Trading From the Inside - Softcover

Über die Autorin bzw. den Autor

Joe Kellogg started in the commodity business as a commercial grain merchandiser and basis trader. Mr. Kellogg helped develop the Farm Marketing Program, a marketing plan for agricultural businesses to use with the grain options in strategies to improve profits and reduce risk. He hosted "Futures Talk", a commodity talk radio program that aired bi-weekly out of Los Angeles.

In addition to these Futures programs, Mr. Kellogg has also written The Option Traders Playbook, an option traders guide to understanding option strategies. He currently writes a number of weekly newsletter publications on trading, including Traders Market Views, published electronically every Monday, Wednesday and Friday.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Chapter One - Learning to Trade

It all started in May 1988, sure I had been involved in commodity trading for almost ten years by that time. First as a basis trader for commercial grain accounts, than as a retail furures broker. Along the way I have picked a few things that I have found to be valuable in my trading, and I would like to share those with you. Everyone knows that commodity markets move. If you are able to pick the correct direction, there is a lot of money to be made. Picking the correct direction, however, may prove to be more difficult than many new traders believe, unless you know and understand what clues the market is giving. With these clues, the day-to-day movement of the markets is much easier to understand and trade.

I had first started trading, before I became a broker. Back then, I had a wife and two small children. Back then, I had a wife and two small children. The grain trading ha dbeen coming along nicely and I had been able to set aside a little reisk capital. Since my job involved the trading of the cash grain markets, and not the futures, I had developed a great fascination for just how all the money was made and lost in the futures business.

So, I gave it a try. I opened my first account in 1984 with Cargill Investments. I had come to know of Cargill through my dealings in the cash market. IN fact, Cargill is one of the biggest cash grain traders in the world, and since they also traded futures, I thought I'd give them a try.

I quickly found out that there was a lot to learn. To start with, there was a whole new language to learn. Some words had different meanings and other words I had never heard before. It was all new to me, and even though I wa ssticking to trading the grain markets, I still felt lost. After my first week of trading, I knew I needed some education.

The first stop was the public library, where I was able to find some very outdated books on the subject. I soaked in everything I could get my hands on. I started reading the Wall Street Journal commodity section every weekday, trying to understand what all of the other commodity markets were about.

After burning some midnight oil, I had been able to learn enough to get myself into trouble. Mostly I was trading the Corn and Wheat markets, based on what I knew of the cash market. I kept a close eye on the relationship between the Kansas City, Denver and Chicago cash prices and the near month futures contract. If the spread started to widen or fall, I would make a futures trade based on my understanding or the cash market.

With this approach, I had been able to make alittle money and after a few months, I was able to build my account up enough that I could afford to spread my wings and start looking at some other markets. The new commodity market on the block at that time was the S&P 500, which I knew nothing about. But in doing my research about the S&P 500, I came across the bond market. It didn't take long to see the relationship between the cash bonds and the furures bond prices. I thought that maybe I could use what I knew about the relationship between the futures and cash in the grains, and apply it to the bonds.

Soon I was trading the bonds full time, buying and selling many times during the day, making money, losing money and learning the ins and outs of being a trader. As my account grew, so did my trading volume. And before I knew it, I was doing a lot of trading. Far more than I should have, with my lack of market knowledge.

Every day after the close, I would study my charts, looking for the clues that were right in front of me. The only problem was, I could not see them. At night, I would sit with those charts in my lap, working through many different market theories, as I thought of them. It didn't take much of a brain to figure out the amount of money that could be made, if I only found the key, the key that was right in front of me, somewhere hidden within the very charts I was holding.