There can’t be many traders who haven’t at least considered the idea of telling the boss what they think of him, throwing it all in and going off to trade the stock market for a living. It’s a big risk financially, and that uncertainty is what stops most from jumping ship. Is it really possible to trade for a living?

The Dream

You know how it is, you’re sitting in a traffic jam at some unearthly hour of a particularly wet and miserable morning, on the way to the same office you have sat in for too long to remember, and you’re thinking - there must be a better way – life shouldn’t have to be like this.

Your mind starts to wander and you find yourself thinking back to that stock you bought only a week ago, and how it skyrocketed giving you enough profit to takes the kids to Disneyland in the summer, and you begin to consider if you couldn’t make a fulltime living at this trading game. The advantages are certainly tempting; no more pointless meetings with the manager, hours to suit, holidays whenever you feel like it, and with your home-office - no more traffic jams.

Heck, come to that you could even make home anywhere you want it to be! By the time the traffic starts moving again. you’re busily calculating how much cash you could make if all your trades went like that last one - you’re almost ready to write your notice letter there and then!

The Bad News

Time for a reality check. Certainly all of the above benefits are there to be enjoyed, but it’s a huge step from full time employee to full time trader. Are you really ready to give up that monthly pay-check just yet? Can you really cope not knowing how much money you’re going to make month to month? Are you prepared for the months when you actually lose money instead of make it? There are many things to consider before taking the leap of faith.

Considerations

Before you even think about trading for a living you have to know how much money you need to live on, that is, how much cash do you need to generate every month in order to survive. As a financially minded person you already have good home accounts, or are at the very least vaguely aware of where the money goes. So take the annual figure (monthly is no good, you need to account for annual recurring items like insurance premiums, car servicing, and vacations), add 50% and divide by 12. Why add 50%? Because there will always be unexpected expenses, and as traders we are always prepared to expect the unexpected.

Now you know how much money you need each month, you can look at your savings and work out how much buffer money you have, that is, how long you could survive without earning anything at all. You can’t expect to be an instantly profitable trader, and even the best and most experienced have periods of drawdown, so you need to be ready for the worst. If you can’t live for at least six months from your savings then you are probably under capitalised and are not ready to give up that pay-check just yet.

An important but often overlooked aspect of under capitalisation is the effect it will have on your trading; if you are trading because you need the money, then you are trading scared and you’re almost certainly going to lose. You cannot distance yourself from the money-aspect of the trade if you are relying on the money.

Living expenses are only one part of the financial equation. Next you must consider how much trading capital you need. This is the money actually facilitate trading, in other words your account balance for trading margin, and the money you will be spending on data feeds, software, and internet access. You must account for this separately, you cannot start eating into your daily living expenses money just because you took a bad trade and need some more margin.

The amount of trading capital you require will depend very much on your trading style. To day trade the US Stock Markets for example, you must have at least $25,000 in your account, so budget for $30,000 to allow for positions moving against you (if you fall below the $25k minimum even briefly, your account can be frozen for up to three months). If you are holding positions overnight you may manage with a lower balance but bear in mind your buying power and consequently returns will be reduced.

If all this is starting to sound expensive, well it is. There’s no two ways about it, you simply cannot survive long term as a trader if you are under funded.

This article will be concluded in part two.

About The Author

Geoff Turnbull is a full time day trader, and a contributor to http://www.stock-trading-world.com

How do you invest? What do you really pay? At the end of the day, what are your real results? These are questions smart investors should be asking themselves (but usually don’t). In this era of more fees, misc. charges, holding periods and back end redemptions, even at discount brokers, how are you really making out?

Working with a new client brought this all to my attention. I know what I found may not apply to everyone; however it will apply to many and very likely apply to you.

I need to preface this by saying that, unlike the majority of registered investment advisors, I have built my practice over the past 15 years by dealing with “small” investors. Many of them are first timers because my minimum account size is only $5,000.

I targeted this group because I enjoy the educational part of my business. A happy side benefit has been that by providing million dollar service to these so called “small” investors, they naturally refer me to parents, relatives, friends and business associates, often with considerably more assets than the original client. What a happy consequence.

Having set the stage, here’s what happened with my new client who we will call John. John was 26, newly married with a one year old son. His wife was taking care of the child and John had a good full time job. After selling his house in California and moving to Florida he had $6,000 left for starting a long-term investment program.

Though he had been reading my newsletter for about a year, John decided to manage his 401k on his own. It was a noble effort but provided less than desirable results.

He then attempted to set up a brokerage account at a major discount broker. With his $6,000 he was told that the quarterly fee would be $45, and, of course, if he sold any mutual fund within the first 180 days, there would be an early redemption fee.

$45 per quarter would be equal to an annual fee of 3% of his starting balance. John called me somewhat frustrated and said that he’d be willing to set up an account with me, but how would it make sense if in addition he’d have to pay my advisory management fee?

That was a good question because it certainly doesn’t make sense to have an account in any type of market environment and pay about 6% in fixed annual fees.

However, what John didn’t know was that if you have an account with a registered investment advisor who is affiliated with custodial broker, the fee structure changes.

What did that mean to him? It meant that I opened the account for him as a new client. He now has no annual fees, other than my management fee, and his 180 day holding period for mutual funds is reduced to 90 days, minimizing, if not eliminating, the likelihood of an early redemption fee.

The net result was that he would receive the benefit of my experience-which he already trusted based on my track record of pulling clients out of the market in October 2000-and it would cost him no more, and likely less, than his discount brokerage account.

Needless to say, John was very relieved. In essence, he traded broker garbage fees for professional management at no additional cost to him.

And, since he itemizes his deductions on his tax return, all fees paid are tax deductible, which is just an added bonus to factor into the equation.

It turned out to be an all around win-win situation for John. I encourage you to review your situation and see if what looks like a discount in fees is actually costing you a premium.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com; ulli@successful-investment.com

It takes a total mental commitment to the task. It becomes a complete way of life. You cannot be a part timer. You cannot work at a regular job and trade stocks successfully.

When you decide to make your living this way you must be willing to work 365 days a year, 7 days each week, 24 hours every day with no time off. I know.

How do I know? As an exchange member for 17 years and a floor trader I can personally tell you there is no time off. Never. Almost every waking moment is given to thinking about your current positions. Where should I sell? Should I move my stop up a little more? There are 3 more trades I’d like to make, but I need to save some extra cash in case I need it for a margin call. It is hard to pass up a trade that looks as good as XYZ, but I have to maintain my trading discipline. And so much more.

These are just a few of the thoughts that run through your head. You are constantly being torn by the natural enemies of fear and greed, yet you must hold your equilibrium to try to make dispassionate decisions. The first law of trading is to protect your capital so that any single trade will not have you going home broke.

If you are working a regular job or you own a business you cannot be a trader. One or the other or both of these pursuits will suffer. When I owned my brokerage company I did not make one single trade for 8 years because I understood the commitment necessary to be a successful trader.

Why am I telling you all this? Because I don’t want you to lose your money in the market as so many people do and I especially don’t want you to think you can be a day trader. You can still make money in the market and beat 90% of the Wall Street experts. Here’s how.

First you must learn that you CAN time the market even though your broker and all those "experts" will tell you that you can’t. There are several good timing advisory services that you may subscribe to or you can develop you own method.

Second, don’t believe all that horsewash about research. That is Wall Street smoke and mirrors. Don’t try to pick individual stocks. Stick to no-load mutual funds with a discount broker and buy only the best performing funds during the past 6 and 12 months. When they quit being in the top 1% sell them and find new ones that are going up.

There isn’t enough space here to give you the details, but I want you to realize that you can safely make plenty of money in the market without devoting 365/7/24.

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

If you want one.

And I don’t recommend any broker with whom to trade who will be giving you advice on what to buy and sell. When a broker speaks it is a eulogy for your money. My definition of a broker is one who makes you broker.

The reason I say this is that when I owned my brokerage company I hired and supervised over 300 brokers. The actual number of good traders I could count on one hand and have fingers left over.

Let’s understand that a broker is hired by a brokerage company for one reason - to generate commission, not to make you money. He is trained to analyze stocks or mutual funds, but not to protect your capital. Pitifully, he thinks he is. They never tell you to sell before a stock falls to 50% of its value. Most of the time brokers are left to themselves as to what they recommend to their customers, but there are many brokerage houses that will insist that they push some particular stock of the day or new Initial Public Offering (IPO). Many times he has a quota - and you’re "it".

Don’t deal with a relative. Do I have to explain this?

If you live in a small town, don’t deal with anyone who also lives there. You don’t want everyone knowing your business and anyone in that local office can see your account if they want to.

The average broker has 300 accounts and you know those with six and seven figure amounts are the ones he calls. Those people with less then 100K seldom get attention. Understand you are on your own which in most cases is best.

Be careful of any broker who advocates fading the market. I can hear him now, "This stock has gone so low it has to come back". This is a death wish for your money. Bottom pickers end up with smelly fingers.

A broker who calls you and says he has a "system" must be highly suspect. If that system is so good then why is he willing to share it with you? He should be independently wealthy by now. Be suspect of any broker who calls you out of the blue with a "story". I don’t care how good it is if you don’t know this "Billy Sol". These guys refer to you as mushrooms. I wonder why. Maybe because mushrooms are grown in the dark and fed horse manure.

Never trade commodities with a stockbroker. There is a world of difference in trading stocks and commodities. Stockbrokers don’t think fast enough. You shouldn’t have someone who is used to driving a kiddie car trying to handle a Formula One.

Make any broker prove what he says. Get references. What you want from a brokerage company is proper execution of your order at a low price, not advice. Your best bet is a discount broker because they are not allowed to give you "advice".

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

Unfortunately, most of you who are reading my column are suffering some substantial losses in the stock market. Whether it is mutual funds or individual stocks everything with mighty few exceptions is going down. Maybe you are just giving back some nice profits, but maybe it is beginning to bite into your original principal.

You are wondering what should I do? I know, I’ll call my broker. He knows all about the market. Please! Don’t ask your broker. I already know what he will tell you. The usual Wall Street smoke and mirrors answer. "Don’t worry. This is just a healthy correction in a bull market. It will come back". It makes me sick to hear this kind of nonsense from a supposedly informed and intelligent (?) person. By the way, what is "healthy" about a 38% "correction"?

If this guy was so smart when he had you buy these stocks and mutual funds then why wasn’t he smart enough to have you sell before you gave back 50% or more of your portfolio? He is working under the guise of investment conventional wisdom that is conventional but not wisdom. "Mr. Mushroom, you are in for the long term so don’t worry about these aberrations." YUK! That is what you are - a mushroom. Grown in the dark and fed you-know-what.

There are times when you should have on only one position - CASH. Cash is a position, but brokers are not taught that. They never heard of it.

When I was a floor trader guys would come to me and say, "Al, what do you have on?" and my reply, "Nothing" drew a shocked look. "How can you be down here on the floor and not be trading?" It is very simple, I was there to make money, not to trade. Many times you should not be doing anything. It is the same for the average investor. He should be in cash when there is a bear market as there is right now. How long it will last I don’t know, but I will know when it is over and the bull has returned. Your broker won’t know because he has not been trained to make money, only to make commission.

Every stock and mutual fund you own should be examined regularly (preferably weekly) and a stop placed under each position so (just in case) that hummer decides to tank you will be out with your profit. Never let a winning trade go to a loss. You must protect your capital at all times.

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

Who are the successful investors?

There are those who follow the advice of their brokers and financial planners or those who choose to use their own good judgment? If you care to compare the results of the past 4 years from 2000 to now I believe you will see who as done the best job.

In the old days at the Chicago stock yards they used to have an old sheep who led the lambs to the slaughter when they arrived on the train. It seems there were lots of investment sheep in 2000 that followed the advice of their brokers and financial planners and were slaughtered. Let’s hope you were not in that herd.

When the next train (bear market) arrives (and it will) in the station and you get off I hope you will not follow that old sheep. You have been given another chance to recoup some of your money (current bull market). Don’t be slaughtered (again).

The successful investor is one who thinks for himself. Are you an independent thinker or one of the sheep about to be cut into pieces? Do you relish the idea if thinking for yourself and participating in financial success? Of course, you will be scorned by Wall Street and their minions and told you need an “expert” to help you invest your money. We have seen what the “experts” did from 2000 on.

During the last 4 years I challenge you to check out the price of any growth, stock or index mutual fund in January 2000 and compare it with the price of today. The S&P500 Index lost 50% of it value and has rallied 37% from the recent low, but is still down 29% from the high of 2000. With the bull move of the last 8 months you won’t find very many, if any, stock funds that have come back to those old highs. Yes, there will be individual stocks that have made new contract highs, but very few of them have done well enough to get the poor sheep (pun intended) back to even.

For the past 100 years there have been consistent secular 16 to 18 year bull and bear markets, one after the other and within them have been shorter cyclical bear and bull markets where the thinking investor has been smart enough to be investing or be in a money market fund.

It is timing the long-term bull and bear phases and is relatively easy despite what Maul Street tries to have you believe. If your broker or planner has not learned how you need a new and smarter advisor. You, and only you, must break away from the herd to learn to think on your own to be a success in the market.

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

The higher the market goes the more confusing are the "experts". In the September 14 issue of Investor’s Business Daily newspaper we find the great prognosticators such as:

Sheldon Jacobs, editor of No-Load Fund Investor newsletter quoted that he is recommending having more cash in your portfolio.

Louis Navallier, manager of three aggressive mutual funds, remains very bullish. He says now is the time to load up on tech stocks.

John Wallace, another mutual fund maven now has become positive toward small-cap stocks for his mutual fund.

Any time you need someone to agree or disagree with you on anything in the stock market you can find a Wall Street "expert" who will agree with you. There is an old saying "The market climbs a wall of worry" and the higher it goes the more worriers there are. Yes, it is scary, but you have to make your own decisions and you can’t listen to those people because if you check their past records you will find they have made some real "boo-boos". The experts are not as expert as they would like you to think.

Is there any way to figure out the stock market so you can have a good return on your money and still sleep at night? Yes, there is. You listen to the only "expert" you will ever have to. That is the market itself. And how do you do that? It is not as complicated as they would have you believe. Let me show you how simple it really is.

The first thing you need to know is if the market is going up or down. Right? You need a simple indicator. The plain vanilla one I recommend to the non-sophisticated investor is the S&P500 Index. Any time the S&P500 daily close is above its 200-day moving average the market is going up. When it falls below sell everything and go to cash. How simple can you get? You will find these numbers published every day in Investor’s Business Daily.

Even though I am considered a professional trader (17 years an exchange member and floor trader) I no longer try to pick individual stocks. It is just too much work so I let other experts do it for me - FREE. I only buy no-load mutual funds that are in the top performing (never mind the category) 1% of all funds and are outperforming the S&P500 Index for the past 12 months. Not 3 years, not 5 years.

Don’t get carried away with trading. The simple plan is watch the S&P500 Index and only look at your mutual funds once a month to be sure they remain in the top category. You will beat all the "experts".

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

What can I expect to make my first year of trading?

We get questions like this one quite often. We find that most aspiring traders don’t have a clue as to what to expect from the market. Yet here they are, putting up their money. Most are going to learn the hard way.

We have no idea in the world what you can expect to make in your first year of trading, or any other year, for that matter. What we can tell you is that without proper guidance and help, you are probably going to have some very bitter experiences. Why? Because your anticipations are almost completely wrong.

Futures traders, especially beginning traders, often open an account with unrealistic expectations of trading performance. These expectations could be formed by the sales literature for a trading program that emphasizes its profitability, by reports of success stories by top traders or by some brokers within the industry. In all cases, you are rarely made aware of the many other times when performances were considerably worse. In other words, you are a victim of selection bias.

Most advertisers of courses, systems, books, etc., will mislead you into thinking that you just can’t lose if you buy what they are selling. We are talking here about hype, major hype – as much as the authorities will allow them to get away with.

Selection bias is a term well known within the social sciences and occurs whenever some undesired screening factor leads to a misrepresentation of a population sample. For example, traders seldom express their losing trades with as much enthusiasm as their winning trades. Consequently, a random selection of letters or phone calls received by a company that sells a trading program often will overstate the proportion of traders who are doing well.

Sometimes the cause of the selection bias is not obvious. For instance, let’s say that a trader who purchases a very expensive price and charting package is more profitable than another trader without it. The merits of the package seem obvious. Maybe not. It could be that the individual who can afford to purchase the package is better capitalized than the other trader and this is the reason for the better performance.

Starting off your futures and options trading experience with unrealistic expectations inevitably will lead to frustration and disappointment. It’s better to face reality now. It will make life as a trader easier down the road. Here are just a few facts to dispel those unrealistic expectations.

1. More traders lose money than make money. The figures are fuzzy, but it is 80% to 90% (maybe more) who end up losers and leave.

2. Within the industry, only a small percentage of retail traders are profitable on a consistent basis. Moreover, if you are just starting out, you should expect to incur some loss strictly due to error on your part as you climb up the learning curve. Increased trading knowledge and experience combined with trading strategies that have superior risk/return characteristics can help put the odds of success in your favor. So, it is important to study the markets and educate yourself before trading or, alternatively, you can rely on the support of your broker professional. Another option you may also want to consider is paper trading. It’s a viable option because it’s a lot cheaper to make a mistake in a fictitious account than a real one.

3. You will have losing trades. In fact, most of your trades will be losing trades. It is impossible to predict price movements every time. Even when the technical and fundamental factors are in agreement, the market often moves in an unexpected way. This can even happen several times in a row. For this reason, it is always important to make sure that loss is limited on every trade and that you have sufficient trading capital to withstand several losing trades without being taken out of the game.

4. Don’t expect to become financially independent. It’s unrealistic to expect a small-sized account, especially one under $5,000, to generate consistent income to replace regular employment. While this may be possible for a very low percentage of traders, it does often require high-risk trading. High-risk trading means that if you are one of the many who lost money, then you probably lost your money very quickly and you may end up owing even more money to the clearing firm. High-risk trading should be avoided, especially by the beginner. Rather, concentrate on low-risk, low-frequency trading and devote appropriate effort to increasing your knowledge and understanding of futures trading.

Keep in mind that, as a beginner the emphasis should be on learning and proceeding slowly. By that, I mean practicing in a paper trading account and confining your trades to those that have low risk. The expectations of huge profit that many beginners start out with may be realized, but only after you invest the requisite time and energy and only after a slow and realistic start.

Book recommendation: If you choose trading for a living as your desired career, then it is vital that you read the book "Trading Is a Business"

http://www.tradingeducators.com/books.htm?source=ezinearticles

Joe Ross, trader, author, and educator, has been an active trader since 1957, when he began his trading career in the commodity futures markets. In 1982, when it became possible to day trade the S&P 500 stock index futures via a live data feed, he successfully made the transition from full-time position trader to full-time day trader. In 1988 he formed Trading Educators for the purpose of training aspiring traders in the futures, bonds, and currency markets.

Trading is a fascinating activity.

There are so many layers to it. And so many paths that you can go down.

Soon after we first got interested in the stock market I became captivated by technical analysis. I finally felt that I was in control. It gave me great confidence to have all these tools to use.

We bought some expensive charting software and I started playing with the hundreds of indicators that it contained. Exotic sounding devices with impossible to understand mathematical formulas.

So, armed with all these new tools, I was sure we would be making a killing in no time. Because now we had science on our side!

And so I spent night after night, weekend after weekend trying to understand them. Backtesting. Trying one and then another.

But still we struggled to pick the winning trades.

I can remember buying this add-on to our software that gave us even more indicators. And I was convinced this would finally make the difference.

So I tried yet more indicators. Using different settings and different combinations.

But success still eluded us.

And it took us quite a long time before we understood why.

But before I explain what we discovered, let me tell you about eating bitumen.

My office is close to home. So some years ago I decided it was silly for us to have a second car. And so I traded it in and bought a scooter.

Now the only real problem with scooters or motor bikes [apart from getting wet in the rain] is that you are fairly likely to get hit by a car at some point!

It just stands to reason.

So I am always careful to watch cars to see which way they indicate they are going to turn or whether they are stopping.

But this one day I was in a bit of a hurry.

And as I approached an intersection a car was parked at the stop sign on my right. I was going straight through and the driver was indicating to turn left.

[At this point I should remind some of our overseas friends that we drive on the left side of the road!]

So I knew it was OK for me to keep going straight through the intersection. Or so I thought!

Next minute I am slamming on my brakes as the car accelerates across the street immediately in front of me. As my scooter hits the fender I go flying across the front of the car and land on the pavement on the opposite side.

For anyone who has experienced such an event you will know what I mean when I say that it was like the whole thing happened in slow motion. Quite weird!

I can remember looking at the car as it headed for me and not believing that this was really happening.

Because I was convinced it was going to turn left. The driver had indicated that he was turning so what was he doing on my side of the road?

But there he was. I couldn’t believe my eyes but eating bitumen convinced me that this was indeed reality!

Ever since, I don’t trust car indicators. Instead I have learned to look at the front wheels. Because this is the true indication of which way the car is actually going to go.

And you can’t rely on looking at the driver, even if you can see them. Because they often don’t seem to know where they are going, either!

But the wheels don’t lie!

The car can only go in the direction they are pointed.

Now what on earth has this got to do with what I was talking about before?

You remember I was telling you about the problems we were having with technical indicators? Well what finally dawned on us was that we were not taking enough notice of price action.

And so we started to study the chart before adding any indicators.

And suddenly we saw what was really happening. It was like looking at the car’s wheels instead of its blinkers.

You see, technical indicators are just what they say they are – indicators. Not reality. Not price action.

But an interpretation of price. A filter.

And so you need to look at a stock’s price chart on its own to get a picture of what is really going on.

This is not to say that technical indicators are not useful. But the critical thing is to only use them after you have analyzed price action. Not before.

Just remember – the wheels tell the truth!

David Chandler

Ordinary People Making Extraordinary Profits!

For free mini-course on stock and options trading click the following link:

http://www.StockMarketGenie.com

Or visit our blog at:

http://stockmarketgenie.blogspot.com/

The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn’t worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.

To become a successful trader you must have some kind of method or system to follow that will keep you on track. You may be buying and selling on tips, the weather or phases of the moon (there is a system like that).

The two basic methods are based either on fundamental or technicals. In stock the fundamentals take into account sales, gross profit margins, net profit margins, industry growth, management capabilities, price/earning ratios, etc. In technical analysis you would be computing various moving averages (such as 200-day, 50-day 10-day) of the stock price, trend lines, Fibonacci retracement, support and resistance levels, Elliott Waves, stochastics and many others.

There are scores of systems for sale and you can pick and choose among them to see which one suits your bank account and personality. Your choices will range from long-term to day trading. One thing for sure – don’t buy any system that does not have a good exit strategy. Understand that many systems will trade frequently with small losses, but any method must have a won/lost ratio of 3 to 1 to be profitable. That means over the period of one year you must win $3 for every $1 trading loss. You will learn early in the game to love small losses. Never buy any system that allows big losses.

There is a magazine published every other month called Futures Truth that prints the trading record for about 200 commodity systems. A great way to find the best systems without losing your money.

Most of the systems you find will be based upon some kind of strict mechanical entry and exit computation and will need computer software that you will receive when you purchase it. The software vendor may even provide you with a broker who specializes in trading their method.

The reason many of these mechanical systems do not have a better ROI (return on investment) better called ROS (return on speculation) is computer systems adhere to a strict formula for their BUY/SELL signals. They cannot give you a “maybe” because computers don’t understand maybe. There is no subjective influence at all. The latter will have both positive and negative results on your returns. Most people don’t want any subjectivity and prefer to follow what the computer spits out whether right or wrong; it relieves the trader of the responsibility of the decisions.

There are many professional traders I knew when I was an exchange member who traded strictly on “feel” and I know many who made six figure incomes doing it.

Many people start with a professional system and will tweak it to better fit their personality. This is very common, but requires personal discipline to remain with those alterations. You can’t be changing all the time.

Whether for stocks, funds, commodities or whatever you invest you must have an organized trading system that has a good exit strategy. Whatever you buy it is the exit method that will help you keep the profits you make. To be a successful investor you must have a system.

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know.

Copyright 2005