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Commodity Future Trader
There is always "year one" for every commodity futures
trader. I had mine and made every mistake a trader can
make and more. Here's my story of how I stumbled into
the lion's den, got gored a few times and even made some
money. My hope is that beginners will read this and
avoid some of the more obvious stuff. Here's to all new
traders!
Commodity Trader
Let's go back to 1979 and fast-forward a few months
after the Boston Commodity Broker from Hell episode. I
occasionally glanced at the commodity futures contract
quotes in the Wall Street Journal and noticed sugar kept
climbing. So did gold. I couldn't take it anymore and
decided to drive down to Merrill Lynch and walk out with
some Kruger ands. I walked into the cigar smoke-filled
office. Gold closed at $420 an ounce that day. I met
Max, the sole commodity futures broker among a sea of
stockbrokers.
Commodity Futures and Options Traders
Max was a serious looking, dark haired guy of about 45
years old who sat in the corner. He looked like he had
been around the block a few times. He would become my
commodity futures and options trader for the next year
or so. I liked Max. They say the main reason you do
business with a broker is because you like him. Making
money is secondary.
Commodities Futures Gold Trader
Being a commodities futures trader, he said I should buy
gold futures, not coins. (of course) I opened an account
and funded it with $15,000. Commodity commissions were
somewhat better at $100 a trade. Gold was quiet and in a
correction, so I switched to cattle. I spent the next
few weekends at the library looking up cattle prices and
charting them. I drove the librarian’s nuts running up
and down the cellar stairs pulling out the old Wall
Street Journals.
Commodity Future Trading Management
Max called the shots and after getting permission for
each trade, put in the futures day-trades for me. Over
the next month or so he made about 25 losing futures
trades in a row. All were small day trading losses. I
was down about $3,000. I told him this couldn't go on.
He agreed, but what could he do? Now that I think about
it, most of the loss was made up of commissions.
Twenty-five trades times $100 = $2500.
One thing that stands out to me is the flow of commodity
news we traded on. This has to be the most confusing way
to trade. I would sometimes stay on the phone for an
hour as he gave me the results of the trade. Just like a
horse race. One day I went short cattle futures because
of some oversupply report on his noisy little real-time
mechanical commodity ticker machine. I could always hear
it rapping in the background. |
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