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enough money to trade stocks. Surely you must have some advice for someone who has these ideas. |
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C.V.: If someone has only $5000 available for trading, I do not think that person should be trading commodities. Using the risk-per-trade rule of thumb of 2 to 3% of trading capital means that $100 to $150 would be risked per trade. Most people will risk more than that, and their trading capital will be depleted. If that person has a burning ambition to trade commodities, he or she should go to Chicago and get an entry-level job in the business. |
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Neal: Do you always follow your system? |
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C.V.: Whenever I am in a trade, I always follow my system's exit signals. In fact, if my system says get out tomorrow on the opening, I will many times get out during the night session. I allow a limited amount of discretion in taking a trade. As I mentioned, I will not put an order in to initiate a trade before a big report. Sometimes I wait for confirmation before entering a trade. For example, if one of my systems is giving a signal to buy T-bonds but I have no other buy signal for T-bonds or T-notes, I'll wait for a second system to kick in before taking the trade. I will never take a trade which is not based on a tested system. |
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Neal: I noticed you failed to take a short position in corn this summer. Isn't that contrary to your system? |
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C.V.: For my breakout systems, avoiding a short corn position in the summer is statistically preferable. This would be true even adding 1998 to the database. The reason is that my trailing 12-day stop gets hammered by the ''shake the shorts" rallies, such as the limit move I discussed. My systems would have a positive '98 return, which would not offset the prior years' losses. To trade corn short in the summer requires a different type of stop strategy. |
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