Will the person in Row 34, Seat 13 please come to the podium and give the keynote speech?

Picture this:

You are attending an important conference.

You are sitting in the middle of the auditorium among hundreds of fellow attendees awaiting the keynote speech when the Master of Ceremonies comes to the podium and announces,

"Will the person in Row 34, Seat 13 please come to the podium and give the keynote speech?"

You look at the little plaque on the front of your seat and you realize that you are sitting in Row 34, Seat 13.

How would you feel about getting up in front of all those people and giving a speech that you had not planned to make?

How good a job are you likely to do without a well-rehearsed outline of your speech to guide you?
Can you feel the unease and the fear from having to give the speech without preparation or plan?

I know this all sounds ridiculous because no important conference would have a keynote speaker who was not fully prepared. The result would be disastrous.

This is the way most traders start their trading day - without a plan. No wonder so many traders are afraid of the market. For the unprepared, the market can be a fearsome adversary.

However, like the speaker who is well-prepared, a trader with a detailed, written trading plan will be ahead of the 90% of other traders who start the day with no written plan at all.

You do not even need a perfect trading plan. You just need to design a workable trading plan that makes sense to you and includes:

• the setups you will take;


• defines your risk per trade, per day and per month;
  states your goals;


• explains how you will keep records of your trading; and


• lists the steps you will take should you have an equipment, software or Internet failure.

In my Electronic Trader Mentoring Program, the first priority for a new mentoring trader and I is to design a clear, written trading plan. This unique plan incorporates the best of what the trader has already found effective along with a series of setups and strategies that I have successfully used with dozens of other traders.

Once we have developed a written trading plan, we can be confident in approaching the market in a structured, rational way.

One last thing:

You should be happy for all the other traders who trade without a plan.

After all, they are the ones who are needlessly leaving money in the market for us better-prepared traders to earn.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto, all rights reserved

The futures markets they are always a-changin'

Come gather round traders,
wherever you are.
We know that these markets,
are harder by far.

Accept that this change,
is just part of the deal.
Follow your plan,
with unwavering zeal.

You should look to grow,
in these difficult times.
Resolve to be the trader,
who advances during declines.

For the futures markets, they are always a-changin’

The markets, so far this year, have been hard to trade.

Traders ask me if they should change their strategy to accommodate the new reality of 2009.

Are the good trading markets of the past gone forever?

From my vantage point over 37 years of trading, I can tell you that the markets they are always a-changin’.

Today’s difficult markets are, in part, the result of a fundamental change in market participants that I have seen several times over my career. This fundamental change is the result of formerly-important market participants leaving the markets, never to return.

My experience shows that new major players will eventually come to fill the void, but until these new major players emerge, the markets will be volatile, illiquid and hard to trade. Importantly, my experience shows that these difficult times are excellent for learning to trade and for improving, honing and deepening you trading skills.

During the tech bubble of the late-nineties, people left their jobs in droves to make easy money as stock day traders. Tech funds flourished as the stock in dot-com companies with improbable business models rose to impossible levels.

When the bubble burst, many of these players left the market leading to several years of dull markets. Between October 2003 and June 2007, the VIX, the CBOE’s index of volatility, spent the entire time below 20.

Today, the VIX is 40. At the height of last fall’s volatility, the VIX reached 80. When the VIX first went below 20 in 2003, traders told me it was impossible to trade S&Ps. In time, most of these same traders adjusted their trading to the new lower volatility and did well.

In the early-eighties, many grain exporters merged or went out of business. Throughout the seventies these same exporters were among the biggest players in the grain markets.

Initially, the grain markets were illiquid and hard to trade without these important participants.

Like today, traders wondered if the markets that we had known were over, never to return. In time, the merged grain exporters became even bigger players. These larger grain exporters and a new category of major player, funds, became the biggest traders in the grain markets. The markets did not return to exactly the same markets as before, but they did become highly-liquid and very tradable once again.

The same thing will happen today.

The hedge funds and investment banks that left the market in 2008 will be replaced by another group of major players.

Who they will be, I cannot say. But, they will bring liquidity and they will bring opportunity.

Until the markets return to the liquid, flowing markets of the past, I would trade conservatively. I would not throw out my proven trading strategy in an attempt to adapt.

Instead, I would make certain that I was:

• confident in my setups,
• resolute in my risk management, and
• sure in my ability to execute my plan.

My goal would be to grow as a trader and to go forward in my trading account, albeit, at a slower pace than in better trading times.

I can help you use these times to prepare for the good trading markets ahead in my Electronic Trader Mentoring Program. You can find out more at: www.ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

My name is Bond - Jeff Bond

Can you picture yourself as James Bond in a tuxedo sitting at the Baccarat table at the casino in Monte Carlo with a beautiful girl by your side?

I can.

The first time I was ever in a casino, I wanted to be just like James Bond. Of course, I was in Reno, Nevada (the biggest little city in the world), not Monte Carlo.

I did have a beautiful girl by my side (my wife) and I had invested five minutes, or so, reading an explanation of Baccarat in the little pamphlet I found on the table beside the bed in our hotel room.

So, I was ready.

My wife and I agreed to limit our investment in my pretending to be James Bond to a few hundred dollars, which we split between us. We arrived at the Baccarat table well-dressed, confident and ready to break the bank at Monte Carlo - I mean, Reno.

As it turns out, I should have invested more time reading the pamphlet explaining Baccarat because, when I sat at the table, I did not have any idea what I was doing.

However, through no fault of my own, some of my bets seemed to work. My wife was similarly winning some of the time.

After what seemed like a long time and many winning and losing bets, I was nonetheless out of chips.

My wife gave me a few of her chips and we played for a while longer until we were both out of chips.

I suggested we adjourn to the bar so that I could get a Martini (shaken, not stirred). At the bar, my wife opened her purse and I saw that it was filled with chips.

Unbeknownst to me, she had taken a few chips out of each winning pot and stowed them in her purse.

I was elated.

I was indeed James Bond, not some chump from the suburbs.

We cashed our chips and went to a late show where we saw Alan King.

Being smart about money in trading is just like that.

You need to take your profits off the table and play with a set amount of money. When your account is ahead by some predetermined amount, take the money out. Trading with a larger amount of money than you planned can cause you to trade with less discipline. Do not leave more money in your account than you need to reasonably trade.

When your account is ahead by $1,000, $5,000 or whatever you decide, give your broker a call and ask for the overage to be sent to you. Only increase the money in your account in a planned well thought-out basis and only when you are ready to increase the size you are trading.

Regularly taking money out of your account may not turn into James Bond, but, in my experience, it does help in getting the girl.

If you would like to take the gambling out of your trading, check out my Electronic Trader Mentoring Program at www.ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

My days as a big trader

Early in my career on the floor, I wanted to be a big trader.

Pictures from the video shoot for the three-part CME series on learning to trade

What an amazing experience!

Using Jeff Quinto's "V" to supercharge your trading

Have you ever been trading well and decided to increase the number of contracts you were trading? And, just as you increased the number of contracts you were trading, you started losing money on every trade?

To add insult to injury, your losing trades were done with more contracts than your winning trades.

All too often when we increase our trading size, we unconsciously alter our trading from the creative, effective trading at smaller size to ham-handed, tentative trading at larger size.

To be most effective, increasing your trading size needs to be preplanned and natural.

Your trading size should be increased when the market is rewarding you and decreased when the market is not rewarding you.

To assure that increasing your trading size is natural, you should have a strategy for adding and decreasing contracts clearly outlined in your trading plan. I advise even new traders to have a strategy for adding contracts in their first trading plan.

As an example, you could decide to trade your base position, ten contracts, until you are up 30 ticks per contract in a day - at which point, you would trade the next size increment, fifteen contracts. You would trade the increased size, fifteen contracts, until either the productive part of the day ended or your P&L dropped below the 30 tick per contract threshold - at which point you would revert back to trading your base size, ten contracts.

Reverting back to your base size once you fall below the threshold for increasing your size is very important.

Too many traders increase the number of contracts they trade when they are being rewarded and do not reduce their contract size when their P&L drops below the preset level.

Don't let your ego prevent you from reducing your size. Staying with increased size when the market is not rewarding you is tantamount to falling on your sword.

Now, for what traders in my Electronic Trader Mentoring Program call Jeff Quinto's "V".

Think of the shape of the "V".

Start your trading each day with your base size represented at the middle of the "V". If you lose money, you reduce your size, as if you are going toward the narrow bottom of the "V". However, as your profits build during the day, you should increase your size as if you are moving toward the upper, wider part of the "V". If you think of my "V", it will help you conceptualize adding and subtracting contracts as the market either rewards you or penalizes you throughout the trading day.

Using the "V" to exploit winning days and reduce losses on losing days is one of the concepts I teach traders in my Electronic Trader Mentoring Program. You can find out more about the program by going to www.JeffQuinto.com.

Wishing you success with your trading, Jeff

Copyright © 2009 by Jeff Quinto, all rights reserved

Making decisions with imperfect information

A man with a watch knows what time it is. A man with two watches is never sure." Segal's Law

Successful trading comes from being able to make decisions with imperfect information.

However, like the man with two watches, we often try to look for multiple indicators to confirm our decision before we make a trade.

After all, we want as much going for us as possible.

But, waiting for everything to be aligned in order to make a trade will not lead to success.

By the time anything becomes completely obvious, it has already happened.

As an example, let's say we put 100 people in a field on a hot summer day with the sun beating down on them and not a cloud in the sky.

Then, let's ask all 100 people, if it is going to rain - with not a cloud in the sky, almost no one would predict rain.

Let's say a few clouds enter the sky and we ask the same group if it is going to rain.

This time a few more people are likely to predict rain.

Now, let's say that the sky fills with dark clouds.

When we ask the same 100 people if it is going to rain, most will say it is going to rain.

The only way to get the entire group to agree that it is going to rain is if it is actually raining and they are all getting wet.

This is how decision making in trading works.

If you wait for perfect confirmation of what you are predicting, it will have already happened.

Looking for more information, like the man with two watches often only serves to confuse your decision making. This is the reason that I coach traders to concentrate their focus in one timeframe on one chart.

I have traders in the Electronic Trader Mentoring Program who successfully glance at other timeframes for context. But, constantly diverting your attention from one timeframe to another will only result in your being confused.

Meaningful success in trading comes from learning how to make rational decisions before the outcome becomes obvious to everyone else.

No matter how advanced you become in your trading, you are still going to have to make your trading decisions using imperfect information.

If you would like to learn how to dramatically improve your decision making power, check out my Electronic Trader Mentoring Program.

You can find out what other traders, like you, think of having me as their trading coach by clicking on the testimonials tab at www.ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

The deck is stacked!

I have heard dozens of traders lament that the market is fixed. They believe the deck is stacked against them.

I have a very different view of the market.

I believe the market is designed to pay you money.

I agree the market is fixed - that the deck is stacked. I believe that the market is stacked in your favor.

In reality, the market is neutral, but, for those traders who do three things, the deck is stacked in their favor.

• They consistently execute setups that have an edge;
• They cut their losses when they are wrong; and
• They exploit their gains when they are being rewarded.

If you start with an edge in your setups and you cut your losses and let your profits run, then the following is true:

• The market is designed to pay you money;
• A good trade works immediately and profoundly; and
• Any trade that does not work immediately and profoundly is suspect.

First - in my view of the market, the market is not against you. The market is designed to pay you money, if you just know how to extract the money it is waiting to give you.

Second - a good trade works immediately and profoundly. A good trade should explode in your favor the moment you execute it.

Third - any trade that does not work immediately and profoundly is suspect.

When a trade immediately explodes in the trader’s direction, surprisingly, most traders cannot get out of it fast enough.

They cannot believe their good fortune.

You should view this favorable explosion as the norm and let the market go in his direction until that market either stalls or retraces by a preset amount.

After all, if the market is designed to pay you money, then each trade has the potential to be a home run.

Of course, we know that most trades do not immediately explode in your direction. When faced with a trade that does not move or, worse, drifts against the trader, most traders make excuses for the trade and think of reasons to hold onto it hoping it is still going to work.

You should do just the opposite.

A trade that does not go in your direction should be given the minimum amount of room to work and, if it does not, it should be exited.

After all, each trade is just a small probability.

It is important to keep in mind that when you are in a trade that is not working, you are not able to see the next trade which has a better chance to reward you.

In conclusion, the deck can be stacked in your favor if you just understand that:

• The market is designed to pay you money;
• A good trade works immediately and profoundly; and
• Any trade that does not work immediately and profoundly is suspect.

I can help you make sure the deck is stacked in your favor in my Electronic Trader Mentoring Program.

To see what other traders like you think of having me as their mentor, check out the testimonials tab at www.ElectronicFuturesTrader.com.

To find out more, e-mail me at Jeff@ElectronicFuturesTrader.com and tell me a little about yourself and your trading.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto, all rights reserved

The Year of the Rat gives way to the Year of the Bull

Today starts the Chinese New Year.

Last year was the Year of the Rat.

This year is the Year of the Bull.

The nearby chart tells the well-known story of 2008, the Year of the Rat.


Traders in my generation used to tell all the younger traders about the stock market crash of October, 1987.

We referred to it reverently simply as “The Crash”.

The Crash was breathtaking, and the horror of it seemed even more spectacular over time as the story was told, and retold. However, as bad as it was, the Crash of 1987 lasted about a week.

In contrast, 2008, the aptly-named Year of the Rat, unfolded over much of the year. Its most spectacular volatility extended over several months.

I do not know what we will be calling 2008 in thirty years, but, for now, the Chinese may have it right as the Year of the Rat.

Could the Chinese again be right in calling 2009 - the Year of the Bull?

Could the stock market have already fully-discounted our negative economic reality?

In describing his investment philosophy, Warren Buffet said that, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Certainly, the entire world is fearful, but is it time to be greedy?

As to my studied opinion developed over thirty-seven years trading futures, I haven’t a clue.

What I do know is that disciplined traders will be rewarded and undisciplined traders will be punished.

I know that traders who follow their plans will do well.

Traders who limit their losses when they are wrong and press their advantage when they are right, will be handsomely rewarded.

I, also, know that focusing on the past will not help.

According to Warren Buffet, “if past history was all there was to the game, the richest people would be librarians”.


Make 2009 your personal Year of the Bull, join my Electronic Trader Mentoring Program. A few spots remain available to start in mid-February.

Once again to quote, Warren Buffet, “risk comes from not knowing what you're doing.”

I can help you know what to do whether 2009 turns out to be another Year of the Rat or, as the Chinese predict, the Year of the Bull.

Wishing you success in your trading, Jeff

Copyright ©2009 by Jeff Quinto
All rights reserved

Freezing out your fear

When I woke up on Friday, it was -23° outside - not the wind chill, but the real temperature was -23°.

It was colder Friday at my house in Wisconsin than it was on the North Pole.

About midmorning, my wife told me that there was no water coming from the kitchen faucet.

After some investigation, I determined that there was no water coming from our well into our house. I surmised that either the underground pipe from the well to our house had frozen, our pump had failed or the well had run out of water.

The more I thought about it, the more I felt that getting our water back on was going to be massively expensive and insanely complicated. I wondered who I would call: a plumber, a well-digger?

How could I trust whoever I called?

The bill to have someone come out and fix a frozen well on the coldest day in ten years would be mind-boggling.

By noon, I was convinced that this was going to be a major disaster costing thousands of dollars.

Later that afternoon, I was talking to Bob from Northern Michigan on our regular Friday mentoring meeting. I asked him if he had ever had a problem with a frozen well. His winters are at least as bad as ours and, like us, he lives several miles away from the nearest town.

Bob said that he had never had any problems with his well, but he had read that in Alaska people put electric lights under their cars to keep the engine warm in freezing weather. We talked about the idea of my shining a light on my well-head outside and I remembered the halogen work lights that I bought for painting and how much heat they put out.

With Bob's help, I devised a plan to array my work lights around my well head and cover it all in a tarp held up by logs from the nearby woodpile. I built a log fort around the well-head, turned on my work lights and let them shine all night.
By Saturday afternoon, the outside temperature had risen 45° to a spring-like 22°.

My work lights had been shining on the well-head for almost 24 hours. When I reset the circuit breaker, the water came back on.

I was elated.

I had gone from thinking that we wouldn't have water for days, that the cost to fix the well would be in the thousands, and that we would probably be cheated by the workman who came to fix our well to a point where the water was back on at no cost.

All of my fear about the cost and complication of this impossible problem was for naught.

My fear had not led me to a solution. It had prevented me from viewing the problem rationally.

My fear had made me irrational. It had clouded my view of reality.

I had not looked at the problem for what it was.

In reality, even if the worst happened and I had to dig another well in the middle of winter, I would have found someone competent to do the work. I had the money to pay for it and the problem would be solved in a couple of days.

But, those rational, measured thoughts never crossed my mind.

This parallels how fear subtly, but profoundly, effects your trading.
Fear in trading clouds your thinking. It prevents you from fully-capitalizing on good trades.

Fear causes you to stay in losing trades longer than you should. It causes you to alter your plans and set aside your discipline.

Fear makes you think of yourself, not as someone on their way to becoming a great trader, but as an incompetent loser. It makes you feel stupid.

Just like my fear of spending thousands of dollars and being cheated; fear in trading leads you to unhelpful, frustrating and incorrect conclusions.

By identifying your fear and realizing it will sabotage your thinking, you can move away from fear and toward making productive, rational decisions.

You can move your trading away from fear and toward meaningful success in my Electronic Trader Mentoring Program.

If you would like to hear what other traders, including Bob from Northern Michigan, have to say about the Electronic Trader Mentoring Program, just go to www.electronicfuturestrader.com and click on the testimonials tab.

Don't be afraid.

Contact me at Jeff@ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Grading your trading

Over the years, I have developed an evaluation system for futures traders. I use this rating system to help traders, I coach, in the Electronic Trader Mentoring Program to upgrade their trading.

I present "grading your trading" here as a basis for defining where you are in your trading and to help you establish your trading goals for 2009.

Once you have determined your skill level, from A to F, you can work to upgrade your trading, one grade at a time. Rating your trading based on your skill level and working to advance to the next grade is a better way to establish trading goals than only making monetary goals. Rigid monetary goals may be too easily achieved in a good year and not achieved at all in a difficult year. By focusing on enhancing your trading skills and your consistency, your trading profits will naturally improve.

My grading system starts with the failing grade of "F" and advances to modest improvement as a "D" trader. I estimate that 75% of all traders are in these two categories.

Only 25% of all traders who attempt futures trading advance to become "C" traders. These traders have a chance of meaningful success, although they are not there, yet.

10% of traders advance to become "B" traders and only 2% of traders, in my grading system, advance to become "A" traders.

What grade are you?

Grade F traders lack a plan, lack discipline and do not know where to go to find either. "F" traders encompass a majority of all futures traders. They buy a surefire system that doesn't work. Then, they join a chat room that doesn't help. They copy other traders and look for the great setup that will make them rich. They claim to have discipline only to lose it when things do not go their way. They are searching for answers, but they do not even know the right questions to ask.

Grade D traders have a plan that they do not consistently follow, setups that they do not always take and rules that they often violate. "D" traders are traders who realize that they need a plan, that they need rules and that they need discipline. But they do not consistently follow their plan, stick to their rules or live within the discipline they set. I estimate 25% of all traders are in this category. Trading for these traders is not only unrewarding financially, but it is unbelievably frustrating.

Grade C traders have a plan, are usually disciplined, and are able to pay their trading expenses from trading profits. "C" traders have surpassed 75% of all traders. They are able to hold their own in their trading account, but they have not yet developed their trading to the point where they are able to make meaningful, consistent profits. This is the gateway to trading success. Once you can beat the market and pay your trading expenses, you can work on your consistency and, over time, you can build your trading size, so that you can move forward to the higher grades.

Grade B traders have a well-developed plan, are well-disciplined and are able to make consistent profits. "B" traders are an exclusive group. They have a well-developed plan that they execute without fear and without hesitation. They understand risk and always keep their downside discipline. The major skill they lack that keeps them from moving from being a "B" trader to an "A" trader is the ability to fully exploit opportunities.

Grade A traders represent only 2% of all traders. These traders are set apart based on their ability to fully capitalize on opportunities while holding to their plan and keeping strict discipline. "A" traders are those few traders who not only have a solid foundation of trading - robust setups, clear trading plan, downside risk management, but they have the key ingredient to meaningful success in futures trading.

They regularly exploit opportunities. These greatest traders in the world are defined by how they "press" their advantage. The secret to this highest level of futures trading is exploiting opportunities by the trade, by the day and by the year.

Do not despair if your honest assessment grades you lower than you predicted.

Just know that you need to work toward becoming a better trader. You do not need to worry about what you will need to do to become an "A" trader. Instead, just concentrate only on moving to the next grade. Once you reach that grade, and only then, work toward the next grade.

In this way, you will be working toward improving your trading in a measured, logical way knowing that to become a "B" trader you must first master the skills of a "C" trader.

I can help you advance in your trading during 2009.

Traders in the Electronic Trader Mentoring Program will tell you that you need a trading coach. I am that trading coach. Simon Townshend, a successful British hedge fund manager with whom I work described the progression in trading and the advantage of using a mentor/trading coach when he said:

"Less than 20% of traders are profitable. Probably only 5% are really profitable and probably only 2% are consistently really profitable. To join the 2% club is not easy, but it is possible. However it takes all three of those elements mentioned earlier - the right strategy, the right discipline and the right top class mentor. Certainly you can reach the 20% mark without the latter provided you work hard enough. But however good your strategy and your discipline, the 2% club will almost certainly elude you if you are working alone. That is why Tiger Woods does not work alone and why the top traders all have mentors and buddies working alongside them too. Fortunately for me I searched and found a mentor that is perfect for me. Fortunately for you, you know his name and he could well be that perfect buddy to propel you too into that exclusive 2% club."

Contact me if you would like to make upgrading your trading your #1 New Year's resolution for 2009.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Acres of Diamonds

Acres of Diamonds was the title of a speech given over 5,000 times by Russell Crowell between 1900 and 1925.

The speech was very popular and Crowell was paid to give the speech all over the United States. He used the proceeds from giving the speech to provide tuition for over 1,400 students to attend what became Temple University in Philadelphia.

In the beginning of the speech, Crowell tells the story of a farmer who sold his farm and left his home in a futile effort to find diamonds in a far away land.

The new owner of the farm found that the property was covered with black rocks that when broken open revealed diamonds inside.

The farmer left his home in search of diamonds when, in fact, he had acres or diamonds all over his farm.

Conwell, then, tells the story of a rancher in California in 1847 who sold his farm near Sacramento in order to move further south where he had heard prospectors were finding gold. The rancher sold his farm to Colonel John Sutter who built a sawmill on the stream running through the ranch. A year after the sawmill was built, gold was discovered in the stream. The discovery of gold at Sutter’s Mill started the California Gold Rush. Since then, over $38 million in gold has been taken from Sutter’s Mill.

Nothing is known of the rancher who sold out to Colonel Sutter in search of gold further south.

The point of Conwell’s two stories was that good fortune is often waiting for you wherever you are. You do not need to search far and wide for success. It can be found right here and right now, if you just know where to look.

I was taken by the Acres of Diamonds story the first time I heard it, many years ago.

Today, I think that the story provides a great parallel to finding success in futures trading.

Success in futures trading, in a way, is very simple.

Most unsuccessful traders try to make it more complicated than it needs to be in the hope that they will discover some secret. In fact, the secret to successful trading is not even a secret.

Success in futures trading is not about finding the most complex way to trade, it is not about enrolling in the best live chat-room, or buying some great trading system.

Consistent long term success in futures trading comes from

• finding a methodology that works for you,
• documenting that methodology in a clear, detailed written trading plan, and
• then, exploiting that methodology while following your plan to the letter.

A workmanlike plan unfailingly followed will always beat a great plan executed inconsistently.

You see, you probably do have acres of diamonds all around you, if you just know where to look.

If you would like my help in finding your acres of diamonds, please feel free to contact me at Jeff@ElectronicFuturesTrader.com.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
All rights reserved

Maximizing 2009 - data mining for futures traders

Several years ago, I attended a luncheon meeting at the Economics Club of Chicago in which Bill Gates spoke.

I had never heard Gates speak in person and I was ready to hear all about the newest software and latest technology. Much to my surprise, and disappointment, all Gates talked about was what he called "data mining".

Gates thought data mining was important.

He said that by analyzing data collected throughout your business, you could find revealing insights leading to improvement.

To tell the truth, I did not get it.

For me, the meeting was a bust. I came to hear something useful and exciting and all I got was a discussion of data mining. My reaction to Bill Gates was similar to the time some years ago when a wealthy, older family friend in Iowa told me he wanted to talk privately with me after dinner.

He said he wanted to tell me something important.

After dinner, he and I went downstairs away from the rest of the family to play Gin Rummy (this is Iowa, not New York City) and, for me, to hear what he had to say. He cleared his throat, looked at me seriously, and told me that he thought the stock market was poised for a rally.

Poised for a rally?

Was he kidding? No one wanted to buy stocks, least of all me. Stocks hadn't done anything for years.

The stock market was actually lower, at that time, than it was ten years before when I first became a stockbroker. I was disappointed. I thought that he was going to tell me something important.

Did I mention that our long-ago Gin Rummy game took place in early-August 1982, just days before the Dow bottomed at 777 and began an eighteen year bull run to over 11,000?

Just like hearing about data mining from Bill Gates, I did not get it.

However, today I saw a dramatic example of how mining the data from your trading can lead you to important discoveries.

This may not be exactly what Bill Gates had in mind, but it demonstrates the importance of keeping detailed, accurate records of your trading and periodically analyzing your records.

One of the traders in the Electronic Trader Mentoring Program took my advice and analyzed his trading in 2008 during the dreaded two weeks off from trading in late-December.

As you might expect, he tallied his trades by month. He listed them by setup and he figured his winning percentages and losing percentages.

Lastly, he separated trades that matched his plan from trades that were impulsive and did not fit into his plan. The impulsive trades were obviously the result of a temporary lack of discipline and nearly all of them were losers.

In this case, the lesson from looking at his past trades could not have been clearer. Had he not done these emotional, out-of-plan trades, he would have more than doubled his result for the year. Instead of making a 15% return on equity in his trading account, he would have made almost 40% return in 2008. Maybe, this was what Bill Gates was trying to tell us.

My suggestion is that you make a New Year's resolution to analyze the data from your trading in 2008. There could be some easily-implemented change that you can make to advance your trading in 2009 without taking more risk - in this trader's case actually by taking less risk.

If you would like my help in finding and documenting a methodology that works for you and then exploiting that methodology in my Electronic Trader Mentoring Program, please contact me at Jeff@ElectronicFuturesTrader.com.

As your trading coach, you can let my hindsight be your foresight.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
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