Separating the Winners from the Losers

Vast fortunes can be amassed within a relatively brief period of time by trading futures. Naturally, the other side of :he coin cannot be ignored. Vast fortunes may be lost in a relatively brief period of time in the futures markets. What separates the winners from the losers in futures trading?

This question has fascinated, intrigued, haunted, obsessed and frustrated traders since the first futures contract was traded hundreds of years ago. While one is tempted to take refuge in a plethora cf intellectual and defensive responses, the answer to this question is indeed simple. Yet the simplicity of the response fails to do it justice inasmuch as the implementation of the response is, at least on the surface, exceptionally difficult. Scores of seminars, books, articles and lectures have attempted to cover the subject. But. as elusive as the keys to success may be, they are attainable through the use of various time-tested techniques.

The keys to successful trading are net only attainable; they can be learned and taught Ore of the most effective ways to learn is by example. The interviews that follow in this book, along with the analyses of these interviews, will helpillumi-nate the path to successful trading by way of example.

Lessons Learned from W. Clement Stone

On a hot Chicago summer day in the mid-1980s, I was forturateenough to have an experience that changed my life as a trader. On a whim, several weeks earlier, I had called the officcs of W. Clement Stone, the driving force behind Com-bined Insurance Company of America. Beginning with nothing more than determination and a vehemently positive attitude, Mr. ¿tone, or "Clem," built a vast insurance empire as well as a tremendous fortune. The Stone rags-to-riches story intrigued me. Given the close proximity of Mr. Stone and 1ns empire to my home. I asked if I could interview him To my surprise, he agreed.

With several "attendants" at his side, Clem arrived at his corporate studios, perfectly dressed—suit, white shirt and ascot, his imposing mustache curled and tailored perfectly. When Clem entered the room, 1 felt a certain respect that, to this day, I cannot describe. The man exuded self confidence; he made every movement with self-assurarce and singleness of purpose. I Ie reached out his hand, and I took it. I lis handshake was solid, purposive and firm. 1 Ie looked me Straight iu the eve—a piercing, deep and all-knowing look.

Attitudes Versus Luck

I told Stone that I was indeed privileged to interview him, and I stated my purpose for the meeting, which was to gain some insight into his business philosophy and moreover his psychological techniques for maintaining a positive mental attitude throughout the years. The question or. my mind was whether Stone's attitudes were truly major forces

New traders should not be shocked if they lose mor.ey during their first two years ot trading experiences. They also should not become discouraged if their performance fails to match those monthly published fund results. They should keep in mind: When the industry's average performance is stated, the funds that fail each month are not listed, us far as I know.

As a brokerage house broker, 1 observed that many of the successful traders were those whose occupations were involved in a commodity industry—soybeans, soybean oil, mining, crude oil, sugar, cocoa, the meats, lumber, cotton, etc. Doctors and lawyers do not often become good traders.

In my judgment, looking back at lb-year and 20-year records of performance i^n't of great value. What one really needs to give a system credence for consideration is its results during the years since 1987 Money managers change as co industries and governments and economic values. The peoole in this world and their requirements will double during the next 30 years.

If you had to do things all over again, knowing what you know noio about trading, what would you do differently?

I would:

♦ Arrive at trading decisions based more strongly on moving averages and their signals.

♦ Become an i ntensive student of daily candlestick chart formations instead of just bar cha-ts.

♦ Adopt one or two com pu ter t rad i ng si gnal s, and avoid months of confusion and uncertainty that can come trom reliance on five or six.

♦ Study and become more proficient in the use of computers for obtaining faster research results.

♦ Establish both a futures and a stock mutual fund.

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