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Pit Stops:
From the Pits to the PC |
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Tom Rehberger and I traded with each other at the Mid-America Commodity Exchange. He was in an arbitrage group that kept the Chicago Board of Trade and Mid Am-Bond pit in check. After two in the afternoon, the Mid-Am had paper coming from locals and cash dealers. Tom told me about the 1000-lot trade he did. Well, so much for people who say there is no liquidity at the Mid-America. Tom has made the transition from the pit to the PC. He also incorporates many of the skills learned from his pit trading days. I asked Tom to share his best system, but he had a better idea. This pit stop is a must-read. |
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Tom: I was asked to share my best system idea that people could use immediately in their trading. I replied that I would do one better and share what I think are the most important dynamics common to all the successful trading systems and floor traders that I have encountered in my career. I'm thoroughly enjoying the success that the systems had this last year and am looking forward to what this year will bring. I hope you will find this information useful as we trade our way through the new year. |
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I have followed one rule in my search for trading strategies in this extremely difficult business: Find the people who are making money and learn how they earn that money. In a business where an estimated 90% of the people lose money, it's not an easy quest. To make matters worse, charlatans abound. |
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At the core of all successful trading systems are two dynamics, momentum and statistics. The first dynamic is simple to understand and use. You can't make money unless the markets are moving. If it's not trending, you're guessing, and futures don't pay dividends so there is no reward for taking a position and waiting. Most profitable systems will be in on the same trend, some earlier, some later, but they all need the price momentum to be profitable. The second dynamic, statistics, is hard love. Trading systems consist of many trades. It is not necessary for each trade to be profitable. To be profitable, your system needs |
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