There are Bold Traders and there are Old Traders, but there are no Old, Bold traders.

- Michael Levin

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July 6, 2007

Trade the Platinum Commodity Spread Program COMPLIMENTARY for 60 days

PLUS, for a limited-time only, receive 30-days complimentary access to the Platinum Weekly email market performance update! This system works! Long only commodity funds that buy and hold huge quantities of futures contracts in many commodities have become a very powerful force in the market. These funds act in a very predictable way and the Platinum Commodity Spread Program has found an ingenious way to profit from the price movements of the spreads caused by these long-only funds. The Commodity Spread Program is now offered on a limited basis by Platinum Trading Solutions. Go here to learn more.

Ok, you’re a trader or even a part time trader and now it’s time to look yourself in the eye and review the 1^st 6 months worth of trading and evaluate where you stand. Here are 7 questions to ask yourself, as if you were the manager of a hedge-fund and you were evaluating one of your traders:

Money Amount Under Management __________
Starting Balance $ __________
Ending Balance Money __________
Net Result Money __________

1. How did you do money wise?
2. How did you do timing wise?
3. How was the risk and risk management?
4. What did you do well that you will continue?
5. What did you do poorly that you will eliminate?
6. Where do you get your info and ideas?
7. What do you see happening the rest of the year - Any new strategies or markets to trade?

Ok, now that you have gone over each question in your mind and the trades, ideas you did, things you didn’t, great profits, stupid losses ALL come home to roost. While this is fresh in your memory, let’s go over each one of these questions and see how we can become better over the next 6 months of the year:

1^st How did you do money wise?

This will be the easiest of all the questions because it is simple to define. Either you made money or you lost $. Now I will say that there are times where I have lost money trading, but I learned important lessons for the future and those losses were lessons worth paying for. But here, for the moment, look at the scorecard and how did you do? How did you THINK you were going to do?

If you thought that your $50,000 trading account would double in 6 months and you’re only up 25% then for some that isn’t as happy as it could be. For others that same account, standing at $62,500 with a few good trades, sound risk management and enjoying the trading process, portends a brighter future the next 6 months...

2^nd How did you do timing wise?

Yes, timing is SO important, we know, but how well did we enter and exit our trades so far this year? I normally enter early and exit early, sometimes getting too anxious to be IN the trade than in following some of the scaling in tools/methods I have right at my fingertips. Will I ever improve on that? Depends on what is the cost of my decisions, can I define where I could have done better than look back and see how I was “being” at the time? That if I was more “patient” and “allowed” the trade to come to me, would I have done better?

Sometimes by looking at how we are mentally and what “state of mind” we are in, can be the difference between a Lucky trader, a good trader and a bad one. The way we are when we make the important decisions is one of the KEY areas I make sure my traders are CONSCIOUS of, as they trade.

When you are level headed and unbiased, great trades appear in abundance and we seize on them without attachment to whether we will be right or wrong. It’s as if we know that we will succeed in the end, because we sense, feel and know it ahead of time.

3^rd How was the risk and risk management?

Here is a foundation of our trading; what kind of risk do we assume, when do we “lay it off” and when are we oblivious to what the risk may cost us or MAKE us?

Again, speaking from experience, I like a lot of leveraged plays for my own accounts and for those who like the Home-run play, risk is synonymous with reward, but to what degree?

When you have a feel or a gut instinct on a commodity, say like Corn and you feel, as I have been feeling the past few months that it is due for a decline...  How do you play it? Do you outright short the contract right away or do you study which months might be more vulnerable than others? Do you look to see where a smart spread strategy might work or where another market that is in the opposite camp might be a great cross-spread opportunity? (Think short Corn, long Soybeans recently)  Do you pick a put option to buy and hope it falls in time for you or do you leg into a put spread, hedging your risk?

I can’t tell you exactly WHAT to do, but we can focus more on what might be the best for us, given the time, margin and velocity of the move needed for us to profit handsomely.

As for deducing risk on a position, we ALWAYS have a point where we get out (unless we are on an “All or nothing” trade with an OOTM option and a wing and a prayer) where the pain becomes too hard for us to bear and decide on. All too often we have gotten in trades and said to ourselves: “Ok, if it goes HERE, I’m out... Then it gets to that point and we say: “well, it came down here so quickly, it HAS to bounce”... and then it keeps going against us and we panic and close the position, right as it turns and goes our way... “Accchhhh!” as my friend Chana loves to say... (Other words are screamed in lieu of Acccch I’m sure)

4^th What did you do well that you will continue?

This is my favorite part, where we recant our great timing, shrewd entries and best money wins. I will keep this simple, write out AS MANY of these examples as possible and refer to them almost DAILY. It is the “feelings” that you have, of pride, accomplishment, savvy and good fortune that you want to experience OVER and OVER again such that you “expect” to feel this way after a trade. Feeling great attracts great feelings!

(From my last article on decision strategies I referred to the Movie/Book “The Secret” www.thesecret.tv  and to Lynn Grabhorns book “Excuse me your Life is waiting, the astonishing power of Feelings”)

5^th What did you do poorly that you will eliminate?

Don’t spend a lot of time on this, just own up to what you did that you shouldn’t have and what you should have but didn’t. Don’t beat yourself up about it, just list it, and acknowledge it and LET GO OF IT.

Realize you made mistakes and learn from the ones that you created as well as the ones where the mistakes “just happened” and know the difference.

If you find yourself making the same mistakes perhaps a trading coach can help you work on that and help you to define some things for yourself that may be hindering your trading without your conscious awareness.

6^th Where do you get your info and ideas?

Our trading is only as good as our opinions, hunches, idea flow and connections. So that being the case, how good are yours? Do you subscribe to some good services that give you good ideas and opinions? Then keep using them and be grateful they work. There are some great market commentators out there that have a knack within certain markets and ones where they are great technical spotters across the entire spectrum.. Make sure you diversify in your “types” of trades such that you aren’t caught on one side of the market where it hurts you across the board. (Short the grains, long the foods, long the oils, short the bonds, etc)

How about your own ideas, are they any good? Are your long term hunches on certain markets good? Do you keep smacking yourself in the head when a particular product makes a move that you KNEW was going to happen? That happens to me a LOT, lol.

I have had a hunch on Corn for about a month now that initially didn’t go my way but came right back to where I “knew” it would. Same for Cotton recently. Pay attention to those kinds of “knowings” and play a 6-9 month option on the direction of your “gut feel” and don’t be surprised how often you are right on the money.

What kinds of patterns are you looking at and what is “everyone else” focusing in on? Are there any “tipping points” coming up, things that the “talking heads” will be chatting up? With the money near historic lows, will it drop further? Will there be any panic? What about Gold, will it fall off here, or Break to new highs? Keep in mind what the mass markets are thinking and invariably take the other side of their trade.

Is everyone long Oil to the hilt already and if this summer is a dry one in the Gulf area, will the overhang of longs cascade into a selling frenzy?  Just my 2 cents.

7^th What do you see happening the rest of the year - Any new strategies or markets to trade?

This is where you want to just relax and visualize the next 6 months the way you really want it to be. All you need do is find a nice quiet place to relax, grab a nice glass of wine or scotch or even a beer, soda or filtered water and just allow yourself to daydream about closing trades with a gain, putting on a winning position and feeling it ahead of time…  See yourself pumping your fist in the air for taking $20k out of the market on an idea you had about Coffee or even cutting a long position on Oil and reversing and going short and capturing a down draft the next 2 days…  Things like that.

Always do this; See yourself winning all the time and feel how good it is when you do succeed. Constantly and consistently expect to be successful, feel good about who you are when you trade and what you are doing and for the most part having these “ways of being” about you will carry you through.

The next article will be on picking “Tipping points or Tension points” in the market that can be seen ahead of time and exploited.

Michael Levin is a Consultant to Platinum Trading Solutions. He has been in the Financial markets since 1981, having been a broker and trader on the PHLX Equity Options floor in the 1980's and ran trading firms in New York in the 1990's to 2002. Mike briefly set a record in the options trading division of the US trading Championships years ago.

Trade the Platinum Commodity Spread Program COMPLIMENTARY for 60 days

PLUS, for a limited-time only, receive 30-days complimentary access to the Platinum Weekly email market performance update! This system works! Long only commodity funds that buy and hold huge quantities of futures contracts in many commodities have become a very powerful force in the market. These funds act in a very predictable way and the Platinum Commodity Spread Program has found an ingenious way to profit from the price movements of the spreads caused by these long-only funds. The Commodity Spread Program is now offered on a limited basis by Platinum Trading Solutions. Go here to learn more.