The 3Dimensional Trading Breakthrough

The 3 Dimensional Trading Breakthrough
What if you were one of the traders that went long on the breakout of new highs the
trading day before? Somebody had to be long! …half of all participants! Would a
protective stop provide a way out with a “$550 money-management stop” you had
diligently planned for? NO. There was absolutely no way of seeing that downside
opening coming. YOU CANNOT RELY SOLELY ON PROTECTIVE STOPS.
Most recently, the Swiss Franc gave me a case of déjà vu when the Swissie gapped
down 120 points. Just the day before, a buy signal was realized, and on the day
session chart the very next morning – BAM, down 120 points. Getting back to
relying on protective stops…You never could, you never can, and you never will...
Sorry to be the bearer of bad news - reality.
Grains now trade around the clock, thanks or no thanks to “Globex” computerized
trading. Are there any safe haven - day session only - markets left? Well, way
before grains traded in overnight sessions there was a problem that still exists
today with these markets. Do you know what it is? I’ll give you a hint . . . What
time is the monthly USDA “crop production” report released to the public? (7:30
am CST) What time do the grain markets open? (9:30 am CST) Do you see the
potential problem here? Every month some traders are unknowingly, or carelessly,
long/short a futures contract with, or without, a protective stop going into the crop
report! Traders have two full hours to digest these reports and plan their strategy.
Will a protective stop help them in a limit move against them? NO. Never could,
never can, never will . . . Do you understand my point? No market is safe from
adverse moves.
Now for personal experiences: Chances are you never heard of me by the time I was
trading 60-lot Treasury note contracts. This is when I was “watching bonds trade
tick-by-tick for seven months”. From August of 1994 to March of 1995, I managed
to take $130,000.00 out of the Chicago Board of Trade. Are you aware I later lost
most of those profits - to the tune of $110,000.00 in a one week time frame? I
know that a few of you were with me when I dropped another $20,000.00+ in
the bonds when they went down limit in March of 1996! This second loss never
should’ve happened. I knew better by this time but, “I just knew the market was
going to go up.” Have you ever experienced anything like this…?
“There are no secrets to success. It is the result of
preparation, hard work, and learning from failure.”
- General Colin Powell
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