Trade with the Trend, Manage the Risk!
At Trends In Commodities that's our philosophy and investment strategy all rolled into one. If you follow that advice you just might be able to make money trading the Commodities and FOREX markets. My name is Dale F. Doelling and I am the Chief Market Technician at Trends In Commodities. Trends In Commodities analyzes the various Commodities and FOREX markets and publishes a market newsletter highlighting trending markets. Our mission is to teach individuals a solid, time-tested approach to trading that should, over time, bring positive results to their account equity. This is no get-rich-quick scheme with pie-in-the-sky examples of trades that produced 1000% and greater returns. This is the get-rich-slow method. I've used just about every time frame imaginable when it comes to my trading methods and I've examined and experimented with countless trading strategies and I believe this is the only way anyone should trade these markets.
I've been a Trend Follower and Professional trader for over 20 years. I've traded practically every market on the planet and I've learned some very interesting things over that 20+ years. First, there's no difference between trading Gold or trading Wheat. The strategies that we employ do not discriminate. They are applied to all markets across the trading spectrum. Second, the old saying "The Trend is your friend" should actually read "The Trend is your friend until it comes to an end". That's because, with any market, all trends eventually reach their crescendo or their nadir. No market trends in one direction forever. Are markets always trending? No. Markets often become entrenched in a trading range for months or years with no discernible trend. A consolidating or range-bound market can be traded but it's not an easy task. The third really important thing is that there are a 1,001 ways to make a fortune trading the markets. Unfortunately, they take an incredible amount of work to uncover. If I've piqued your interest then please read the next paragraph because it contains some facts that you must know BEFORE you even think of executing your first trade.
So, what is Trend following anyway? First, let's discuss what it's not! Trend following has nothing to do with "Buy LOW, Sell HIGH!". That strategy is a myth. I say that because no one knows when the actual market low is going to take place. If you think you do then you're delusional. You might get lucky once or twice but, in the long run, you'd be better off taking your money to the casino. You'll lose your money but at least you'll be entertained in the process. Any market that is heading down should be SOLD not BOUGHT! Trend followers BUY HIGH and SELL HIGHER and they SELL LOW and BUY LOWER. This is far easier and makes far more sense than trying to pick tops and bottoms in markets. To Trend Followers, buying a declining market is like trying to catch a falling knife. You're likely to sustain serious injury in both instances.
So that covers the first part of our philosophy - Trade with the trend. The next segment, Manage the risk, is a little trickier. There's a quote from the book "Market Wizards", a book that I highly recommend, that states "If you don't bet you can't win. If you lose all your chips you can't bet." This is risk management in a nutshell. If you lose all your chips your trading strategy was flawed from the outset because it didn't have a risk management component. In plain English, you didn't determine your exit strategy PRIOR to taking your position in the market. As my favorite comedian, Ron White, would say, "You can't fix STUPID"! If you think it's wise to take a position in the Commodities or FOREX markets with no exit strategy then do yourself a favor and forget about trading because you don't understand the difference between gambling and trading. You WILL LOSE all of your chips and you will probably lose them very quickly.
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Good trading,
Dale F. Doelling
Chief Market Technician
Trends In Commodities