I have discussed in past articles how volume and open interest can be used to help identify and confirm market situations and trading opportunities. I’ll take open interest one step further in this column by examining the Commitments of Traders (C.O.T.) report, issued by the Commodity Futures Trading Commission (CFTC)….

Before we discuss this topic, let me give you some important background information. I tend to think of trading systems by the distribution of R-multiples that they generate. And the average R (or mean R) of the system’s R-multiple distribution is the expectancy of the system. It tells you what…

“When it comes to planning, many traders can be compared to the German army during World War II–in that the invasion of Britain was planned but never executed, while the Battle of Britain was executed, but never planned,” said John C. Tirone, senior technical analyst for Chase Manhattan Bank in…

The first variable in the snow fight metaphor was the wall of snow. If the wall is gone, you have no protection from the snowballs. Hopefully, all of you figured out that the wall stands for the equity in your account. And generally the bigger your equity, the safer you…

The sixth key quality is that they all have a business plan to guide their trading. I’ve been talking about the importance of this plan for years. Most companies have a plan to raise money, but you need such a plan to help you treat your trading like a business….

No short-term trading system is perfect. However, having and using a system is critical for short-term trading success, say Howard Abell and Bob Koppel. “A successful short-term trading system must be profitable, consistent, and personal–conforming to the unique psychological and methodological needs of the individual,” they said.

What most people don’t realize is that at any given time 4-5 people might go long a position and another 4-5 might go short or unload a position. Each of them can have different systems and different ideas, and all of them can make money. They might have different ideas…