The goal of Trading Commodity Futures with Classical Chart Patterns is to get you thinking about the entire trading process in a slightly different light. Author wants you to discard the conventional wisdom that the key to improved profitability is some new trading approach or system. Once you establish a foundation of market knowledge and an understanding of the speculative process, the keys to increased profitability come from two areas:An appreciation of the human component in the trading equation-discipline and patience and Proper money management (risk control).
Classical charting principles DO NOT represent the Holy Grail. It is vital to keep in mind that over 50 percent of chart formations fail to deliver profitable trades. This may be an indictment of classical charting as a forecasting tool, but not as a trading tool. Classical charting principles do not account for all market price action. Oftentimes, major and intermediate market movements will occur independently of recognizable chart patterns. Classical charting principles do not explain all the markets all the time.
The patterns described by Edwards and Magee are a way to view markets so as to find defined trading opportunities. When a speculator acts on these opportunities over an extended period of time, they provide an edge. Period.
So, in a very real sense this book is as much a study of the speculative process and a certain philosophy of trading as it is a look at classical charting principles. In my experience over the years, I have noticed that there is a certain “conventional wisdom” about trading that floats around. It ranges from beliefs about market interrelationships (that lower interest rates and higher stock prices should go together) to ideas about the best trading approaches (that a high percentage of winning trades is better than a low percentage of winning trades).
Unfortunately, the conventional wisdom about trading is most often wrong. I would not be surprised if some of the ideas in this book run counter to what you have learned and believe. In areas where I attack the conventional wisdom, I hope you will be open minded and consider my reasoning. I am convinced that there can be no single “Complete Guide to Commodity Trading”. The individual speculator seeking to understand the trading process will glean a little bit of knowledge from many different sources. It is my hope that somewhere within this book you will find some statement or idea that will become an important building block for your trading future.
- A Conversation Between Bruce Babcock and Peter Brandt
- Practical Trading Hints
- Chart Patterns and Targets
- Best Dressed Lists