Despite the recent hiccup in its track record, violation of customer segregated funds regulations is a rare and infrequent event. In fact, even without new regulatory safety nets in place to avoid another calamity of this sort, it likely would not happen again anytime soon. Nevertheless, those of us whose livelihood depends on a properly functioning marketplace in which we can all be confident, welcome positive changes in oversight with open arms.
Throughout this text, you find what I believe to be a realistic and candid view of the commodity markets. My intention isn’t to deter you from trading commodities. After all, I am a broker who makes a living from commission, and I would love nothing more than to attract traders into what I believe to be some of the most exciting markets available to speculators. However, as a broker, it is also my job to make sure that you are aware of the potential hardships and, accordingly, that you will properly prepare yourself before putting your hard-earned money at risk.
If you walk away from this book with something, I hope it is the realization that anything is possible in the commodity markets. Never say “never”—if you do, you will eventually be proven wrong. Additionally, trading the markets is an art, not a science. Unfortunately, there are no black–and-white answers, nor are there fool-proof strategies—but that does not mean there aren’t opportunities.
I am often asked what is the best technical tool or indicator to use when speculating in a market. My answer is always the same: No “best tool” exists, nor is there only a best way to use the tool. The paramount approach to any trading tool, whether technical, seasonal, or fundamental, is to use it—or, better yet, a combination of a few tools—to form an educated opinion in your expectations of market price. With their findings, traders should approach the market with a degree of humbleness and realistic expectations.
Remember, as a trader, you compete against the market—specifically, each participant in that particular market. Therefore, assuming that you can always beat the markets is assuming that you are somehow smarter and better informed than all other participants. Not only is this arrogant, but it also might be financial suicide. Instead, you should approach every trade with modesty and the understanding that you could be wrong. Having such an attitude might prevent you from sustaining large losses as the result of stubbornness.
With that in mind, in its simplest form, trading is a zero sum game. Aside from commissions paid to the brokerage firm and fees paid to the exchange, for every dollar lost in the market, someone else has gained a dollar. Becoming a consistently profitable trader isn’t easy, but it isn’t synonymous with chasing the proverbial end of the rainbow, either. With the proper background, hard work, and the experience that comes with inevitable tough lessons, long-term success is possible. I hope this book is the first step in your journey toward victory in the challenging, yet potentially rewarding, commodity markets.