Long Term Secrets To Short-Term Trading

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pop" vantage point. 
More importantly, though, there was a time in my life when I did indeed think it was our minds that 
screwed us up and kept us away from the unlimited wealth the markets seemingly offer. With that belief 
system operating at full speed, I dabbled in them all. Geez, I could never admit it before now, but turning 50 
as this written, makes confession of the soul much easier. 

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I tried Scientology, rebirthing, ARICA, EST, Rolfing, Reichan, sat for countless hours in a Zen 
meditation center by Big Sur ... listened to subliminal tapes for a message I could not hear, chanted, panted, 
prayed and pranced with the Sufis ail to "get clear" so I could tap the market's till. In short, I went through 
more mental processes than coleslaw does in a Cuisinart. 
It was fun, I learned a hell of a lot about myself, my body and rest of the people out there-like you. But, 
you know what? None of that stuff helped one iota in making money trading. Not a twit. 
My experience had been to make big money-with splash as you all know then give a little back, play 
some games and hit it big again. It seemed I was good, but haphazard. 
The Unvarnished Truth 
Finally it hit me ... all this time and money had been a waste. 
My trading success had nothing to do with my mental state. The market did not care if I'd rather drink 
vinegar than kiss my mother. My mind-set about her, a Rorschach blot or my first-grade teacher ... no not 
even my concept of God ... made any difference. 
The reason I lost money was not because I wanted to ... or that I was retentive, possessive, etc. Nope, I 
lost because I did the wrong thing and losing was what screwed up my mental attitude or approach. 
It is not the other way around. 
So, for my money you can forget the psychobabble currently being offered. You don't need 6 hours in a 
flotation tank, mind-altering drugs, or hypnosis. All you need is ... 
A Winning System and Patience 
Frankly, I don't know which is the most important, the winning system or patience. It takes both. Why? 
Because even the best of systems does not make money every day. When you plant a crop, you don't dig it up 
every week to see how it's doing. Ditto systems, market letters, gurus etc. It always takes time to make money. 
Making money is about time. time is about patience. Moral of all this: Forget Freud; Shut down your Primal 
Scream; Activate your reactive mind if you want. It doesn't matter. just find a reliable approach to trading and 
stick with it. And, for the record. of the 25 services monitored by Commodity Traders Consumers Reports. we 
are in the top 5 or so for profits for the year, one of the few that made money in 1991. 

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December 1992
Volume 29, Issue 12 
Beating Them to the Punch 
In a matter of days, pundits will be telling you what 1993 has in store. All sorts of claims will be heard 
and sage, crystal ball, advice given based on these oracles. Will they be any good? 
Sometimes You Can Judge the Future from the Past 
Listen up here real good ... people (analysts) tell you all the time that you can foretell the future from 
studying past events. That's true, but not as often as you might think. If that was totally true, all we market 
soothsayers would be multimillionaires. Few of the talking heads you see on CNBC, who judge from the past, 
have more than cab fare to get to the TV station. 
But ... there are some things you can judge from the past-one of these things is past predictions. I've been 
waiting 12 months to pull out last year's predictions, for this year to prove, that prognosticators' ability to see 
the future is no better, and probably worse, than yours. 
It Means Millions of Dollars 
Say what you want, the National Enquirer is a multimillion-dollar operation that would just love to take 
bragging rights to being able to predict the future. Every year they have their psychics tell us what will unfold. 
If they could be right certainly the NE would shout it out to the world and make more $$. Ditto all market 
letters. Guess what? Sneaky me kept the NE's 1992 forecast as well as the market letters that make yearly 
forecasts to see how their 1992 expectations came out. Here are the results: 
The National Enquirer These journalists paid the top 10 psychics for their predictions and printed them 
last January. Here's the scorecard; of 41 forecasts for 1992 not a single cotton-picking one of them was 
correct. The closest was that "an AIDS epidemic will devastate prosports." Well, AIDS devastated Magic, but 
there was certainly no epidemic. Chicago psychic, Irene Hughes (who charges a pretty penny to forecast 
markets, and I've seen make major misses) saw that Vanna White would be "nearly killed" from a shock 
while turning the Wheel of Fortune ... Angie Dickinson was to appear nude in Playboy at 60 years of age and 
Cybill Shepherd would renounce acting in favor of running a medical clinic for the poor. NONE of these 
hotshots predicted Bill Clinton's victory, most all gave the nod to Bush. 
Moving Right Along Reading the Enquirer's predictions is a stop far removed from reality ... Donald 
Trump was to lose it all but become a successful late night talk show host ... Michael jackson was to have lost

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his voice ... and Liz Taylor was to have children ... maybe one would think that market forecasters would have 
a better grasp on reality. 
The truth is they don't. Several of the more respected soothsayers were looking for a December 1992 
(that's now) drop of 1,000 DJIA points. Another said George Bush's New World Order troops would take the 
U.S. over on December complete with a bank holiday! 
Some market analysts said we would be in a rip-roaring bull market, others, a devastating bear market. 
What became of the best-selling author of the 1992 depression book? And, what became of his depression and 
stock market crash? I hold in my hand an October 19th epistle which proclaims, "Have no doubt about it, a 
Crash will occur ... there is a fast fortune to be made ... $2,000 will become $20,000 ... THE DECLINE WILL 
BEGIN NOW." Of course you are given the opportunity to call, with credit cards, for their recent update. The 
point is no crash came. 
Like the National Enquirer crystal ball gazers, the markets pundits I kept book on also had a perfect 
record-of not being right. None of their "projected major turning points" were on the money. Several of them 
called for a major high in March with new lows for the year to be seen in October. Instead October was an 
excellent time to buy (it usually is). 
The Moral of All This 
Avoid like the plague attaching any significance to any ones predications of the future. The future 
happens, certain laws come into play. But, the truth is good thinking and reasoning will get you much farther 
along than oracle reading. If you take correct action in your life, trading or investing, you will come out on 
top. Chasing guru forecasts is not right action. Prove my point-take 30 minutes right now to make your 
sensible notion of what will happen in 1993. Read it one year from now and you will see how accurate you 
are, compared to the headline mongers. Thinking and taking the correct action will always beat the crystal ball 
crowd. Sure, it's work, but it works. 
In 30 years of this game 1 have tried hundreds of "magic" forecasts and crystal ball crap. I used to 
believe. But reality has taught me an important lesson I hope I can pass on to you-don't let forecasts get in the 
way of doing what needs to be done. Savvy?? 
It's just Over My Head 
Mine too .... 
I've had a flurry of phone calls and letters this past week that I found revealing about folks like you and 
me and the markets. 

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The call or letters generally go like this, "Gee, Larry, this stuff of trading commodities is hard, I don't 
understand it, it's just over my head. Would you please refund my subscription fee?" 
We do. 
But I don't want to ... I want to grab them by the lapels and tell them this is not an easy business, that 
whoever told you this seriously misled you. After almost 30 years of trading most all of the market is still over 
my head. As trite as it sounds, I am still cobbling away, learning how very little I know about the market ... it 
seems to me I will never be able to learn very much and some things I have to relearn. Over and over. 
Yet despite all this, I've made millions of dollars trading ... something few people can say ... and I never 
would have made those hard-earned $$ had I let the notion of "stuff being over my head" thwart my 
intentions of making money. That's my first reaction. But upon some reflection what I should say is ... 
"
Where did you ever get the idea that making money is easy-in this or any other business? Is it easy to 
make money in your business? If so, stay there. Refrain from trading. 
"
Money is made, in any endeavor, by an exchange of one thing of value for another. In this business the 
exchange a winning trader makes are his dollars at risk and his intelligence. He or she pays for his earnings 
with hours of study. 
"
There is just no way you can blindly follow some market guru and blissfully make money day after day, 
year after year. At some point you MUST go to work, figure this stuff out yourself, walk on your own. I'll 
help you, but bear in mind this is not an easy business, that to get money from any source requires an output 
of energy. There is no bliss or Nirvana in this business." 
As my daddy used to tell me, and my children's father tells them, "There ain't no free lunches ... we don't 
deserve anything. We earn it." 
I LOOKED FEAR AND GREED IN THE FACE 
And here's what I found ... 
It's no secret that a trader's worst enemy is his/her emotions. Some have even gone on to identify that the 
emotions that kill us are the mutually entwined powers of fear and greed. 
But's, so what, you ask. Is just knowing this enough to help a trader? The mumbo-jumbo crowd tells us 
that on that basis we can deal with the identified problem. 
No way. I've known of these Gemini like emotional forces for years but it was not until recently that I 
fully understood (I think) how to avoid the negative downside of all this. 
First, let me establish once and for all that Greed is the strongest of these two emotions. 
Indeed, greed may be the strongest motivator, after sexual drive, that we all possess. 

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How do I know this, from watching my trading-and people like you-who hope to recoup losses. We do it 
in a host of ways. Why do you not use stops? Greed, pure and simple. You want to make money so you hang 
on too long. Alexander Pope said it best, "Hope springs eternal in the human breast." We all hope to make 
money, hope to get out of margin calls or bad marriages. We want to make money so badly that some of us 
cheat. steal, lie, even rob the local 7-11. Why, because of our greed to have more. 
The secret of winning as a trader is simpler than most think. The operating rule is that if you lose, or can 
control your losses, who will probably become a winner. 
What causes loss is greed. We get so greedy-crying for profits-that we get either; (1) sloppy in our money 
management or (2) fail to cut our losses as our hopes are too high that every trade will turn into a winner at 
some point. The desire for profits is the killer. just last week I held onto a long position, refusing to bail out 
taking my profit as I wanted to believe the market would move higher. I bucked the system. Why, because I 
wanted to make more. It is not my fear that screws me up, it is my greed. When looking these two emotions in 
the face I found that it is my greed that causes me to not follow my systems (do the right thing). 
You can bet from now on I will be on alert when I "want" to make more money. I know my enemy, I 
have stared it in the face, it is not fear . . . it is my greed. And you know what? You are just like me. 
October 1993
Volume 30, Issue 70 
The Show Must Go On 
A loss I am not proud of and a reaction I am. 
just because I've had the audacity to write several books about the market and publish a letter, some 
subscribers seem to think I never have the same problems trading they do. 
That's wrong ... real wrong. I go through the same emotions, and though I may harness them better, they 
still tug away at my heart and soul. Daily. 
About a month ago I screwed up, big time. Oh, not enough to wipe me out, like maybe I would have done 
in the old days. But, enough to get my attention, my anger and raise those old questions of self-doubt I 
thought had been put to rest years ago. 
Probably the first step to being a winning trader is getting rid of most of the self-doubt. When you "know 
that you know" you are on your way. Mentally, and physically, at that point you have become a professional. 
Why? Well, I thinks it's because you are no longer the effect of the market ... you are the cause of what you 
are doing. 

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That's an important edge ... my screw up had cut me like some giant pack rat slipped into my office to 
chew away at the fibers of my being. The self-doubt built as I went through several losing trades, until, 
naturally, the worst screw up of the year came. 
I was humiliated by what I had done, felt as stupid as I'd felt in years, and just wanted to stop trading.