Monday, September 3, 2007

Trading Commodities - What Style Of Trading Matches Your Mental Make-Up? - PART 2

Matching your mental make-up to a method of trading is possibly the most important aspect of trading to get right. There are many traders who fail every year simply because they force themselves to do things they should not be doing. Read on to see why and how you can find out what trading style is best for you!

Professionals use their intuition all the time. A doctor uses his intuition when he makes a tough decision. He would have no intuition if he had not paid his dues learning and observing for years beforehand. The same goes for an electronics technician. He can look into a familiar piece of equipment, take some basic readings and give a pretty good guess where the trouble lies. Ask the doctor to do the technicians job and he is lost.

My point is, study hard to learn what creates a good turning point or opportunity in the S&P 500 futures market and then you will be able to recognize them in real time - intuitively. Some futures traders will never develop these skills no matter how hard they try, whereas others can do it with training. It requires focused analytical skills, a patient temperament and most importantly, the aggressiveness to step up to the plate and put real money on the line.

Few commodity traders ever get all three skills firing on all cylinders. We need ALL three working all the time, believe me. Some say musicians are well suited for spotting market patterns learned from playing pieces over and over to perfection. Some say that women are well suited for intuition. And maybe yoga masters are well suited for the patience needed to wait for the best market set ups. So would an aggressive female musician who practiced yoga be a good trader? I would put my money on her to be a successful commodity trader verses someone who had none of these inherent skills.

Why do I believe this? Many times Ive been right on the mark by calling a market turn but hesitated and just couldnt pull the trigger. (Lacked confidence and aggressiveness) Or lost my patience and started taking what I call drunken sailor trades. (These are commodity trades that have no rhyme or reason - all emotional). Or I had the aggressiveness to trade that session, but the market just had no opportunities that day or maybe I just didnt SEE them.

Knowing when NOT to trade because you are not firing on all three cylinders is as important as knowing WHEN to trade. How easy it is to wash away recent profits on a bad day! And, conversely, profits can come easily on those days when everything just clicks. Weve all tasted these times.

As once said: Beware of that man, for he knows himself well. Know yourself well, your strengths and especially weaknesses, and gain an edge on the competition.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey directs the managed futures division of Thomas Capital Management, LLC. Get FREE, his complete 44+ lesson, "Thomas Commodity Trading Course" and weekly TimeLine newletter by visiting: The course is brand new and fun reading... a "street-wise" trading e-course. Visit the main Thomas Capital Management trading website at: