Timing Techniques for Commodity Futures Markets
By Colin Alexander
McGraw Hill Business
352 pages, $65
Colin Alexander assumes the reader is new to futures trading, so he covers the basics at the onset. This is where I got my first inkling that this book was more than just another “milk-for-profit” rehash. Even the introductory chapters taught me things I hadn’t considered. In Alexander’s words, all transactions, even outright speculative ones, are “an exercise in buying one thing and selling an equal and opposite amount of something else.” Every long futures position, for example, acts as a short in the U.S. dollar because strong foreign currencies make raw materials and financials (i.e., futures) more attractive to overseas investors.
Neophytes understandably want to learn not only the rules of the game but also practical strategies they can apply. This book is rife with such ideas, covering everything from fundamental to technical, long- to short-term cycles, sentiment reading and an array of popular indicators that are framed in unique ways. Each tool is thoroughly explained in theory and practice. Alexander then advocates combining them and provides an extensive checklist of what would make a market bullish or bearish.
One section deals with recurring calendar cycles in the S&P, Nasdaq and other indexes. I was gratified that his advice confirmed my own research, such as how you really do well to “sell in May and go away.” He suggests that resumed buying should be done in late October while I prefer the start of November, but that’s minor quibbling.
The two sections on index day-trading are valuable in these times of extreme intra-day volatility. They include pivot points, overbought/oversold indicators, moving averages and a methodology that incorporates 400-tick increments. It’s particularly important to identify support/resistance areas in a short time frame because moves are going to end relatively quickly, and day traders don’t have as much opportunity to exploit momentum. Anticipatory strategies, therefore, become more crucial to success.
As the title suggests, timing is a key element in creating a favorable edge. This has to be combined with good money management, obviously well-covered terrain, but Alexander makes it fresh and succinct. Again, it is the relative newcomer who is going to get the best bang-for-buck out of “Timing Techniques for Commodity Futures Markets,” as the book serves primarily as a one-stop-shop primer and practical doorway to trading. Even so, it has enough thoughtful information that even veterans may enjoy this.
Art Collins is an active, long-time trader. He is the author of “When SuperTraders Meet Kryptonite” and “Market Beaters.” Reach him at email@example.com.