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| I've had several email inquiries last night and today & am still occupied in evaluating meats & china grains& oilseeds so I'll address a couple of subjects & provide more detail via email at a later date.
Successfully trading the markets is an art, in my opinion. It was a 'different' sort of craft prior to computer platform trading. First it is essential to have a complete grasp of the fundamentals of the market (as in the potential of the market months or more down the road).
This DOES NOT mean an immediate entry into a market if the fundamentals are 'right.' Your actual timing may well be a month or two down the road.
Markets need a “set up” -meaning the technical condition for higher or lower prices need to be in place. If you are going to be a seller it is necessary to begin the program as shorts are 'being run-in” (not in an inverted market) and if a buyer it is best if the public is washed out, sick of the game and getting bearish. It is also essential to have a grasp upon where in the price chain will commercial interests be willing to assume significant positions.
In the 70's & early 80's -a group of fellows of common profile (a capacity for very large positions) were in play..folks who enjoyed either phenomenal industry or political connections or who themselves were large speculators. I do not mean this comment as arrogant but if I were going to “hang out” (telephone or occasional drink at the pub) with players -I, or others, were interested in the market views of an individual trading several hundred thousand contracts a year versus a small player.
In my experience some folks have a special talent of observation; two fellows come to mind. Both were 'real artists' in the wheat or soybean pit in the sense they had a grasp on trading with personalities who were seldom right (fade them) & a feel for the entry or exit of 'systems' players who'd aggregate stops or other orders at some specific price level. A couple of others were expert in cattle or hogs. A couple of other fellows were wired into commercial order fillers; another was a significant spread trader (spreads were filled by folks expert in the trade with a deep order book or the discretion to trade). I enjoyed a huge commercial following & also personally engaged in the delivery & re-delivery process. Most of us were unique in our trading methods. There was no agreement on trading (I've never known two traders to agree on specifics); for example I tend to be a 'pioneer' -I prefer to 'buy or sell a market right' –being a little early—while others may prefer to scale into a position. Point is, we were all respectful & experienced traders who exchanged very timely information with the understanding it was 'from our lips to G-d's ears.'
Add to this mix is the “club atmosphere.” I recall an acquaintance buying a CME membership so he could realize his goal of pork belly expert. As illustration, probably a month or so after his entry into the club, the pork belly market was very volatile. He was frustrated as almost every price level he'd chosen was hit...his only problem..NO ONE WOULD TRADE WITH HIM....he was trading 5's and 10's and the big guys were only filling orders of 50's & 100's. Keep in mind, he was not a customer being guaranteed a fill..but a local and had yet to enjoy decent contacts.
The advent of computer platform trading requires giving the market a great deal of slack or 'room' for the funds. Most, but not all, operate on some sort of system & it is important to recognize certain triggers & stand back as their orders are large and often follow a consistent pattern. I, in my experience, have never known a large successful trader who was not a fundamentalist. Knowing the potential of the market is essential. The fundamental facts change with time and require constant evaluation with an eye on the technical condition of the market.
More later.
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