Before the chartbook
by Raymond J. Kaider
To the active trader of futures and futures options, sitting down in front of a chartbook or computer for
a round of technical analysis can be a most promising endeavor. The fact is, though, that the average
small speculator is consistently whipped by the market. This is never more true than when the small
speculator ventures into trading options. This consistency must be one of our nation's leading causes of
premature hair loss.
The purpose of this article is to share with the reader some of my observations as to why "the best laid
plans" often go astray. The ideas expressed are experientially based and meant to give a different
perspective in viewing the futures markets, especially options. The validity and importance of technical
analysis is unquestioned. A book could be filled simply by enumerating all of the legitimate
trend-following and trend-fading systems that have made their way into the public eye. No doubt many
more will follow.
But the methodology or technical system used to make trading choices is only half of the picture.
Oftentimes a trade by the small speculator may be doomed before the order reaches the pit. In an attempt
to show the other half of the picture, the possible reasons (other than technical) for the failure of a trade, I
point to three general areas: the role of the broker, the mechanics of the marketplace and human nature.