This page was last modified January 18, 2018

Trading Stocks, Futures, Options, Bonds, etc.

Part I - You probably shouldn't trade

I discourage you from getting to trading if you're thinking about doing it. The most compelling reason that I can think of NOT to trade is that it was shown mathematically in the 20th century that prices of stocks, commodities, etc, cannot be predicted. This is a highly compelling reason.

If prices can't be predicted, then how do people make money trading? They don't. 99.9%+ of traders, professional and amateur alike, do not succeed in the long run. Take a look at the books I have listed in the side panel. Anyone who consistently makes money in the trading business is not making money from trading itself, but rather from auxiliary involvment, such as making markets, making money on commissions (not from the trades themselves) or from inside information.

People will often use the argument that a buy-and-hold strategy in the U.S. stock market is valid over the long term. This was true in the twentieth-century, but almost certainly will not be true for the 21st. The reason? China. Read "Destined for War: Can America and China Escape Thucydides Trap?" by Graham Allison.

So.... Don't Trade.

Part II - Guidelines for getting started

If, after doing your research you still are interested in making a go of it, then I suggest you read my booklet "How to Trade Crude Oil Futures" which you can obtain by clicking on the link in the side panel. Don't trade with real money until you have done sufficient backwards- and forwards-testing (as described in the booklet) so that you are satisfied with the outcome.

Preparatory work

  • Leave emotions out of it
  • Don't pay attention to news.
  • Realize that trading is a probability game over the long term.
  • Risk/money management is crucial.
  • Backtest and forward-test over all possible market conditions.
  • Do not make predictions of any sort.
  • I do not recommend trading in the way he does, but for real-life stories, anecdotes, and self-deprecating humor I recommend books by trader Art Collins.