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D. Murali

TRADING in the markets is risky. Riskier still is what many perceive futures to be. But Jake Bernstein lays bare fishing tricks in the futures pool in his book Profit in the Futures Markets! — a publication of Vision Books (visionbk@vsnl.com). However, for those itching to fast forward from rags to riches, the preface voices a caution: "Buying this book and skimming its contents will not bring you the profits you seek.

In fact, a little knowledge may be a dangerous thing — you could very well lose money." If you are willing to traverse the learning curve, the author takes you through ``building blocks and basics'', fundamental vs technical analysis, trendlines, cycles, moving averages, seasonality and computers, and thereafter shifting gears to ``discipline and trading'' that talks about the art of contrary thinking and so forth.

Advanced concepts, including a discussion of intraday trading and artificial intelligence form part three and the reader can evolve his own trading plan in part four. A few glimpses:

Trading profitably is not as simple as picking up a telephone or clicking a keyboard to place an order. The true story behind the crisp numbers crossing the brokerage house ticker or flashing on your computer screen is one of competition, psychology, strategy, skill, victory, and defeat. The majority of traders are, and will continue to be, losers. Accept this fact now, or you will be nothing but grist for the market mill — a mill that is run by professional traders, experienced speculators, large hedgers, and a small but successful group of individual traders who have learned profitable trading techniques through experience and persistence.

When someone asks me how much he should risk in futures trading, I answer with a simple question: "How much can you afford to lose?" One answer might be $10,000. "Take this slip of paper on which I have written $10,000," I respond. "Rip it into shreds. Flush it down the toilet. How do you feel?" If you can cope with the loss by not having it affect your lifestyle, then that is how much you can risk.

If contrary thinking is not one of your traits, you must work toward developing it. A common quandary of most traders is the fear of going against the crowd. It is crucial to learn how to assess what the crowd is thinking and develop the courage to take an independent trading approach in the market. Contrary thinking will also help the trader avoid being trapped when the public takes hold of a market and panics.

There is a great deal to be said for isolationism in trading. In order to keep free of impulse, it is often best not to know the news. Then you can "keep your head while all those around you are losing theirs." Concentrate instead on selected information sources such as prices, charts, trading systems, and timing indicators.

Most chatrooms are breeding grounds for the uninformed, the insecure, braggarts, liars, bashers, and rumourmongers. Outright lies and so much incorrect information posted in these places render them useless, even counterproductive for traders. Rumours are plentiful, but solid trading information is scarce. Don not let yourself get dragged into that abyss. The only potentially good use for chatrooms is to take the consensus of market opinion in them as a contrarian indicator.

Many traders feel they must be in the markets all the times. Nothing could be more inaccurate. If you are confused or uncertain, remove yourself from the game and observe for a while.

During which time Bernstein could give you company.

BookValue@hotmail.com

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