Commodity Strategies: High-Profit Techniques for Investors and Traders

CHAPTER 1

Developing a Trading System

“If you bet on a horse, that's gambling. If you bet you can make three spades, that's entertainment. If you bet cotton will go up three points, that's business. See the difference?”

—Blackie Sherrod (b. 1922), U.S. sportscaster and sports writer

There are only two reasons to trade—because you enjoy the “game” or because you want to make money. There is absolutely nothing wrong with trading for fun. Everyone has a hobby. If yours is golf or tennis or bridge, you are not primarily concerned with the cost of your hobby, except to the extent that it should not adversely affect your (or your spouse's) present or future lifestyle. If your hobby is investing or trading, the same rules should apply. You need to know that it is a hobby, that it will likely cost you money, and that you will need to take precautions to ensure that it will not affect your present or future lifestyle.

Since you are reading this book, my guess is that your approach to trading is not that of a hobbyist. While you may enjoy trading, as I do, you want to win at the “game,” and that means making money. But do not start trading with the idea that it is an easy way to get rich. Like any other end-eavor, it requires hard work. The good news is that it is a lot easier to learn to trade or invest like a pro than it is to learn to play golf like Tiger Woods.

“There are no secrets to success. Don't waste your time looking for them. Success is the result of perfection, hard work, ...