genesis data and charting platform, TradeNavigator, in my own trading and have found Glen and his team to be real partners in my market operations.

Dan Chesler, President of Chesler Analytics (a firm providing technical market research to energy traders) originally suggested that I write this book. Dan and I go back several decades as peers. If you have ever written a book, you will understand it when I say that I don’t know whether to thank Dan or curse at him for encouraging me.

Finally, I want to thank Meg Freeborn and Kevin Commins of John Wiley & Sons for hanging with me during this process. I started this book in early 2009, but for health reasons I was sidetracked for nearly nine months. Meg and Kevin demonstrated great patience and guidance to get this project back on track.

Part I

Foundations of Successful Trading

Is trading an art, or is it a science? Or is it some combination of the two? I am not sure of the answers to these questions. I am not sure it is necessary to know the answers. I view trading as a craft. A successful trader is a craftsman, applying his or her skills in the same way as a baseball pitcher who has perfected throwing a knuckleball, or a welder specializing in joining together exotic metals, or a software engineer who overcomes complex problems to design new chip technology.

All craftsmen undergo apprenticeships. An apprenticeship is not some specified period of time in a specified classroom or training grounds. Rather, an apprenticeship is a composition of personal, professional, and proprietary experiences that lead to the knowledge and skills to perform a craft.

Part I of this book relates my apprenticeship as a trader and provides context and background to all that follows in the book. Part I contains two sections:

1. An Introduction to my background and history as a trader, the reasons I decided to write this book, a road map to the book, and what I hope this book accomplishes

2. A brief overview of classical chart principles, the foundation of my trading approach

Part I lays the foundation for the architectural design of my trading plan, which is detailed in Part II.

Introduction

One of the first things I check out in a new book is the number of pages prior to Chapter —long book introductions put me to sleep. I will assume that most of you are like me—you want to cut to the chase. The last thing I wanted to do was write a book with a lengthy introduction, but my opinion has changed now that I’m on the author’s side of the equation. It turns out introductions can be useful in providing necessary context and perspective for a book. And so, please forgive me for committing the sin I have always disliked—I think it will be worth it.

This is a book about me as a trader of commodity and forex markets and how I use price charts in my craft. I think of it as a mosaic: eventually the parts of this book will tie together in the same way that a good mosaic becomes visible only in its entirety. Piece by piece or section by section, a mosaic makes no sense. Only at a distance and in its fullness does a mosaic gain clarity and perspective. The concept of a mosaic describes how this book will unfold. First, a bit about how I got started in the business.

The Invention of a Commodity Trader

In 1972, shortly after graduating from the University of Minnesota with a degree in advertising, I moved to Chicago to work for one of the nation’s largest ad agencies. A neighbor was a trader at the Chicago Board of Trade (CBOT). Through our conversations and my visits to see him on the trading floor, I became captivated by the futures markets. In commodity trading I saw the opportunity to earn a good living, work for myself, and be challenged in a very exciting field. In short, I became hooked.