Category Archives: Education

25 Jan

Principles and Profits – for Commodity Traders

Larry Pesavento sent me a small pamphlet – written by (I think ) Roy Longstreet. It is written 60 years ago. I hope you will enjoy it:

Principles and Profits – for Commodity Traders ( by Clayton Brokerage Co.)

There are certain truths that have been with us since the beginning that form the foundation for action. They cannot be ignored. Commodity trading is on art. It can be mastered by anyone provided he is willing to pay the price in time and concentration. Each of the following ten principles must become a part of one’s personality. Each principle must become a habit in living.

SELF KNOWLEDGE

Whatever success I achieve will be the result of my efforts. The help I receive from others will be as a molehill compared to the mountains I must move myself. I must prove that I can endure the life of a trader. It will not be an easy lot. The rewords of success will be great because so few succeed. I must overcome obstacles to success because victory comes only after many struggles and countless defeats. I cannot regard myself as a trader until I have been exposed to knowledge and experience. I will become what I think about. My thoughts will determine my habits. I should form good habits and henceforth become their slave. I am a unique person. Nobody has ever been like me. I have talents that others do not have. It is my privilege to develop them to the utmost. I will abandon vain efforts to imitate another. I am a tree. My wealth is the vine. The vine can grow no higher than the tree. I have limitations, too. These I will recognize and learn to live with. I can learn to be content and also achieve victory. There is only one person I can depend on for success – myself. The only thing I can expect from others is that they wish me well. When I blame my failures on somebody else, I am a complete failure.

SELF CONTROL

I will master my emotions. The market will add to my emotional problems. After victory there is a tendency to overact. After defeat the tendency is to underact. I will recognize these human weaknesses and overcome them. Each day I awake with moods different from yesterday. One day is sad; the next is joy. There is exultation and depression. These can do me injury unless controlled. My secret of control of self lies in my ability to force my actions to control thought. I will exercise. Walking stimulates positive thinking. Sadness vanishes with increased circulation of blood.

When I feel inferior, I will buy a new suit. When defeated, I will eat o good meal at a fine restaurant. When I fear, I will act and fear will disappear. When I feel bold, I will remember past defeats. I will regard discipline as my greatest friend. Horses and traders hove one thing in common – neither are worth much until broken.
No man reaches the peak by doing what he wants to do, the way he wants to do it, when he wants to do it. Only those who do what must be done when it should be done reach the pinnacle.

ACCEPT COMMODITY TRADING FOR WHAT IT IS

Commodity trading is a contest.Skill counts. Knowledge is necessary, but it is not sufficient. Courage, too, is needed. Commodity trading is high-risk speculation. It is possible to be right seven times out of ten. Some of the big winners are wrong seven times out of ten. It is possible to make a great fortune quickly. It is also possible to lose all quickly. Prices do not always act in o rational manner. Sometimes the market pays no attention to value. There is not much that con be said about commodity trading with any degree of certainty. Everything must be qualified with maybe, perhaps, probably, potentially, etc. The one sure thing is that commodity trading is war; and to the victor belong the spoils.

PICK BIG MOVES

The one important thing that commodity trading offers that makes it all worth while is the opportunity to make o lot of money with a little. I must be alert to pick the big moves. They
will not always be forecast. They may start unnoticed. They depend in part on luck. The sequence of fundamental events occurs rarely. Each day I will look for the opportunity where
I can multiply my fortune a hundredfold. When I find the market, I will apply my skill to take full advantage of the opportunity, should it develop, and protect myself should it not. The greatness of my goal will not hold me in awe. I may stumble many times before it is reached. This will not concern me, for I know that all men who achieve stumble often. I am not a sheep that follows others. I am myself – a man. I will build castles in the air. That is where they belong. Then I will build foundations under them.

FACE FACTS

Substituting hope for fact is the greatest gamble. It leads to wishful thinking. Bias is the greatest of pitfalls to a trader. One sees things he wants to see – sometimes when they are not there. I will hove the courage to face facts even though they cause me pain. Each day I will see the market as it is – not as I hoped it would be yesterday. I will know my position each day so that I may close out losing trades and hold the winners. I will accept the verdict of the market, even though it is contrary to my expectations. I will not be like the ostrich that sticks his head in the sand and hopes that adversity will go away. I am a man. I will face facts.

ACT

I cannot succeed and at the some time escape the hard realities of trading by daydreaming. I must act. If I act, my mind becomes heated and the job will be completed. If I hesitate, I will only become confused. When I am afraid to act, I will act. Then fear will disappear. All my dreams and plans are nothing unless followed by action. When tempted to procrastinate, I will gain courage by action. I will not avoid the tasks of today in hope that tomorrow will change my fortune. My actions may not bring me success, but it is better to act and foil than not to act and flounder. When I om tempted to quit, I will act. That is the only way I con be sure of being in on the big one. The market will not wait. While I dolly, opportunity posses me by. There is a time to do the right thing in the right volume. When confronted with losses, I will not hold on until my capitol is depleted. I will act to conserve my capitol and my will to win. When opportunity knock, I will be ready, mentally and financially, to act. I will be like the good general who never loses all of his army and who always takes full advantage of every opportunity.

MANAGE MONEY

My money is my army. It has power. The more I have, the more power I have. I will take steps to manage my money. It must not manage me. I will not trade just because I hove money. My object is to trade to make more money. I must always regard what I have as being more TEXT MISSING FROM PAMPHLET

LEARN TO LAUGH

As traders, if we do not learn to laugh, we can say with Lincoln, “My heart would break.” Traders ore bruised souls. Try as they will, they make mistake after mistake. What does one do with his mistake? They are serious. They cannot be token lightly. One learns from them and forgets them. If I am to succeed, I must learn to forget. Unpleasant truth must be made invisible. Anything that reminds me of errors must be obliterated from my memory. If I can re-establish a favorable image by Achievement, I will do so. But nothing must be permitted to be a millstone around my neck in my pursuit of victory. Therefore, I will learn to forget those unpleasant truths which I cannot change.I will laugh and my burdens will be lightened. Most of all, I will laugh at myself, for am I not most comical when I take myself seriously? Everything that man does looks amusing from a distance. I will learn the great truth that never changes – that this, too, shall pass. When heavy hearted with unbearable losses, I shall console myself that this, too, shall poss. When men offend me with disrespect, I shall laugh as I remember Henry Ford, Edison, and Pasteur and how they built success on failure. I will laugh at my failures and they will vanish in clouds of castles I build in the air. I will laugh until others laugh, too. Never should I become so important, so wise, so dignified, so powerful, that I cannot laugh at myself and at the world. I will laugh because, with other traders, I am a bruised soul. It is the only way I con find happiness in a world filled with people who can be made happy because I laugh.

11 Apr

1-day course on trading techniques in London

Dear traders
It is a rare event when you can place two trading personalities at the same place at the same time. On the 28th May 2016 the legendary US trader Larry Pesavento and the Danish day trader expert Tom Hougaard will give a 1-day course on trading techniques in London.
It will be a long day, but not boring. The two have decided to split their time between them over a full day of education.

1-day course on trading techniques in London includes:

  • You get a course handout with the techniques Tom used to generate 38% in just 5 sessions.
  • It is the same techniques he used to generate 137% in one year.
  • You will get Larry’s book as well as being taught by the legend himself.
  • You will be on his alert email list for 30 days after.

Take a look at the complete day and book here

1-day course on trading techniques in London

 

1-day course on trading techniques in London

07 Apr

When Everything Goes Wrong

The next time you go through a tough period in your trading, and you are thinking about taking a break, do me a favour: please read this brief post.

I have a question you need to consider. Which one of these two scenarios do you closest fall into?

quote true adventure begins-when everything goes wrong

Scenario 1:

You have been trading like a man on fire, and you have very quickly built up your trading account. Maybe you even doubled the account or quadrupled it – maybe more. The market environment suited you, and you were able to capitalise well on the market movements. Yes, you did have losing trades, but it didn’t bother you. You were in control of your trading. You took the losses and you did your best to let your winners ride.

Then from one day to the next day things changed. It started off slowly. The peak of your account was behind you, and you seemed to struggle to read the market well. At first it was just a normal drawdown, but then it turned ugly. You had a really bad day or bad week, and it only stopped, when the day ended, or the week ended. You lost a significant portion of your gains. You were still up, but you were far away from that equity peak you were so fund of and proud of.

The next day or the next week you were back in the saddle, and you felt ok about yourself. You realised that losses are a part of the trading profession. Yet somehow you could feel yourself placing trades that were bigger and more desperate than previously. It was more of the “hope” kind of trades than trades based on sound technical or other considerations.

It wasn’t long before you continued where you left the previous day or previous week. Now you are very unhappy with yourself. You have realised that you need to stop right now.

Is this where you are?

 

Scenario 2:

You have been trading with some success but you also had your fair share of big losses. You have perhaps traded well all day only to lose it all on some final trade of the day. It may be that you have traded well all week, but on that Friday afternoon, you gave it all away.

Your account is below where you started, and you jump from one market to the next, without really knowing what you are doing. You feel ill equipped, and you don’t really know what to do next.

Is this where you are?

 

Moving forward

I have losing periods too. I go through these periods with a sense of “regret”. I know intellectually that they are part and parcel of my trading life. Nevertheless it always seems to catch me by surprise when it happens.

It shouldn’t surprise me. There will be times when I am trading like a demon, and there will be times when I am trading like Blind Freddie.

However, the two scenarios above require a different approach. I accept you may not fall in either category perfectly. So I recommend that you read the solutions to both situations, and you see what you can take away from the suggestions?

 

Remedy for Scenario 1

You need to step away from screen for a day. I recommend this because staying in front of the screen can tempt you into trading.

You need to ask yourself: Is there anything you could have done differently?

If there is, then you need to do something about that. If there is nothing you could have done differently, and you have a good methodology, then take a break. The market will be there tomorrow. Right now your body is chemically not in balance, and you are going to experience some very powerful thoughts about getting back to “the peak”. You will get there, but right now, you need to step away until you feel like you are in balance again.

If there is something you could have done differently, it is most likely one or more of the following reasons:

  1. You overtraded and you chased the market.
  2. You were so desperate to catch the next move that you got whipped on the long side and the short side, or you were overtly bullish even though the market kept stopping you out.
  3. You traded too big to make up for the losses you made previously.

What I recommend you do is as follows:

Get the data from the period where it went wrong. Print out the day charts for the markets you traded, and plot the trades on the chart. This will give you a visual representation of what you are feeling: the loss. You will see the loss for what it is.

So what is the loss? Your particular loss could have been just like any of the other small losses you have had, and that you gave no thought to. Yet somehow this loss or these losses cost you a lot more. You either traded too big or you gave the trade way too much leeway.

Whatever the reason, make sure something good comes of it. There is nothing like a little book of “big mistakes” to remind us of the ever-lasting truth in the markets: We are on our own in the markets, and either we learn from our mistakes or we don’t. If you don’t create a little memory of this “un-memorable” moment, then you risk the lesson will be forgotten.

 

Scenario 2:

I was once in Scenario 2. I moved away from this when I got some trading techniques that worked well. I recommend you spend some time working on two matters:

Develop some solid entry techniques by doing your own studying or pay someone to teach you some solid techniques. I teach solid techniques, but this is not a marketing pitch. This is a suggestion to the path you need to take from here. There are plenty of avenues to take when it comes to education.

Whatever you do, please make sure they suit you. You need to work with techniques that fit your style of trading. Mechanical entries are great like that because they tend to be “time scalable” to suit a time frame that fits you.

The second thing you need to consider is to work on yourself. I have written a trading psychology manual on this subject. The point to take away from this (irrespectively of you are reading my manual or say the book by Mark Douglas about trading psychology) is that we often make the best trades when we are in perfect balance, and we have a clear idea of what we are trying to achieve.

When I am in my most balanced self, I trade well because I am patient, and I am flexible. If I lose one of those two traits, I tend to not trade well.

I hope this will help you. If I can help you any further, then please drop me an email using the form on the contact page.

Kind regards

Tom

Tom Hougaard

07 Apr

Be careful who you listen to

I am deeply distrustful of what I read in the newspapers or see on TV.  There is always another side to the story, and I often don’t get to hear about that side.

I spent 9 years of my career talking to financial journalists. They would call me during or after the trading day to ask why such and such an event had taken place. Why did Vodafone rally? Why did IBM fall?

If I told them that Vodafone rallied because it had broken above its high from 6-months ago, then I would not be quoted in the paper the next day. If I told them that the rumours in the City was that Vodafone was poised to announce quarterly results which was above expectations, then I would find my name in the paper the day after.

If I told them IBM was selling off on rumours of disappointing sales in Asia, I would get a quote in their column. If I told them it was because IBM was making new monthly lows, and short-term traders were jumping on the band-wagon, I would not be quoted.

So I have a fairly good idea of idea of what is rubbish and what isn’t, when it comes to news reports. In general I stay well clear from mainstream media. I NEVER listen to news during the trading day. I am aware of news reports coming out, and I make sure I take the necessary precautions.

My friend and legendary trader Larry Pesavento sent me some images of the Dow Jones Index with various newspaper and magazine front page quotes next to them.

From the 1970’s the business week front cover story of December 1972 proclaims that the bull market will continue in 1973. Business Week timed the top with that headline. Dow fell relentlessly for the next two years.

1970s chart

 

The 1980’s weren’t short of a few ill-timed headlines, such as Fortune’s bullish call days before the 1987 crash.

1980s chart

1990s chart

2000s chart

My own favorite is from 2000, where I read a headline discussing the NASDAQ, stating that “in this new paradigm, profits don’t matter”. Within a month NASDAQ had started the bear market which was to shave off 83% of its valuation over the next 3 years.

Be careful who you listen to. Even so-called experts, world recognized authorities, may have an agenda, which they don’t tell you about. I firmly believe that talk is cheap, and that everything you need to know is in the price. Price is king. Learn to master price and the rest will fall into place.

You might want to read this article

http://www.marketwatch.com/story/how-much-do-profits-matter-to-stock-market-returns-2016-04-01

Tom.

Tom Hougaard

09 Mar

Personal mentoring

Personal 1:1 mentoring is designed for those who want to learn my secret technique which I use for myself and in the live trading room to trade stock indices like the DAX, the FTSE and the Dow.

In 2014, the WhichWayToday live trading room generated 135% in profits. Of those 135% I generated 110%. This was done trading only from 8am to 10am.Tom Hougaard Personal mentoring

Interview: It is an absolute necessity for you to talk to me before we engage in a personal mentoring relationship.

The personal mentoring will start in June 2015. If you want me to send you more information, then please register your interest with the room administrator Hayley on hayley@whichwaytoday.com