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Commodity Traders Club News

Commodity Traders Club News

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Published by: Hall Of-fame on Aug 02, 2010
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I Knew the Market, Not - J.L.

Although I had read several accounts of futures traders who said that one of the most important factors in
trading was the preservation of capital. I guess I didn't fully appreciate what they were saying. I do now.

At the end of January 95, I had $97,000 in my account. I had made a gross profit in 1994 of approximately
$95,000, netting nearly $82,500. This was made trading primarily the S&P500, making two to three trades
daily, although close to $31,000 was made in two coffee trades. On January 30, I felt strongly that the
S&P500 was due for a major correction to the down-side. I sold two March contracts and then a couple
days later sold an additional two contracts.

When the correction didn't happen, I still felt it would at any time, so I held on though the market continued
to rise. I rolled the March contracts into the June contracts on March 14, and watched the market continue
to rise. I had a margin call and liquidated two contracts and shortly after that liquidated another contract.

Finally on May 19, I liquidated my final contract for a total loss since January 30 in the S&P of $56,500. I
felt like a person who had held onto a rope of a hot air balloon who didn't let go while he could and then
couldn't because he rose too high. I was in agony for several months.

You would have thought I had learned a lesson. Again being sure the bond market was due for a correction
downward, I shorted bonds eventually taking a loss of $7,093.

I had a system for trading the S&P market that I had usually followed that was profitable. I strayed from it,
though it had been profitable over a long period and followed a hunch that the S&P was sure to have a nice


correction downward. I was sure of my hunch, but I was wrong. I have been nearly always wrong when I
follow a hunch, thinking I know what the market is going to do. I was wrong to the tune of about $25,000
on lumber in 1993 and wrong another time the S&P in the amount of $16,000 in 1994.

I have now stopped trading until the middle of July, while I evaluate things. I have lost confidence in my
trading due to the scenario above. Now I am not even confident of the things that proved to work prior to
my very stupid trades. Yes, I have called myself stupid among many other things in these past five months.

I hope I have learned a lesson, a very costly lesson. I have now decided I will always put a protective order
at the time of my original order to get myself out of the market whenever it goes against me, in the event I
follow a hunch rather than a system. Preservation of capital will be utmost in my mind.

I do have several systems I follow, one of my own for the S&P 500 market and the Gary Smith S&P
system. Also I plan to use another system I purchased from Lee Gettes for the bonds, S&P, coffee, cotton
and silver. I have been monitoring Gettes system for several months and I think it has merit.

My motto from now on will be: Don't rake the leaves against the wind. Don't stray from what works and if I
can't resist then always place protective stops that I am comfortable with at the time of the order. I find it
extremely difficult to place a stop after the order, unless I am following a system that calls for one. It is far
better to take a loss a little early than to take a large loss later. I now realize I don't know how high is high
or how low is low. I have become very humble. If what I have said turns out to be of help to anyone, then I
am glad I shared this terribly distasteful but very real experience.

A Data Vendor Wish-List - David Sligar

Continuing the recent comments by and about data vendors, I would like to submit the following "wish

Accuracy and reliability. Almost goes without saying, though I certainly agree with Buzz Ross in May's
CTC News that perfect accuracy is not essential, even if it were possible. Much more important is the
percentage up-time of the quote system, which one must hope is close to 100. Redundancy, anyone?

‚ Accessibility. Local phone access or in real-time data, cable or satellite feeds, should be inexpensive and
easy to set up. The data should be available in a format readily usable by all major charting/analysis
programs, and should provide conversion software accordingly.

ƒ Flexibility. A trader may need quotes on one (or a few) issues at a particular time. Data on issues
previously uncollected should be easily available, and beginning and ending dates should be easy to

„ Cost. A low monthly fixed charge for some base amount of information is good. If historical data is
required, a reasonable and well-defined surcharge for data collected is acceptable. (The adjectives are

… Completeness. Includes stock, mutual fund, commodities, futures and options quotes. More?

† Telephone support. Most information highway vendors I've dealt with came up short in this department.
Somehow, there are always excuses, e.g., "hundreds of calls per day," "explosive demand," "overtaxed,"
etc. I would suggest that an essential component of any product is its usefulness. If that's true, then it is the
seller's responsibility to provide to the buyer whatever will make the product usable, including, if
necessary, adequate technical support. Is this basic? When it comes to computer information and software,
I would prefer that systems be carefully designed, and manuals well written, that only a bare minimum of
telephone support would ever be needed. This can be done, though most often it's not. An example is
MetaStock. In almost two years of using their charting software, I have called them only once, and without
much difficulty.


That's enough, from my perspective. If I've left something important out, I hope someone will help me
complete the list. Now, to be more specific. CTCN has run several comments in recent issues by Bob
Pelletier of CSI, including in the May issue a response to a letter pointing out some problems with CSI's
technical support. I recently stopped my subscription to CSI. My reasons may be of interest.

The difficulties I had were with the software. CSI data is no doubt quite good, but collecting it was
extremely time consuming, and the collection process was hard (for me) to set up. I had to create a new
portfolio whenever I wanted to collect data on only one security, or when I wanted to collect any subset of
my normal portfolio. The time required to set up the data collection process in this way was not acceptable
to me. It may be that I was simply not well enough schooled in how to get around in the program. I was not
able to discover better operating methodologies during the limited time I had to learn the system. I did
telephone for technical support on many occasions, and the response was that this is how the system is, no
one else is unhappy with it, and so forth.

That may be. But my interest is in trading, and I prefer to spend a minimum amount of time learning to use
my mechanical tools, and almost no time at all actually using them. The market and my psychological
responses to it are where I want to spend my time. Thanks, Dave, for providing this forum. I thoroughly
enjoy every issue of the News.

Emotions are The Key - Mike James from New Zealand

Thanks to John Brown for his contribution in the last issue. I have been meaning to write a letter covering
some of the same ground. I don't intend to repeat specifically the areas covered by John, I suggest for the
sake of your health and trading profits, reread his contribution in Vol 3 No5. It contains some sound advice.

Personally, I believe that your emotional state is the key element in determining your bottom line profit.
Trading success is a product of internal control. Without a healthy mind and body this control is far more
difficult, if not impossible to maintain.

There are many aspects to this. One example is an exercise program. Anyone who has committed to any
sort of aerobic exercise program will probably have experienced a more relaxed state, and found that they
can think more clearly.

If you are worried or stressed your brain doesn't function as well. Think back to the last time you sat a
formal exam. For most people examinations are stressful. Many people find that in the heat of an exam they
"forget" many pieces of information that they would usually be able to recall immediately. As soon as they
leave the examination room, the information they tried to recall in the exam room pops back into their
head! This is one simple example. You may have had something similar happen to you in a trading

As well as regular exercise, make sure you get some mental relaxation. Trading can be a very intense
business. So mental relaxation is important. Another important aspect is your diet. I'm fortunate that my
wife is a natural health practitioner, so I have some guidance from her in this regard. Personally I only eat
organic unprocessed food where possible. You may think that this is going a bit far. Don't you make sure
that you car has the correct grade of fuel? From a nutritional point of view, processed foods and chemical
additives de-nature foods and make them less than ideal as a fuel for our body. I want to operate at my
peak, make money out of the markets consistently and be relaxed. Processed foods just add one extra
stressor that my body has to deal with, that I for one want to try and avoid.

I also take one or two herbal and vitamin supplements every day. Seek qualified advice. To help with my
mental concentration, I take a vitamin B complex and the herbs Siberian Ginseng and Gotu Kola. These
herbs are available from Natures Way Products, which is based in Utah, and probably on the shelf at your
local health food retailer. Briefly, Siberian Ginseng helps the entire body adapt to stress. Because it helps
our cells to use oxygen more efficiently, it also increases stamina and endurance. Gotu Kola is termed a


"Brain food" as it increases blood circulation to the brain. It also has a relaxing effect on the nervous
system. Among herbalists, it is renowned for its ability to promote memory and reduce mental fatigue.

Babcock's Systems Opinion - P. R. Rettino

I received Bruce Babcock's CTCR for 2-3 years. I purchased about 20 of his systems. After converted many
of these to SystemWriter, I discovered only losers or marginal systems. It appeared that they may have
been over optimized.

I succumbed to some very slick advertising and purchased his S&P Day Trading system. It was very
expensive. I lost a lot of money and all faith in CTCR.

Bruce Babcock Responds

Thank you for the chance to comment on Robert Rettino's letter. It raises some important issues for
consumers of commodity trading systems. Although I know Mr. Rettino is sincere, his letter leaves a very
unfair impression about me and my company.

I have checked our records and Mr. Rettino was a "Commodity Traders Consumer Report" subscriber in
1990-91. The "CTCR" magazine is separate from the systems we sell. He must have thought there was
something of value there as he renewed his subscription for a second year.

Between Jan. and Nov. of 1990, he also bought six written systems at an average price of $38. He says they
were "marginal or losers." We sell these inexpensive systems without undue hype primarily as a source for
trading ideas. Certainly, we make no claims that the systems are guaranteed to be profitable in every market
or time period in the future.

Only three of the six written systems he bought were capable of being comparatively rated. A cursory
check showed that in 1992, two of them were rated in the Top Ten Systems in Futures magazine on the
basis of performance after being sold. Other systems similarly rated in Futures' Top Ten sold for hundreds
or thousands of dollars.

Mr. Rettino also bought seven systems that came with computer software to allow historical testing,
parameter optimization and trading signal generation. He paid an average price for those systems of $163, a
small fraction of what others charge for equal, or most often, inferior software.

One of those seven was the S&P Day Trading Company system which Mr. Rettino specifically criticizes.
Its price was $495, which he says was "very expensive." I suggest that was not expensive for a mechanical
S&P day trading system with powerful software and an impressive historical record.

I don't know what he means by "slick advertising." Those who are familiar with my advertising know that it
is truthful, factual and realistic.

Mr. Rettino says he "lost lots of money." As I will show in a minute, he must have lost money because he
did not follow the system properly or long enough.

No system vendor can guarantee future profitability, but I think I do everything possible to demonstrate my
faith in my products. Is there any other vendor who actually trades with the systems he sells and publicizes
the results? I don't trade with every system I sell, but I have been trading a demonstration account with a
number of them since the end of 1990. This account trades only with systems I sell to the public. In fact, I
trade no secret systems for myself in any account that I do not share with my customers.

Additionally, none of them has ever been re-optimized. Far from selling "over-optimized" systems as Mr.
Rettino suggests, I must be the only system vendor who always tests and trades using the same parameters


for all markets. Other vendors have different parameters for every market and reoptimize all the time to
show spectacular historical results because they don't plan to trade with the curve-fitted monsters they sell.

The annual returns on my demonstration system account have been: 1991 +63%, 1992 +61%, 1993 +23,
1994 +66%, 1995 (through May 24) +85%. That is not a misprint. This year's and last year's results use a
six-figure account. (Past results are not necessarily indicative of future results.)

Many of my customers report similar impressive returns. Unfortunately, Mr. Rettino chose not to purchase
the best of my personal systems though they were available in 1990 and 1991 for less than $500, including
the most powerful system software in the industry.

But what of the ones he did purchase? I actually traded the day trading system he mentions both before I
started selling it and for nearly three years after I had stopped selling it. It made real-time profits (including
a $25 commission) of $19,450 in the two years after I started selling it. That's not bad for a mechanical day
trading system that traded only 112 times during that period.

Mr. Rettino bought the system on 1-25-90. Because of excessive volatility then, the system did not trade
during Feb. and March 1990. That gave him several months to become familiar with it. If he had started
trading the system in 4/90, and traded it religiously until 4/91, he could have made more than ten times
what he paid with only 28 trades. The worst drawdown from starting capital during that period would have
been only $2,150, highly reasonable for an S&P system.

Another of the software systems he bought I stopped selling several years ago because I decided the
performance was not living up to expectations. However, I have continued to trade it myself in both my
demonstration system account and my retirement account to this day. Although its performance has been
marginal, I have not yet given up on it myself.

Under the circumstances, it is hardly fair to vilify me because a well-intentioned system did not perform up
to historical standards. After all, I sell all my systems (even the most expensive) with an unconditional 30-
day guarantee. In addition, they all have fully-disclosed trading rules. What could be fairer than that?

College Education Costs Money - Michael Ireton

Fifteen Years ago I started trading commodities with a couple of friends of mine and we became day
traders. However, we didn't have a complete understanding of what we were doing. We charted and thought
we were doing the technical things we needed to do, but in the end we went bust and had to give it up. This
experience, while costing mega bucks, was part of my college education in the commodity trading game
and my entrance fee. The experience forced me to go back to school and finish a couple of degrees so I
could move on.

Now I am back in the trading game. I originally wrote Dave to find out about a particular trading program
that was offered in the slick and glossy world of advertising. I mentioned that I consider much of my
investment in books, tapes, videos, etc., as part of my college education tuition in trading. Every piece of
information I pick up that adds to my personal trading techniques and that I can feel confident in, makes me
a better trader and will allow me to make better informed trades. After all, that is all college really does for
anyone is to help you make a better decision based on all facts. As I look back over the past months at the
money I have spent on different things, I realize that much has been in the search to assist me, so I am
willing to pay the price. I am trying to involve my sons in the market and use the materials to teach them
also. The old adage of "it takes money to make money" is appropriate.

The same holds true to dealing with brokers and selecting brokers. I am still conditioning myself to be
cautious of any broker recommendations. I have changed brokers recently because of poor information
leading to losing trades. I am gaining the confidence through experience and my "college courses" in the
technicals to back away from the teachers' (brokers) suggestions and to make my own decisions. Except for
a couple ill-conceived trades when first starting and not following the technical signs my system trades


have been money makers. My losses have been in trades I Initiated at a broker's call and what was going to
happen. I have stopped this foolishness and am disciplining myself to only trade my techniques that work
for me.

Experience and education is important when becoming a trader. Everything you purchase is a part of your
education and everyone you talk to is your teacher. Your tuition is on a pay as you go basis. You know you
have graduated when you begin to make more money than you pay out and the decisions become yours and
not someone elses.

A Corn Options Trading Method & The Problems With Options - Fred Montgomery

This analysis involves a trading method involving Corn Spreads. The trade buys Sept Puts 15¢ out-of-the-
money and simultaneously buys Sept Calls, also 15¢ out-of-the-money, The idea being a big up-move
caused by weather concerns during June/July would make the calls skyrocket. Conversely, if no big up-
move the puts would go up in value as market drops. In addition, if the trade does not double its total
investment by July 4, it's recommended the calls be dumped and puts be doubled-up, as the market is very
likely to drop if no big up-move takes place by July 4. This year I executed this trade during the
recommended time frame (on June 4) with Sept Corn contract being priced at 275 at the time.

Though I have this commodity option (spread) trade underway now, I must confess I never really liked
trading options. Some years ago I traded them more frequently than now and usually never made money (or
lost money) using options.

My biggest complaint with all options is that if the price goes in your favor, they usually add to the option
value at a much smaller percentage than how much they take away from it when it goes against you. It's
always less you make when going your way, and more you lose when going against you.

For example, Friday, June 9, Corn closed down 2¢ vs. Thursday. However, they only added ¼¢ to the out-
of-the-money 260 Put, going from 5-½ to 5-¾. However, they took away ¾¢ from equally out-of-the-
money 290 Call, going from 10-½ to 9-¾.

In other words, my long put gained ¼¢, but my long call lost ¾¢. My loss for just one typical day was triple
my gain in percentage terms. I Have seen that occur often, both on this trade and other options in other
markets over the years, including a number of spread trades. In fact, I have seen many more extreme

After looking at the facts, I now believe it will be very difficult to double my money on this spread. For
example, the 260 call was 21-½ on Friday, with the call being 16¢ in the money. That means if Sep. Corn
went to $3 .06 it would then result in the 290 call being 16¢ in the money, and it may be worth about 21-½
or so.

However, it would likely be worth less than that because of time decay between now and the potential
$3.06 price. Speaking of time decay, I recall some trades where the market was flat or even went my way to
a degree, but I still lost money as they took away the time premium every day, making my option worth
less, even if going my way!

The put is similar to the call scenario. For example, the 270 put is now out-of-the-money by 6¢, and worth
10-½ as of Friday 6-9. For my 260 put to double, which I paid 5-7/8 for a week earlier, the price would
have to drop an estimated 8¢ in the money, or a price of about $2.52 or so. An even lower price would be
necessary due to more time premium decay, if the move took a while to take place.

These Sept. Options expire on 8-18-95 according to my broker. That means there's only a short amount of
time for the price to make a huge move either down to the $2.52 area for the put to double, or up to the
$3.06 area for the call to double.


Moves of that magnitude in corn seem highly unlikely. For example, even with all the unusual major news
stories recently, such as flooding, late crops, Russian sales, other exports, etc., the price only moved about
½¢ today.

Keep in mind, even if the price does make a big move and the option doubles, what about the loss on the
other end! If the price goes up to $3.06 or so the 260 and 250 puts would be almost worthless. The opposite
is true with the calls being almost worthless if the price drops to $2.50 area.

If the price makes that huge move up or down and we double the value, it may only be a break even
because almost the entire investment on the other end would be a wipe out. If that's true, it seems to me we
would actually have to quadruple our profit on the winning end to in reality "double our money!" By the
way, what with daily time decay, the scenario on this trade is even worse than my above calculations, with
even a bigger move required, either below $2.50 or above $3.10 for the 260/290 options.

Some Comments and Observations on Recent Articles - Alfred F. Dougherty

I have been trading Gary Smith's system since 2/3/95 and recommend it. Each month has been profitable,
averaging about 5 S&P points, after slip and commissions (May was the best, +14.30 S&P points, after slip
and commissions). Don't use the Friday short pattern, especially in an up market; even Gary has quit using
it. I have an excellent broker, Reinhardt Watson, who trades this system for me and another person
(someone has to watch the market closely to trade the system, get the breakout point, make adjustments to
stops, etc., during the day). He's also familiar with Vilar Kelly's Daycare and Trophy systems, which he
trades for another person, and breakout systems for T-bonds and currencies.

‚ Tom Cruckshank outlined in 5/95 (V3, 5) a method for using TradeStation software and Signal delayed
data service to use the real-time S&P cash index plus the futures premium to create minute-by- minute real-
time data, or at least a close proxy. I'd like to hear from anyone who has done this using TradeStation with
Signal or other data vendors on real-time data. I want to use one and/or five minute data with Gary Smith's
system. As Bob Buran outlined in the most recent issue of a rival publication, using intraday data with a
mechanical system can significantly improve profits (yesterday, for example, taking profits at the 2.0
standard deviation band between 3:30 and 4 p.m., rather than MOC resulted in $300 profit per contract).

ƒ There has been some discussion recently about scale trading and Wiest's "You Can't Lose . . ." As one
who has tried his approach, subscribed to his newsletter, taken a bath in coffee a couple years ago when my
stomach couldn't take the drawdown (I've also looked for oceanfront property in Arizona), caveat emptor!
But, after this unpleasant exercise, I had the opportunity to review the manuscript of a similar, but much
more conservative and sensible method, called interval trading. Risk is substantially reduced.

The resulting book, "Conservative Commodity Speculation," by Ralph Fessenden, a professor at the
University of Montana. He has been trading commodities for years, including dabbling with Wiest's
system. John McDivitt, the lead broker at Zia, collaborated with Dr. Fessenden on the book and is an expert
on scale trading (he was recommended to me by Wiest) and interval trading, and is a superb, experienced
commodity broker. I understand he and Dr. Fessenden now use an intermediate to long-term momentum
oscillator (MACD) to attempt to avoid very premature entry (and, hence, terrible drawdowns, costly
rollovers, etc.).

When I looked at weekly and sometimes monthly charts over a 10-year period, and used a momentum
oscillator (I used stochastics), with the bottom 1/3 price range approach, I found that decent entry points
can be chosen. I think using seasonal data from an outfit like the Moore Research Center in Oregon to pick
high probability contracts and likely entry points would help further (like October-November entry at the
seasonal lows for the summer Cotton and Copper contracts). John McDivitt understands all this; he also
manages money if you don't want to do it yourself.

„ If anyone has done further testing on the work of Connors and Hayward ("Secrets of a Hedge Fund
Manager") on their "news reversal" system (how big a gap is necessary? Same for shorts as longs?) or has


come up with a method for minimizing false breakouts using their "historical volatility" system, and is
willing to share and work together.

… Finally, the best book I've read recently on trading is the thin, pithy "Zen in the Markets," by Edward
Allen Toppel, Warner Books, 1992. Superb; shows how successful trading requires the discipline, fortitude
and calmness of the marathoner. You begin to understand why they were called "Turtles."

Odds'n Ends from Anonymous Trader

I wanted to make a few comments and observations after reading my May CTCN issue.

I enjoyed the article by Don McCullough. This man seems to grasp how much commitment, dedication and
hard work it is to be a successful trader. Fortunately, it is a labor of true enjoyment for many traders which
make it tolerable, but not easy. He has begun to learn things that I have learned like stick to one or two
markets and specialize (the S&P500 is the best market for risk/reward or bang for your buck) without a
doubt. He has seen how different it is to be focused watching 400+ stocks or even 5 or 6 commodities and
try to be totally concentrating on the trades without distraction. He is correct in his observations about the
T-bond market and currency market. They are tradeable, but the moves intraday are not as rewarding as the

So that's the philosophy I have come to for myself. Find the market that has the best risk to reward value
for your trading and then just trade that and become good at it. Why trade another market that has less bang
for your buck, it doesn't make sense! Rather than watch 2, 3 or 4 markets, why not just then trade a 2, 3 or 4
lot in the best value market and concentrate on that. It makes life much more simple. I think Don and some
others are starting to find this out. For most traders this works better.

I'm not knocking the guys who trade dailys, weeklys and hold positions overnight. Some do well at this. I'm
only saying that after doing that myself, I've come to find it's not for me. I operate better specializing in one
market and holding no overnight positions. I think many traders are finding this out for themselves also.
How would you like waking up in the morning and finding the currencies $1,000-$3,000+ against you or
coffee $5,000-$20,000, cotton, lumber, OJ, soybeans going limit against you for several days in a row
sometimes? That's a heck of a way to start your day - no thank you sir.

Speaking of starting your day, maybe some would like to know how my day's schedule goes to give you an
idea! My office is upstairs in my home and is fixed up comfortable with my office equipment, plus sofa,
TV, reclining chair. Very much like a studio apartment, since my wife tells me I live in there.

To start my trading day: I come upstairs, relax and watch Good Morning America and CNBC while
drinking my coffee. Then at 8:15 a.m. or so I get situated at my desk. Review the market action yesterday.
Look at the Globex S&P, Bonds, Currencies just to get a feel for what kind of a day it might be (I can relax
and start the day off in a good frame of mind, since I don't have to worry about horrid gaps against me).

I look at my support resistance points displayed on my screen and watch the opening at 8:30 a.m. cst. Then
I usually get off one or two trades by 10:30-11:00 a.m. The markets usually start getting quiet. Then I'll
leave to go walking, catch lunch, run some errands and watch "All My Children." Then about 1:00 p.m.,
I'm back in my seat for the afternoon session to have some fun. Then I'll usually get 1-2 more trades off
from 1-2:30 p.m. Then I'm done. Sometimes if I have a good morning, I'll just quit for the day.

This makes trading enjoyable. Most people think daytraders are permanently glued to the screen seven days
a week - 10 hours per day. This is not so. You see that daytrading affords one plenty of free time without
the anxiety of overnight or over the weekend positions. Be honest, how many of you have had
overnight/weekend positions and find yourself watching the news or national weather to see how it will
affect your T-Bond or Soybean position Monday. On my God, it rained in the Midwest Saturday and I'm
long beans. Now I spend the rest of the weekend throwing up, waiting for Monday's open to kill me! I


laugh now, because that's happened to me more times then I care to admit. No more, I enjoy my evenings
and weekends.

Also S.F. from Europe keeps making little snide remarks about how I would not like his method, because
it's so inferior to my $1,200 day amazing returns. First, just to get this guy's record straight so he doesn't
mislead other readers, I don't care about his trading or method. If it works for him, that's great. I don't know
why S.F. keeps worrying about whether I would approve of his % returns or not. Everybody is different,
and if he's happy, that should be all that matters to him.

He also keeps alluding to me making $1,200/day every day, where he picked that up I don't know. I read all
my articles and never found that. I have days when I do make $1,000-$2,000 or more. I have days when I
lose $300-$700 or more. On the average (with a 1 lot in the S&P) I aim for $200-$300 per day, day net.
This is realistic. That's $1,000-$1,500 per week plus some weeks even more. That's lots of money - when I
get up to a 5 lot or 10 lot someday. That's $5-$10,000+ per week. You can live very well on a 1 lot. How
many people you know make $6-$10,000 month working at home. So where this guy comes up with
$1,200/day, I don't know. Readers, if people tell you that you can make $1,000+/day trading a 1 lot every
day in real-time (not paper trading) run for the hills. In the beginning $100-$200/day is a good goal to shoot
for. Some may be disappointed in this, but I had to lower my expectations so I could trade properly.

On the lighter side, Don talks about the greatest trader, Marty Schwartz, he's one of my favorites. He, like
so many others, failed for so many years (10 losing years in a row for Marty) until he made it. These
experiences kept me going during my tough times. Also, he talks about how exiting a trade is the hardest
thing and he never seems to get good at this. I find I leave lots of money on the table also, so I feel I'm in
good company. Linda Raschke said she could retire from all the money she leaves on the table, but prefers
to take reasonable profits when they're there. So even the market wizards aren't perfect. They just make
money. I think their stories are very encouraging to see they make lots of mistakes also.

I have a little thing called steps to becoming a trader that I find was real good. Perhaps other traders will
enjoy reading this, and see themselves as I did.

On a positive note - trading is fun (hardwork but fun) and yes you can be successful after time. Maybe not a
market wizard, but successful. Keep trying, keep learning, don't be greedy. Happy trading!

Often Asked Questions From Many Members to Anonymous Trader & Anonymous Trader

Many members have asked these three questions:

(1) Q: Exactly what does "2-pivots back" mean, and how is it used by you?

Chart in Print Copy

A: Support - if broken I usually go to a sell mode

(2) Q: What is that apparent moving avg. plotted in the middle of your Keltner Band on your charts and
how is it used by you?

A: I think it comes out to about a 7-period exponential moving average (its close)

(3) Q: How do you determine the pullback amount before you act . . . why is it 35% one trade and 65% on
another trade?

A: I really don't measure them. Most of the trades I take though seem to pullback in these areas.

Chart in Print Copy


Mechanical System is Best - John Bowley

Many recent contributions suggest using discipline, commitment, trading skills, etc., rather than 100%
mechanical systems. I think this will cause more losers than winners.

The reason computer trading systems exist is to capture good ideas and determine the best way to apply
them. Basically, any idea one uses can be automated and tested. Various filters and stops can often improve
a system's 10-yr performance even after it's released. Otherwise, one may lose their skill or luck in
selecting trades.

Psychological Dysfunction - Don McCullough

I just came across that title while reading Anonymous Trader's April CTCN article. Today, while watching
tick, 3 min and 5 min bar charts of the S&P market, I was perfectly dysfunctional. (Funny and not so

What a great day for trading the S&P! About $2,000 up and then about $3,000 down per contract. What did
I do about that? Not a damn thing! Not one trade, and I sat and watched one good signal after another pass
me by. How can that happen? Here's some of my best reasons and there may be others I'm not aware of.

Though I have been studying (and trading a little) the markets for around 9-years, I have never done any
daytrading until recently with the Mid-Am bond market. It's a very good jump from that, and similar
trading to the mighty S&P market. Also, I just had a $20,000 check cleared for trading yesterday and the
"shock" of confronting the fact that my big test with the markets is upon me is probably another reason. Its
been a long, hard road to this kind of "Judgement Day" and I am flat-out shy about "pulling the trigger."

Both Anonymous Trader and I have mentioned the difficulty of consistently trading your signals in this
newsletter. Now, you are hearing it from "the horse's mouth!" It's not the fault of my signals. My signals
couldn't be more definite or easy to see. It is my fault and I believe after a few trades, most of this not
trading my signals problem will be history.

The only comforting fact about this great day for trading the S&P is that my signals were, as always and for
the most part, "on the money." I have long been aware of how losses can cause one to miss the next good
trade. What I confronted today was how not trading the first good signal of the day can screw up the whole
damn day!

So, it's not just losses that can screw up your daytrading, but also good signals that should definitely have
been taken. So ... here I've given you a little road map to psychological dysfunction and it was possible
even though I have great confidence in the merit and high probabilities of my signals.

My final analysis of this great-bad day with the S&P market is: I was afraid to take a loss. It's that simple.
There is no way (I've known this for a long time) I am going to be in the market for the winners, unless I'm
willing to be in the market for the losers. NO WAY. Another problem I had today (and it just occurred to
me) is that I wanted my first big trade, of what I expect will be a long and very successful trading career, to
be a winner. Stupid ego problem!

I have had no problem taking losses in the past. I didn't like to, but seldom stayed with a loser longer than I
should have. The losses wouldn't have been that bad. My studies of the S&P market along with my style of
entry dictate placing the stop loss $150-250 from the entry point, on the volatility of the market.

I'm reminded of an old saying about how to make it in the markets that goes: "Plan your trades and trade
your plan." Well . . . I've planned the hell out of my trades--now on to the second, and many say, hardest


Observations on Recent Issues of CTCN William Shelton

Dave, your publication is getting to be very interesting and would like to praise you for the extra work you
are doing for your readers, e.g., trying to get more information from Anonymous Trader, etc.

Now to more specific issues. January 1995 - Dave Reiter's article outlining his trading success and offering
advice to readers. He offers to backup his words with his account statements. He cautioned readers that he's
only a part-time trader, trading between his farming chores. February 1995 - Dave Green reports that Dave
Reiter submitted his account statements, but they failed to show the success Mr. Reiter claimed in the
previous month's issue.

Editor's Note: I never said that, all I said was the specific trades and details were obscured. Only the
monthly P&L figures were shown on his broker statements. Those numbers were in fact as good as Dave
had indicated.

March 1995 - Futures Magazine advertisement: "100% winning trades in 1994 . . . only three losing trades
since 1992. Purchase the system for $175 or rent it for $25 per month." Seller? Dave Reiter. What's wrong
with this picture?

To Bob Meadors - how in god's name could you let Alaron take 14 days to send you a written confirmation
of your trade, and at a $2,300 loss at that? My advice is to lodge a complaint with the CFTC against
Alaron. I have traded with many brokerages, including Alaron, and have never encountered such a

About Harriet Hodges' letter, I feel she is on the right track with reasonable expectations. But she should be
the last person advising anyone on how to find a good brokerage firm. Jack White is primarily a stock and
mutual funds brokerage and their commissions are fairly reasonable. I used them a couple of years ago to
trade mutual funds. If their commodities commissions are the same now as they were then advertised, I
don't care how good their service is. You're right Harriet, they are extremely expensive. Look around, you
can find good brokers who will charge about half of what Jack White charges. You also said you "have to
log four losses for that first win. That's the rule." Where in the world did you uncover that rule? Finally, I
think David Stone answered your question about Wiest's book and system. His system may work, but make
sure you have a ton of money before you try his system.

I would echo Miner's thoughts on all the trading geniuses talking the talk, but not putting their money up
when it comes to proving what they say. Futures magazine should hold a contest to make these geniuses
who advertise in their magazine prove that they can do what they claim they can do. Of course, their
advertising revenue would drop dramatically.

Finally, I would strongly suggest that readers turn to the back of CTCN first and see who is running an
advertisement, then look to see which of these advertisers have also submitted an article. While I am not
saying that someone advertising a product should not have their article taken seriously. I do suggest that
articles by advertisers should be taken with the appropriate grain of salt. In February's issue, products were
offered for sale by Randy Stuckey, Robert Miner, Kent Calhoun, Bob McGovern, Gary Smith and Michel
Arimoto, all contributors to CTCN with articles. Joe Ross, in his article last month seems to echo what I am

Editor's Note: The Feb. issue was unusual in that it contained a number of articles written by members
who also happened to be product vendors. Usually, vendor articles are not that common. In fact, this issue
has only two submissions by vendors, one of whom is little known in this country (from Europe).

By the way, if a vendor article promotes his product, it's not allowed as an "article," only as a paid
advertisement in the last page advertising section. Frequently, when the vendor hears that he cancels his


'article' as he may not want to pay for it. Also, there's nothing at all wrong with articles from vendors as
they typically have more knowledge to contribute to our publication than the majority of private traders.

Incidentally, all of Joe's fine books are sold through many sources with a money-back guarantee. I believe
that he offers his books with a money-back guarantee. I categorically believe that no book or system should
be bought if it doesn't have some type of money-back guarantee. I know I'm stepping on many trading
genius's toes, but if your product is worthwhile, no one is going to send it back for a refund.

Challenge Yourself to Grow to a Better Trader - D. C. H. from Germany

To prove myself and give other traders some advice, I developed the plan to make 125 traders, beginning 6-
1-95. My goal is to trade only US-Bonds on a short-time basis and to make 8 tics trade after trade. This
means I will make $200 (8 tics x 31.25=$250 US$, deduct $50 for commission and slippage).

I plan to make careful and sound decisions, so I don't have any losing trades. This seems to be hybris, but
Mark Weinstein is the Super-Trader-Model we all can learn from (see "Market Wizards" by J. Schwager,
page 321-342). As you can read Mark makes plus-trades in the vicinity of 99% (only some losing trades out
of the thousands of trades he made).

In Europe and Germany we hear about the American dream. Why not have a dream that a trader can be
right the next 80 or 100 trades and then turn the dream into reality? If Mark Weinstein can make 100
winning trades in a row, then we can do it also. Let's try it!

My plan is to trade only one contract of US-Bonds and to begin with an account of $6,000. If I will have 70
winning trades, the account value will be $20,000 (hopefully to avoid losing trades). Then I will trade two
contracts of Bonds per trade; same target: $200 per contract, so I will gain $400 per trade.

For every $10,000 I will make in the market, I will trade one contract more than before.

If you have the right understanding of yourself - of your inner parts and your psychologic issues - and of
the market you are trading, then you can achieve the goals I'm writing about. With patience and looking for
the right situation, it should be possible to avoid losing trades; with consistency it should be possible to
grow the account trade after trade.

Looking forward to notifying all readers how my account value is growing when the first set of trades is
executed - that means after 70 trades are done.

Validity of Methods - Michael Ireton

As a new subscriber and a new trader (traded 10 years ago and quit and now back in the game) I am
receiving multitudes of literature on many different programs, books, etc. Is there any place to contact and
find out how valid some of this material is?

I just received a flyer about Don Fishback and the ODDS Trading Approach. It looks like the program is
based on volatility, but does mention using probability statistics to get a better look at the percentage of
risk. This part interests me, and the cost is not overly expensive ($52 and change) but a person could get so
many of these "good trading" techniques that you can't decide which to use.

I am trying to work my way through various techniques to see what suits me best. I consider the materials I
purchase much like taking college classes. You have to accumulate a lot of data and then throw out what is
not suitable and keep the rest to make a system that works for the individual. Any help or thoughts on this
would be appreciated.


Trading Videos - Don McCullough

I have stopped submitting articles to Bo of Club 3000 simply because he (evidently by this time) refused to
print a couple of articles I mailed him. One article was an "add-on" to a previous article. The other article
had to do with how many people, finding success in the markets impossible, turn to "milking" the average
trader with their so-so to lousy books, systems and seminars. The title was "Mining the Miners." This is an
expression used by some store owners and saloon keepers of old California during the gold rush days.

GOOD VIDEO - I recently received (free) from the Chicago Mercantile Exchange a video that I found real
interesting. Interesting primarily because Linda Bradford Raschke is one of the people featured in it.

Some of you may not know who Linda Raschke is, so let me tell you. She is one of the professional traders
interviewed in Jack Schwager's book, "The New Market Wizards." Jack says in this book that Linda is one
of the most congenial people he's known. (Or something to that effect.) You can see this yourself in this
video. Mostly what I like about the video is seeing all the monitors at Linda's trading desk. I believe I
counted 7 monitors. Can you believe?

The old saying, "a place for everything and everything in its place" sure fits the description of Linda
Raschke's trading desk. A couple of male traders featured in this video had well organized trading desks
too. The older man gives a good piece of wisdom for the beginning trader. That is, go slow. He says that
was the best advice about trading anyone ever gave him and I certainly agree.

One thing I do not agree with is how simple some people in the video make successful trading out to be. As
most of you know, in the long run 80 to 90% of the people who trade the futures markets lose.

Linda advises keeping your trading methods simple. I couldn't agree more and yet I have to wonder about
her seven monitors in a row showing all kinds of indicators and how that "jibes" with keeping it simple.
Wouldn't it be nice if she could be persuaded to write an article or two for this newsletter?

At the very end of the tape, Linda comes on the screen and makes a three word comment about her trading
for a living lifestyle. She says simply and with conviction: "I love it."

Although I was charged nothing for this 7-½ minute video, I called the CME and ordered a couple for my
uncle and dad. Those will cost me $3.50 ea. plus shipping. Here's the phone number to call if you are so
inclined 1- 800-331-3332.

Playing the Corners - Bob Lahodny

One of the common axioms among successful traders is to never over trade. You must show patience in the
markets. I would suggest that theme be taken further to say that only the best trade set-ups be considered
for your trading capital. If the market is not unfolding exactly according to your pre-determined trade
criteria, then let it go. The markets are a painful teacher in correcting "almost" or "close enough" trade
selection. Once an ideal setup has been identified, a critical decision must be made . . . what is the proper
investment device for this trade.

This is really my point in writing. I'll share with you the benefits of this hardest learned lesson. If asked my
profession, I'm quick to respond that I am a commodity futures trader. If further asked as to my principle
methods, I'd probably respond as most traders would -----"I'm a trend follower." Sounds OK so far. In my
experience, which spans 20-years off-and-on, most "trend followers" are really "trend faders" or "bottom
pickers" or whatever else you want to call someone who tries to enter a "trend" at the very beginning, i.e.
the exact top or bottom.

It is those of you who cannot resist the thrill of pinpointing market turns that I am primarily addressing. If
you wish to take advantage of probable market turning points, such as Seasonals in grains, or extremes of
some nature, save yourself some money and sleeping time. Use a futures trader derivative ----- futures (bull


or bear) spreads, an option, or even an option spread, straddle, or whatever. What I call "playing the
corners" in futures is extremely risky, and usually very costly. The markets just don't seem to have a sense
of (your) timing! However, if your chosen vehicle of market participation is a spread or an option, then
your "adversity" exposure is much more manageable. Your timing can be off while your theme is correct,
and you can enjoy tremendous returns.

Let me give you some recent examples, sharing my trading theme, setup and method of participation. First,
let's look at corn. As all market watchers were well-aware of, last year we had a huge crop of corn. Corn
was resultantly knocked down to the common lows of the past six years (including 1994) in July (weekly
price approximately $2.10-2.20/bushel). As we progressed into December, I developed a trading theme that
I felt would take advantage of what I considered a perfect trade setup. The theme was basically this: the bad
(bearish) news was out in corn and fully priced into the market. Corn was holding in a weekly trading range
of $2.10-2.28/bushel. My experience and historical chart review acknowledged that almost without fail,
speculators would run-up old crop corn as the new year planting season approached on sheer anticipation
(hope) of some weather phenomena. It doesn't seem to matter whether there is a catastrophe or not -----
speculators like to be there just in case. Fine with me. My strategy was to take advantage of this consistent
tendency, if the trade setup was perfect. The trading range pattern and parameters had held-up for 21-
weeks; long enough to establish a tradeable base (envelope) breakout. When corn broke to the upside,
defeating the five month old parameters, I felt very confident that they'd (speculators) run-up July corn
values well over the (at the time) price just under $2.40/bushel. To take advantage of this, and not get
caught-up in real breakout, false breakout stress, I decided to buy some July corn 240 calls. They were
reasonably priced at 10 ($500.00) due to low volatility (the base), and I had many months for my trade
expectation, which was to at least double my money, to work out. Experience had taught me that adverse
moves against me by deferred month (distant), options would be minimized by my time-value inherent in
the call, and that I could easily ride out the all-too-common whipsawing around the breakout. As of this
writing, my trade expectation has been met, with my protective stop now at double my money. My greatest
drawdown was (I believe) one quarter of a point ----- not too stressful.

A recent example of how to play extremes is perfectly illustrated in examining cotton. In this case, my
investment method was a very simple (bear) spread technique. Again, the setup is something I perceived as
an ideal situation, especially made for a "play the corners" technique. Spot cotton was trading at (high)
price levels not seen since the civil war, and the deferred (new crop) months were trading at a very
substantial discount to spot. Add to this, a history in which cotton typically comes sharply off spike peaks.
All I needed for implementation of my trading theme, which was to buy new crop (Dec.), sell old crop
(May) cotton, was a message delivered by the market itself that it was time to play the corner. That was
received clearly on March 17 and 20 in spot cotton closing down limit both days (in a row).

I know from history and experience that limit days are surpassed in the direction of the limit move
approximately 80% of the time. On the following day, March 21, the market gave me a wide trading range
to put on the (bear) spread. From that point, I had a very viable coverage of cotton's history to fallout, and
limited exposure to one of those inevitable market swings against me. As it turned out, and as of this
writing, this spread has been a tremendous performer, and is very safely protected by another double of my
capital exposure. I slept like a rock during those five successive limit-down days.

So, if you want to be more relaxed and a focused futures (trend following) trader, play the corners with
futures derivatives. What you'll like best about using these strategies ----- the relative ease of pain when
you're wrong!

How to Submit articles & How Can I Save Money on MY CTCN Renewal - Tom C.

At one time I subscribed to a well-known competitor of CTCN. He liked it if contributions were submitted
on diskette. I can do this, but I don't know what format or disk size you like to use. I use MSWord 6.0 to
write letters.


Editor's Note: The best and probably simplest way to submit articles is by typing them using a word
processor and mailing or faxing it to CTCN. All I ask is that you do not use draft mode if using a printer,
and use fine quality mode if faxing it. That's because we scan in most articles using a PaperMax Scanner
and Word Scan OCR software, which works much better if the type is good quality and dark intensity. By
the way, submissions on disk in either ASCII , Word Perfect or MS Word formats are also OK.

Because of the aforementioned competitor's subscription, I was conned out of some substantial capital by
some less than honest people who read these type letters. I guess I really was born yesterday; I am just too
trusting of my fellow man. I really hadn't considered that I would make any contributions to the newsletter,
but I thought of something that might be of help and save some money for other traders.

Please preserve my confidentiality if you decide to publish this contribution. What is your extension policy
for accepted contributions? Editor's Note: See Special Request on Pg-12 for info on how you can save
substantial money on your CTCN renewal.

Power Indicator Offers Insight into Balance Between Bulls & Bears - Ron Bochan

I trade Options & Futures. In option trading, I use Bollinger Bands. I trade only with longer trend (Dow
Theory), and use waves for timing the short trend. But in options trading that's not enough. You can erase
one week's profit in one day. I developed the power indicator, which is based on volume. Trading based on
channels only can be very risky.

Power 05 - Accumulate the volume of today with the last four days, relate to close price

Power13 - Accumulate the volume of today with the last 12 days, relate to close price

A&F - The price rally, but power 05 traces a lower top

B -The price rally to a new high, but power 05 traces lowermost top

C - Power 05 ticks down after a long rally which is mean, there is no power left to push the price higher (to
the up band)

D-E - The price goes down to the Point E, while power 05 flat and shallow after a rally, which is mean.
There is no power left to push the price lower (to the down band)

Power 13 - Represents the activity of people in the market. If power 13 tick down while a trend continues,
that rally is ripe for a reversal.

When the price reaches high and higher, it is safe, add your position only when power indicator rally. When
power indicator tick is down "be careful" it means that no power is left behind the rally, and it's time to
liquid your position.

Member Requests

Dr. Manfred Wurr of Germany wants to talk to students or former students of Bill Williams' Profitunity.
Please call or fax your phone/f ax number and inform me of convenient times at which I can call you.
Phone:+49-40-672 79 80, Fax:+49-40-673 47 42.

Jennifer Appetta would like to talk with other traders in North Carolina. She can be reached at 919-493-

New member Doug Cragoe wants to know if members know anything about Renaissance System that
claims 300 straight winners!


Jack Burns needs information on the ODDS method of Trading by Fishback, call 304-876-0650.

A Michigan Judge wants to know if anyone has code for Keltner Channel in SystemWriter format.

J.B. would like to hear from anyone who has experience with Kent Calhoun's English Entry methods. Call
him at 515-472-4606 - 3 to 5 p.m. c.t.

Any members familiar with Kent Calhoun's methods, please call. I appreciate your help, so call collect 1-
407-696-2828, John Bond. Also, member Gordon Thomas in Canada is looking for info on Kent.

Ron Stewart would like info on Gann Trading Techniques. Reply via CTCN or call 810-232-7310.

In the May issue, C.J. Casebeer mentioned Pocket Charts for only $50 per year. CaLey Wong would like to
know where to purchase this product. Please include company name and phone number.

Charles Cochran would like to know the following: The address of Marty Schwartz and to know if he has
services for other trades? Also, would like to know if any other traders have good experience using
Commodity Timing by Larry Williams? Also, any recommendations on best brokerage house to use to
follow Larry Wiliams' hotline?

Call Neal Graham at 318-237-8060 with info on David Wright's (in Canada) "Little Gaper" Currency

Daytrader and T-Bond Daytrader systems.

Editor's Note: Due to many requests received for info on both Kent Calhoun & Bruce Gould, I ask that
you reply via CTCN so we can all share.

Editor Comments

Last month's issue had a submission by Terry Davis in which he was critical of the CSI Customer Support
Dept. When we get negative articles we may ask the vendor to respond to the criticism as there are two
sides to every story. We especially want to get the vendor's side if the vendor is a well-known and/or well-
regarded vendor like Commodity Systems Inc.

For example, Bruce Babcock (CTCR) was given the opportunity to respond immediately to a negative
mention in this month's issue. Bruce may have some people who say negatives, but for the most part Bruce
is well regarded and does an excellent job as a newsletter publisher, system vendor and a respected book
author. Therefore, it's only fair we give Bruce (or CSI) an immediate rebuttal opportunity, as there are both
sides to the story, and it's not fair that a negative article (perhaps unjustly) hurt their business for 30-days
until they can respond in the next issue.

Getting back to Terry's comments, Bob Pelletier, president of CSI responded with a detailed article in the
same issue with Terry's negatives, in which he admitted there may have been support problems in the past,
which they have attempted to correct.

In response to that scenario, James R. Burke surprisingly sent us the following Fax:

"Editoring of a Newsletter" - Jim Burke

"I was appalled by the way the editor of this newsletter, Mr. Green, handled the article written by Terry
Davis on CSI. I thought members could share the good and bad experiences dealing with vendors without
the owner of this newsletter running to a vendor and snitching to them. What happened to integrity of our
articles? Well, I now know who comes first with this newsletter - Vendors! It looks pretty cheesy to me.
Since this seems to be the way it is, I will want a half-page article on the software I am selling called


CHAZ without being charged and also offering a free free trial subscription to my fax service for two
weeks to all qualified members. Alright, editor should include this article in its entity to be just as fair to me
as CSI." - by James R. Burke, Jr.

If CTCN was biased toward vendors, we simply would not publish the negatives at all. The fact we publish
those negatives proves we are not biased. CTCN has in the past been heavily criticized and been subject to
revenge by one well-known futures firm for publishing negatives by a member.

It's truly amazing Jim Burke wants all that free advertising of his trading products to compensate him for an
alleged injustice done involving a matter totally unrelated to him and his trading products. Why in the
world would Jim demand compensation for a matter with absolutely no connection to him? Incidentally,
why does Jim think we are "snitching" when Bob Pelletier (who gets CTCN every month in the mail)
would in fact read Mr. Davis' comments anyway, regardless of if I sent it to him early or not? Isn't that a
ridiculous comment to make?

Could there be some type of connection with Jim wanting all that free advertising in CTCN and the fact in
the past he has attempted to submit a long "article" which was not allowed? That was due to it being more
like an advertisement for his trading system than a real article. When told he would have to pay for it as an
advertisement in the ad section, rather than an article, he didn't want to do it.

In the past, and in our CTCN InfoGuide, we have stated we do not want any so called "vendors in
disguise." A competing newsletter has in fact had "vendors in disguise" and had subsequent criticisms and
many upset members because of that problem.

It's interesting to note that Jim apparently is well acquainted with Terry Davis. In addition, Mr. Davis sent a
letter to us (approximately the same time as Jim Burke's astonishing fax) which was extremely
complimentary on Jim Burke's trading system. We are not going to publish that letter due to Jim Burke's
ridiculous and absurd demands and this controversy. It's also interesting to note that like Jim Burke, Terry
Davis is also a vendor, having sold trading methods to the public for a number of years.

Please let the Editor know if any members disagree with the way these matters are handled. By the way, we
don't necessarily make a practice of always asking vendors for immediate comment, as sometimes we may
forget to, not have the time, or may not think it very significant to warrant it

Curtis Arnold submitted his new book for review titled "Curtis Arnold's PPS Trading System." It's a
hardcover book detailing many technical indicators and methods for successfully trading commodities.
Including detailed coverage on many standard technical indicators. There are many charts in the book
which detail the method or technical indicator, so you can visually see how the indicator is applied to actual
trading situations. The book is professionally bound and of very good quality. The many subjects are
covered in excellent detail, well-written and comparatively easy to understand. The book also comes with a
free demo disk of Curtis's well-known PPS Trading System. This book is recommended to CTCN

We also received Perry Kaufman's new book titled "Smarter Trading," which was submitted by Ed Dobson
of Traders Press for review. The book teaches traders how to create a "robust" trading model. It also
teaches how to make sense of other methods, such as neural nets and expert systems, etc. There's lots of
testing results and mathematics and sample charts included. It is very well done and is recommended,
especially for CTCN members who enjoy technicals and detailed analysis.

In addition, we received the new book titled: "The New Science of Technical Analysis" by Thomas R.
DeMark. Futures Magazine said Tom is known as "The Consummate Technician." Tom goes into great
detail on the sophisticated market timing methods he has developed and used over the last quarter century.
He emphasizes scientific and mechanical approaches and techniques, rather than "artistic" or intuitive
approaches. The book uses extensive chart examples of the many trading methods he covers in excellent
detail. This book is also highly recommended to CTCN members.


William F. Eng sent us his book: "Trading Rules - Strategies For Success." Like the other books reviewed,
it's also very professionally done and hardcover. It's a good collection of 50 market trading rules and
descriptions on how to apply them to the markets, with a chapter devoted to each rule. Studying these rules
and adhering to them should help both stock & commodity traders trade successfully. Many of the rules
are quite similar to rules originally contributed by W. D. Gann, but they go into much more detail than
Gann did, with some new rules and far more detailed explanations. All CTCN members should consider
buying this book, in particular newer traders who can benefit a lot from this valuable information.

In fact, you should all consider purchasing any or all of the books reviewed above, as they are all very good
books with lots of trading knowledge and wisdom, to help you traded successfully.

We have received so many great articles lately, unfortunately this has resulted in our not having room to
publish all of them in this issue. Some of them will appear in upcoming issues. Also, some contributions
are being made into Special Reports, the longer contributions in particular. For example, Joe Ross has made
a couple contributions on his childhood and making of a trader, which we have made a Special Report,
available to all CTCN members upon request.

Our next issue has a great contribution by Anonymous Trader titled "The 37-Steps to Become a Successful
Trader." We will also do Quick-Scan Reviews of Ted Shen's FutureSoft Benchmark Trading System and its
programming shell software written by Bob Bolotin. Also, William Wermine's Trading Currency Futures
books, volume 1 & 2.

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