Wednesday, May 27, 2009

What makes good trader?

What makes good trader good? This is the question that I’ve asked myself on numerous occasions and so many times I couldn’t come up with an answer.

One could ask what makes good soccer player or good basketball player or, for that matter, what differentiate good participant from bad participant in any performance field?

Traders, who just have started, would probably say that it is good system what makes good trader – Give me the system that makes money and I will make money!

Traders, who are close to mid-point, would probably say that system and discipline are required.

What I’ve concluded after more than five years of trading is the following:

Hard work makes good traders, same as hard work makes good soccer or basketball players. Gary Player, one of the best golfers ever, said: “The more I practice, the luckier I get.” I believe that this simple and effective sentence explains what you need to do in order to succeed in any performance field. 

If you don’t want to learn how market works or what moves market up or down; to learn about discipline, indicators, trending versus range bound markets; to spend many hours watching for different pattern setups; to scan through different time frames and many other things, than you should not pursue trading. Rather find niche in which you will love to spend hours learning and improving. Probably, you will excel much more in what you love, then in something that is hype and what your colleague at work might have told you about.

But, if you want to spend your time immersed in the art and science of trading, then don’t forget one very simple rule: This is marathon run - it is not a sprint race! First two or three years you are going to spend learning and trying to get something out of the market, but most probably you will end up frustrated more often than not. Keep it going and one morning you are going to wake up and complete picture will be there waiting for you. And when it happens, don’t be fooled, that will not be the end of the road and money will not just fall into your lap after every click of the mouse button – On that very same morning, when you realize what you really want from trading and how you want to trade, new and even more exciting stage in your development as trader will commence. During that stage, you will have to keep up with new traders who will rush to market full of ideas, hungry to make money, as they will be very akin to what you were, in days when you were completing your first trading steps.

Path to success in this game is very long and very difficult - When you arrive there, reward is going to be massive!

I'll see you when you get there if you ever get there ...

Trade well!

Thursday, May 21, 2009

How it is going to work

One of the main ideas behind this blog is to share information on ways of trading ALSI futures contracts. So, let me explain, early on, how this blog is going to work:

Before we start, I would like to provide just a little bit of info about myself –

I’ve started to trade in October 2003 and, as futures market in South Africa wasn’t very developed, I’ve decided to go with Warrants. It was all about ups and downs at the time and only two years later I was able to make some money and, most importantly, I’ve succeeded in keeping it long enough. Prior to that milestone, my trading was simple routine (profit wise): making money-losing money-making money-losing money… If you ask me what made that shift for me, or how I made that shift for myself, I will have to remain silent, as it just happened. Somehow, in December 2005, I woke up one morning and something just clicked in me and I’ve said to myself: “Silly me, it’s so easy to trade!”

From there on, I never looked back and with newly-found peace and success in trading (success on a very personal level), I’ve started to trade (in 2006) ALSI contracts listed on Safex and, at the same time, I was venturing in-and-out white maize and wheat trades.

At the moment, I am trading very simple system and I will be posting my entry and exit points – long before these price levels are breached! System is trend following and it is based on 30 min ALSI futures chart, on which I’m trying to exploit directional moves (of the market) that are lasting , on average, 3 to 4 days.

I’m, as per system, always in the market - I just reverse from short to long position and vice-versa. In order to share my trading system/approach, I’ve linked this blog with twitter, where I will post few comments during the day and where my entry/exit price levels will be shared.

I hope to utilize blog for two-way communication, as well as a space where I can post some interesting charts.
Please look for five newest twitter comments (that are on the right hand side of the screen) and if you wish to follow me there, please go to:

All in all – blog & twitter are just in trial phase for now and I would appreciate your suggestions or comments.

I hope you will enjoy my live trades and that together we will learn more on art and science of trading.

Trade well.

Wednesday, May 20, 2009

Reverse head and shoulders on Top40

Top40 end of the day chart made reverse head and shoulders and broke neckline on 18th May. Target for this move is 23000 exactly what was previous support now resistance. Neckline of head and shoulders was in the same time 23.6% Fibonacci level for the drop from all time high on 22.May 2008 to low on 20.November 2009.

Reverse head and shoulders are usually nice pattern to trade but don’t forget possible back test of the neck line around 19700. Neckline was tested 5 or 6 times over last few months so it should be solid support now.

How I see this playing out is market will hit resistance just above at 20850-21000 then retrace back to retest neckline around 19700 and up towards 23000.

Break above 20850-21000 would signal medium term buy signal based on Dow theory.

Trade well.

Sunday, May 17, 2009

Top40 Weekly Chart

This is Top40 weekly chart. For those that don't know Top40 (J200) is tradable index in South Africa. ALSI is future contract listed on Top40 index and can be traded on Safex. Currently most liquid contract is Jun09 ALSI contract.

What I want to point with this chart is very simple method that anybody can trade. There are two exponential moving averages 34 and 13 on this chart. Simple crossover strategy was used for going long or short.

Long 13.08.2004 - 25.07.2008 from 9675 to 25099 points.

Profit for one trade that lasted almost 4 years was 15424 points.

Short that was opened 10 months ago is 5482 points in profit.

Satrix40 is another instrument that could be used for trading this strategy.

Friday, May 15, 2009

First post

This is my first blog post.

This blog is designed to present how I trade ALSI, here in South Africa, with good success for over five years. I hope you will enjoy reading this blog every day and that it will lead you towards success in trading.

There are many blogs and web-pages around the world where people explain how to trade, what to trade and when to trade.

My focus is different: I will show you how to do it in real time, as all my trades are LIVE and I will try to post them as they happen.

Many people will ask: "If you are successful trader - Why do you post your trades? Why don't you just trade?"

Answer to that question is another question: Why some good soccer players become coaches after they retire from actively playing the game?
Maybe, for the love of the game, maybe for money, maybe for something else.

Feel free to communicate with me, as I will be happy to respond, within comments section, of every post.

Trade well.