|
Trader's Tip
We live in a time of multiple Crisis, and in Chinese the concept of Crisis is written by combining the symbols for Chaos and opportunity. Some will lose their way in crisis and lose their money; others will see the opportunity and profit.
- Chris Morse | |
Quotes & Charts
Quote Search:
Market Specific Links:
Indices/Minis
Grains
Currencies/Forex
Financials
Food/Fiber/Softs
Metals
Energy
Meats
|
Special Message from Our Author
Today's Featured Article
There are fewer things more important in trading than one's ability to stick with things when the weather gets foul. In trend trading we are waiting patiently for the next big moves. The markets only trend about 30% of the time. The rest of the time markets are going sideways or are in a consolidation mode.
During periods of choppy markets we will inevitably see and feel drawdown in our trading portfolios. In order for the markets to march on toward the pivotal new trends, we must first see complacency and indecision played out in the marketplace. It is when the markets are taking their breather and gathering up steam that trading strategies will get beaten up a bit by the entering and exiting of markets without any significant moves.
It is only after sufficient turmoil and series of losing trades that the markets become enabled and set up for us to witness what can at time only be described as magical. For the markets must go through at times what can be considered tremendous periods of drawdown.
Drawdown truly is by this writers account a tremendous trading opportunity. There are perhaps 2-3 periods of drawdown each year which can last for weeks or even months in duration. It is only after the drawdown ends that the draw up can begin. Draw up is the 30% of the time that trend traders live for. However, to participate in the next draw up on must invariably suffer to an extent the drawdown that is the precursor for the draw up.
It is said that the best time to start trading a system such as the one I developed called TradeThink, is when the system is in a drawdown. Opportunities for trading are found during times of drawdown. Some say it is best to wait until after a drawdown finishes before starting trading. Theoretically starting to trade after a drawdown is the best time to start trading. Unfortunately there is no way to tell when a drawdown has ended until a new draw up has begun. After the new draw up starts it is too late to participate in all of the next moves.
Draw ups are typically quite violent and come on the heels of periods of serious trading pain. I truly believe one of the great differences between successful and unsuccessful traders is one's ability to cope with drawdown.
Let me illustrate to you through my own system TradeThink how drawdown is a great opportunity to begin trading. You may have to go through some pain to get to the big trades, but as they say "no pain, no gain."
Below are several examples of big trades that could have gone through significant drawdown before making that big move. | |
Corn
The TradeThink trading system signaled three times in September 2008 to Short (Sell) the Corn futures.
If you cannot view the Corn chart, go here.
As a result of the three losers in Corn the system was down a total of $3,900. Had you quite trading you would only have your loss.
At the end of September TradeThink was rewarded with a huge trade.
If you cannot view the Corn Drawdown chart,
go here.
Had you stuck through the initial drawdown you now got the payday with a Corn trade that moved down $1.83 or $9,150 per contract. Even after subtracting the losers of $3,900 from the winners of $9,150 = $5,250 profit.
British Pound
The TradeThink trading system signaled four times from May 2008 - July 2008 to Short (Sell) or go Long (Buy) British Pound futures.
If you cannot view the British Pound chart, go here.
As a result of the four losers in the British Pound the system was down a total of $3,550. Had you quite trading you would only have your loss.
At the beginning of August 2008 TradeThink was rewarded with a huge trade.
If you cannot view the British Pound Drawdown chart,
go here.
Had you stuck through the initial drawdown you now got the payday with a British Pound trade that moved down 1591 pips or $9,943.75 per contract. Even after subtracting the losers of $3,550 from the winners of $9,943.75 = $6,393.75 profit.
Coffee
The TradeThink trading system signaled four times from June 2008 - August 2008 to Short (Sell) or go Long (Buy) Coffee futures.
If you cannot view the Coffee chart,
go here.
As a result of the four losers in the Coffee the system was down a total of $5,200. Had you quite trading you would only have your loss.
At the beginning of September 2008 TradeThink was rewarded with a huge trade.
If you cannot view the Coffee Drawdown chart,
go here.
Had you stuck through the initial drawdown you now got the payday with a Coffee trade that moved down 33.5 cents or $12,562.50 per contract. Even after subtracting the losers of $5,200 from the winners of $12,262.50 = $7,362.50 profit.
| |
Cotton
The TradeThink trading system signaled four times from May 2008 - August 2008 to Short (Sell) or go Long (Buy) Cotton futures.
If you cannot view the Cotton chart,
go here.
As a result of the four losers in the Cotton the system was down a total of $1,320. Had you quite trading you would only have your loss.
At the beginning of September 2008 TradeThink was rewarded with a huge trade.
If you cannot view the Cotton Drawdown chart,
go here.
Had you stuck through the initial drawdown you now got the payday with a Cotton trade that moved down 23.98 or $11,990 per contract. Even after subtracting the losers of $1,320 from the winners of $11,990 = $10,670 profit.
Heating Oil
The TradeThink trading system signaled nine times from August 2008 - September 2008 to Short (Sell) Heating Oil futures.
If you cannot view the Heating Oil chart, go here.
As a result of the nine losers in the Heating Oil the system was down a total of $12,500. Had you quite trading you would only have your loss.
At the beginning of October 2008 TradeThink was rewarded with it's first of two huge trades in Heating Oil.
If you cannot view the Heating Oil Drawdown chart,
go here.
Had you stuck through the initial drawdown you now got the payday with a Heating Oil trade that moved down 51.26 cents or $21,529.20 per contract. Even after subtracting the losers of $12,500 from the winners of $21,529.20 = $9,029.20 profit.
Then Heating Oil was given a second huge move. Which goes to show that is is not prudent to exit markets after a big trade.
If you cannot view the Heating Oil chart,
go here.
Now had you stuck through the initial drawdown and ridden the next winner, you got another big trade for 4154 or $17,446.80 per contract.
The system showed $26,470 in total drawdown before being rewarded with moves totaling $70,059.75 per contract. That is $43,589.75, not too shabby for having some discipline and sticking through the drawdowns.
| |
About the Author
|
Chris Morse is the Developer of the TradeThink trading system. He has been involved in the development of trading strategies for nearly ten years. Mr. Morse developed a very robust system which is now in private use at one of the largest FCM's and has earned sizable returns for the last 3 years. Mr. Morse now focuses his time exclusively on developing and managing his systems.
| |
Special Message from Our Author
Complimentary Evaluation of TradeThink Trade Signals!
TradeThink's proprietary trading algorithm generates precise entry, exit, money management and trailing stop signals for nearly every major commodities market move with uncanny precision for you. Our Trading signals show traders when and where to enter and exit each trade. The signals are 100% automated and easy to view. Get a Complimentary Evaluation.
Disclosure: Commodity trading has large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest in the futures markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell commodity interests.
Notice: Returns are hypothetical. Hypothetical or simulated performance returns have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since trades have not actually been executed, the results may have under or over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight, no representation is being made that any account will or is likely to achieve profits or losses similar to those shown. | |
|
