Speaking of sugar, I later took the plunge. My swing program said sugar was due for a big swing up. Trident normally tracked the standard 1-2-3 zigzag move and entered the “3” wave. I went long four sugar futures contracts on this signal. The trade started out fine but stalled and reversed down.

Max suggested I sell four farther out futures contracts as a hedge. (That makes a lot sense, right?) He said this way I would be more apt to later remove the hedge. Otherwise, I might not get back in. Whatever. Of course, I put the hedge on at the exact low when I was the most scared. As sugar futures started to rally again, I removed the hedge and the race was on.

Maybe Max was right. Sugar futures contracts ran up to my Trident objective and I got out with a few grand profit. I got cocky and stupid and decided to reverse and go short four contracts at the close on Friday. Trident was flat and I was doing a "drunken sailor" trade. I was so pumped up I gave two of my employees a share of the potential profits. Monday came and sugar gapped up against me. In no time I gave back all my previous sugar profits. I got out and decided never to buck the trend again. Well, at least until I got greedy and stupid again. I told my two employees to forget about any losses and that was that.

Max was making good futures commissions from me and I think I was becoming one of his more active commodity traders. I liked that feeling. I even told some of the young women I met that I was a commodity futures trader. That went nowhere. Back then, it was like saying I played poker or shot craps for a living. But, I couldn’t leave sugar alone. A few days after that loss, the market was still moving up. It was Friday again. The futures market had moved up about 350 points that week. It was kissing 23 cents. I said the heck with Trident and told Max to buy one futures contract at the market.

After his “lightning fast” execution finally got back to me, I had paid about 50 points more than the last quote! I was stunned. But then it kept going up into the close. It closed limit up and I was up a good $1000 on one contract. (The limits were expanded yet again) Monday came and it was limit up again. A few more limit up days and I got out with a nice $5,000 gain. Too bad I didn’t buy four contracts, but I was still feeling the pain of the last loser.

Those were some fun days trading futures. I still look back and realize my innocence was in many ways my strength. After all, it was a bull market in commodities and “drunken sailor” trades usually work out. But as the years passed, so did the bull, bear and chopping markets. I learned how the commodity futures markets could beat you up. I replaced my intense aggressiveness and became conservative in a speculative arena. But that’s the way you need to be.

It’s all about survival. Small positions that go far are a great way to trade. Ringing the cash register often with high win/loss ratios works as well. Just remember that you need to be flexible and prepared to let go of old ideas that no longer work - and keep finding new ones that do. I think even the Boston Commodity Broker from Hell would agree with that. I know Max would.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.