I read in “Golf” magazine the other day that 70% of all golfers never break 90.  I suppose this sounds fairly plausible, as the courses are full of golfers struggling to improve their game.

Trading is a lot like golf, it is a skill, pure and simple, and no system is going to dramatically change your trading results if you don’t have a firm grasp of trading principles.

I like this analogy, and lets use golfing again.  Lets say that all golfers who break 90 make money and all golfers who can’t break 90 lose money.  I’ve watched scads of poor golfers buy new drivers, new irons, even new putters in hope of improving their game.  The problem doesn’t lie in the clubs, though.   Most modern day clubs of any good quality can be used with great results.  No,  the problem lies with the golfer’s ability to use his clubs.  On the other hand, a very good golfer might well improve his driving length and accuracy through a new, custom made driver.  He already knows how to golf, and some improvements in equipment might well benefit him.

The same holds true in futures trading.  If your trading fundamentals are weak, there is no book or software program that is going to make you a great trader.  My writing on randomness and chaos theory in earlier posts makes this assertion true.  My own personal observations make it true.  Many people trade recklessly, without discipline, without trade filtering technique and use poor money management.  No program can cure these problems.

DecisionBar is a great trade filtering product and, when used properly, will improve your trading results.  No, you don’t take every trade the program recommends, even the manual states this clearly.  You need to use a trade filtering system of your own device to decide which trade presents the best earning potential.

A firm grasp on support, resistance and pivot points is also essential for making DecisionBar a valuable tool.  If you don’t have a firm grasp on these concepts and cannot plot them without the help of a computer program, you are in trouble.  For years, I forbid my children the use of a calculator in the use of their math homework.  Once they demonstrated proficiency in math calculations, they were allowed to use a calculator.   Use the same analogy with trading, do you understand where short, intermediate and long term resistance and support lie on a chart.  Can you calculate a pivot point?  Do you understand the relationship between volume and price action?  Especially note the behavior of volume around support, resistance and pivots.   Do you understand that on some days the market completely ignores pivots and why this happens?

These are just samples of a knowledge base a trader should develop before he/she wanders into live trading.  As you have heard me say many times, get a demo trading account and trade on paper, no matter how long it takes, until you can consistently trade five consecutive days in the black.

DecisionBar is a tremendous program for intermediate traders, and the information you can glean from using the program properly will greatly increase your profits.  If you are a complete novice, use DecisionBar in your paper trading until you have developed the trade filtering technique that suits you the best.   The DecisionBar manual expounds on several trade filtering techniques to use, and you should experiment with others until you have a technique that suits you.

Trading isn’t brain surgery, but it takes some skill and practice to be profitable….just like golf, you won’t read a book or buy a software program and break 90 the first round you every play.   However, once you have developed some rudimentary technique, new clubs, quality golf balls and host of other accessories can help you fine tune your game.

Best of luck trading