Guest Post from TLP

Site Administrator | March 21, 2012

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The following is part of our good friend and TradingPub commentator Tony LaPorta's commentary from this weekend.  One thing that has been helpful to us at the TradingPub as we have worked with some of the top traders from around the globe is hearing their stories, how they got started and lessons they learned along the way.  Take a few minutes to read the below and remember that while this market has an enormous amount of opportunity, it is not an ATM machine that spits out money as soon as you buy the latest software or take one course on trading.  Successful trading is far from guaranteed and required hours upon hours of time in front of the screen, learning from losses and finally being able to make a trade and stick with it.  We hope that you enjoy it as much as we did:

On January 11, 1979 I received a phone call from the CME floor manager at Lind-Waldock. My application for a runner’s position was reviewed and accepted. I was offered a job earning $100 a week. I started on Monday, January 15, 1979. On Friday, January 12, 1979, it began snowing. Two days and 27 inches later, it finally quit snowing. The only reason I made it to work on Monday…the Rock Island commuter line and a Volkswagen Bug with the engine in the trunk that never said never:  Chicago Blizzard

On Monday January 15, 1979 I was a recent college graduate stepping on to the floor of the Chicago Mercantile Exchange for the first time. Due to the fact no one could make it to work, I was a runner for about two minutes. I was told to sit down and when the phone rang I should explain to the person on the other end of the phone my circumstance. Tell them to go slow and if they give me an order I should write it down on an order slip. I should repeat back to the client what I just wrote down and give the order to one of the 18-year old runners. In a matter of two minutes, I went from earning $100 a week to $150 a week.

I took my first technical analysis class in 1979. We didn’t have charting services in those days. Old timers will remember the Commodity Perspective. This was a large paperback workbook of commodity and currency charts updated weekly. (Indices futures did not trade until the early 1980’s.) If you took care of your workbook, there was enough space on a page to chart the daily High-Low-Close bars for almost two more months. Before I left the trading floor, I would jot down the High-Low-Close of all the markets I followed. I would update and study these charts every night.

I was fascinated with every market from Corn to Copper to the Canadian Dollar. I knew deep down, the more I learned the more I was worth. One rung up the ladder after another meant a greater earning potential. When I finally made it into the pits, scalping the bond and bund markets as a local had its place, but speculating the markets as a trader was my passion.

Over a 33-year career, I learned many tricks of the trade. Most of these tricks came right out of a technical analysis book. The best tricks were acquired once I learned about Fibonacci retracement levels and gained enough market experience to believe in my “gut feel.” I truly believe Fibonacci, my “gut feel” and the willingness to learn have kept me in the game all these years.

They say technical analysis works until it doesn’t work. The same applies for my gut feel. As well as every trick in the book worked last year, this year has been a complete opposite. Not only has technical analysis let me down, but my Gut Trades have been 50% at best. They say the market can remain irrational a lot longer than I can remain solvent. In such a difficult trading environment, if you have kept your head above water so far you are well ahead of the game.

Today’s crap markets may have slowed my potential to make money, but they will not stop me. The markets which we know and love will return. In the meantime we need to take what the market gives us and try like hell not to give it back.

In September 2007, with the price of Crude Oil at $80 a barrel and gasoline at $2.79 a gallon, the DJIA traded between 13,000 and 14,000. I was bearish then but got squeezed week after week. We all know how that ended. 2008 was a huge year for yours truly.

Five years later, Crude Oil is $107 a barrel and gasoline is $4.00 a gallon. Unemployment is over 8% and despite a 0% interest rate policy the housing market is still in decline. Europe is in disarray and China is slowing, but the DJIA finished at a four-year high of 13,230. Wall Street cannot go up forever. Thirty-three years of old tricks cannot fail me forever, but may I reiterate? The market can remain irrational a lot longer than I can remain solvent.

Cheers - TLP

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Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities. Please consult your personal financial adviser before using this information for your own trading purposes.