Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading
Trading is generally far more difficult in practice than in theory. The reality is that no trade set up or individual trader or system can identify profitable trades in advance with complete certainty. In A Year of Trading, long-time trader Peter Brandt reveals the anxieties and uncertainties of trading in a diary of his 2009 trades. He explains his thought process as he searches for trading opportunities and executes them. Each trade includes charts, an analysis of the trade, and a play-by-play account of how the trade unfolds.
Table of Contents:
Acknowledgments xiii
Part I Foundations of Successful Trading 1
Introduction 3
The Invention of a Commodity Trader 3
Why I Wrote This Book 7
This Book's Audience 9
The Book's Road Map 14
Chapter 1 The History and Theory of Classical Charting Principles 19
My Perspective of the Principles 20
Three Limitations of the Principles 21
Summary 22
Part II Characteristics of a Successful Trading Plan 23
Chapter 2 Building a Trading Plan 25
Trader Personality and Temperament 25
Adequate Capitalization 29
Overall Risk Management 30
Points to Remember 32
Chapter 3 Identifying the Trades and the Trading Vocabulary 33
Trade Identification 35
Vocabulary of the Factor Trading Plan 35
Points to Remember 54
Chapter 4 Ideal Chart Patterns 55
Reversal H&S Pattern in Copper 56
Reversal Rising Wedge in AUD/USD 56
Continuation Wedge and Reversal Failure Top in Soybean Oil 57
Reversal Triangle Bottom in Sugar 58
Continuation and Pyramid Patterns in USD/CAD 58
Reversal Top in Silver 59
Continuation H&S Pattern in the Russell 1000 Index 60
Continuation Rectangle in Kansas City Wheat 61
Continuation Rectangle and Pyramid Triangle in Crude Oil 61
Continuation H&S Top in the Dow Utilities 63
Continuation Triangle, Reversal M Top, and Flag in the EUR/USD 63
H&S Reversal Top and Three Continuation Patterns in the GBP/JPY 65
A Reversal Symmetrical Triangle in the AUD/JPY 66
Two Continuation Patterns in GBP/CHF 67
A Triangle and Running Wedge in Sugar 67
An H&S Bottom in Apple Computer 68
A Major Continuation H&S and Symmetrical Triangle in Gold 68
A Series of Bullish Patterns in Copper 70
A Failed Ascending Triangle in the USD/CAD Crossrate 71
A 12-Week Rectangle in the Dow Jones Transport Index 72
A Rare Horn in Brent Sea Oil 72
An H&S Bottom Launches the 2009 Bull Market in the S&Ps 73
Summary 74
Points to Remember 74
Chapter 5 How the Factor Trading Plan Works 75
Trade Identification 75
Trade Entry 84
Trade Risk Management 85
Trade Order Management 86
Points to Remember 89
Chapter 6 Three Case Studies Using the Factor Trading Plan 91
A Remarkable Technical Event in the Dow Jones 92
A Year Trading Gold 94
A Year Trading Sugar 104
Points to Remember 113
Chapter 7 Characteristics of a Successful Trader 115
Intimate Knowledge of Trading Signals 116
Discipline and Patience 117
Analysis of Self and of the Trading Plan 117
It Takes a Leap of Faith 120
Points to Remember 121
Part III A Five-Month Trading Diary: Let The Journey Begin 123
Chapter 8 Month One: December 2009 127
Trading Record 129
Summary 143
Chapter 9 Month Two: January 2010 145
Identifying Trading Opportunities 146
Amending the Plan 151
Trading Record 152
Summary 170
Chapter 10 Month Three: February 2010 171
Sticking to the Plan in Choppy Markets 171
Trading Record 173
Summary 187
Chapter 11 Month Four: March 2010 189
Trading Record 190
Summary 201
Chapter 12 Month Five: April 2010 203
Relying on Classical Charting Principles 204
Trading Record 205
Outlook for the Future 210
Summary 214
Part IV The Wrap-Up 215
Chapter 13 Analysis of Trading Performance 217
How the Trading Plan Performed 221
How the Plan (and the Trader) Evolved 227
Summary: Best Practices Going Forward 228
Chapter 14 The Best Dressed List 231
A Seven-Month Double Bottom in AUD/USD 231
A 14-Month Coil and Nine-Month Descending Triangle in EUR/CHF 233
A Six-Month Wedge in EUR/USD 234
A 16-Week Horn in GBP/USD 235
A Four-Month H&S in Bottom NZD/USD 236
A Six-Month Ascending Triangle Failure in USD/CAD 237
An Eight-Month H&S Bottom in the S&Ps 238
A 14-Month Symmetrical Triangle in Sugar 239
A Seven-Month Triangle in Gold 240
A Series of Continuation Patterns in Copper 242
An H&S Bottom in Crude Oil 243
Summary 243
Postscript 245
Appendix A Factor Trading Plan Signals 249
Appendix B Quick Reference to Charts 257
Appendix C Recommended Resources 269
Author's Note 271
Index 275
About the Author :
PETER L. BRANDT has been a full time professional commodity and foreign exchange trader for over thirty years. He has worked as a broker to large industrial clients, traded for his own account, and was one of the early pioneers in the commodity hedge fund arena. Along the way, Brandt published a highly regarded newsletter called The Factor, and also collaborated with Bruce Babcock Jr. to publish the highly acclaimed book, Trading Commodity Futures with Classical Chart Patterns. Primarily devoted to trading proprietary capital in commodity and forex markets, Brandt has achieved a lofty average annual rate of return of 68 percent during his career.
The author can be reached at plb.factor@gmail.com
