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"Today's COT data is more complex, we have more than one report, and that is a good thing!"

The Markets are interesting to follow, fascinating to explore, and profitable to trade under the right conditions!


Floyd Upperman

 

Recognized Quotes from Floyd W. Upperman Jr. CTA

"ALL successful traders have one thing in common, we never gave up!"
Floyd Upperman

"In truth, it is very difficult to make money on a consistent basis by speculating on the price fluctuation of any market, but particularly in the futures markets!  Difficult does not mean impossible however, but it clearly does mean the opposite of 'easy'! Anyone that says this is easy is simply not being truthful in my opinion!  However, when it comes down to it, sometimes it is simply a matter of being in the right place at the right time. The key however is having the knowledge to recognize this and the means to act in a timely fashion (before everyone else knows about it)! That may be simple, but the waiting as they say is the hardest part!"
Floyd Upperman

"You never want to be the person left holding the bag (e.g. LTCM in the late 90's).  As we observed with LTCM, even though they were the creators of a very successful approach for pricing options (which made them millions) once everyone knew about their trading strategy and how it worked, the inefficiencies they were exploiting virtually vanished over-night!
Floyd Upperman

 

My name is Floyd Upperman and I have developed my own unique futures trading system unlike any other system I've ever encountered!   I've found commodity trading to be a very challenging and fascinating line of work!  Now with the explosion of technology and the internet,  I've been able to make my entire trading system, over 800 completely unique charts, graphs, and indicators available to private traders for the first time ever!   I've spent the last 10 years developing my own proprietary futures trading software.   I found out early in my trading career that the commercially available charting software and price tracking systems were not versatile nor complex enough to do the kind of statistical studies on fundamental data and comparison correlation's that I needed to do in order to gain a unique perspective into the market.  Using the same software, methods and indicators everyone else was using,  basically provided me with the same results as everyone else as well. Thankfully, I recognized this quickly.  After reviewing everything on the market,  I decided to create my own software package for tracking everything from prices, roll dates and trends to sophisticated correlation studies, intermarket relationships, mean regression analysis and much more!  The internet now provides me with the means to make my software available to other traders,  who like myself,  recognize the requirement for a proprietary system, unique from publicly followed trading software and methodologies.  This is rather obvious, since university studies have proven that roughly 80% of those who attempt to solve the challenges of derivative speculating (futures trading) tend to do a very poor job at it, ultimately realizing very little success on a consistent basis!  The data would surely show even worse results if 'luck' were removed from the equation!   Thus the question is, how does one vast group manage to do so poorly on a consistent basis?   I underlined consistent because that is the root of the question.  Consistency.  Lets consider the following...  If a trader is consistently making the same mistakes over and over again, achieving poor results,  the poor results will continue on a consistent basis.  Furthermore, if an entire group is following essentially the same information, methodology, and perhaps using the same software to arrive at the same conclusions, then the entire group is likely to experience the same results.  But still, it would seem that at least half would do a little better.  However,  part of the issue has not been addressed yet.  Following a flawed way of thinking, and flawed system or indicator is definitely a contributing factor,  but its not the main contributing factor for achieving consistently poor trading results!  There is one single common denominator driving the consistently poor results of the entire group!  That common denominator is "Human Emotion".  Fear, Greed, and Ego impact everyone in this business to some degree.   Without a system to maintain control over these emotions, the emotions will impact the trading decisions and thus result in irrational decision making.  Since human emotions can't be turned on and off at will, the interference of these emotions will be felt consistently, at all times, and thus impacting the overall results on a consistent basis.

This human factor affects and directs prices behavior.  We often look at the market as a thing, "the market".  The market is really the result of all the participants, and the actions of each.  Much of this is not common knowledge however, and is certainly NOT part of all common trading systems.  To achieve success on a consistent basis in this field, one must step outside the realm of common knowledge (what everyone already knows and may already be doing in the market) and tackle the market like a problem needing solved, using the tools necessary to explore and solve the problem at hand.  Solving the challenging problem the market provides is not an easy task and never will be because the heart of the matter is wrapped around the complexities of human emotion.  The driving force of the market is in fact, irrational behavior.  The markets do not behave rationally, because people under pressure do not behave rationally.  However, there are certain traits, habits and behaviors that all people possess, and under certain conditions, all people will react the same way!  This is part of our overall analysis of the market and something I discuss regularly in my reports.  In addition, there are certain patterns in the market that will signal when crowd behavior is extreme or overwhelmingly one-sided.  This is something we track and measure. 

Make no mistake about it,  tackling the challenges the markets provide is a very complicated and complex endeavor.  Those that try to make it sound simple, probably do not seriously attempt to solve these complexities.  The system I developed deals with these issues and includes well defined position management rules and principles along with risk containment procedures, so that we are able to avoid the pitfalls of our own weaknesses as much as is 'humanly' possible!  

Traditional indicators, main-stream software packages are common knowledge in this business.  Everyone starts out using these tools.  However, only a few eventually become successful on a consistent basis.  I have found that everyone I've ever met that is consistently successful in this business, all have one thing in common.  That is,  they do not conform or follow the traditional way of thinking.  Many people initially fall for the idea that this business can be learned very easily using traditional common-place books, tapes, seminars, and software.  That is not the case.  This is not a normal business that simply requires following a book of instructions to succeed.  

Commodity trading is a zero sum business. That means each time we make money on a trade, somewhere someone has lost money taking the other side of that position.  We know that based on the facts, roughly 80% of small speculators lose money trading futures.  All small speculators typically use the same software packages, same indicators, and they all make the same mistakes, over and over again.  Thus, the average trading life of a smaller speculator is about a year.   New ones are coming in, as old ones give up and quit.  If you want to step outside of the mean,  you have to be willing and able to look at the market differently, in a unique fashion,
Here is how I got started...


Before making the transition into my own business,  like many of you, I was a part of big corporate America. I was spending my time helping others get rich. I held a number of engineering positions in the semiconductor industry for ten years upon my graduation from college.  I spent three years with Intel Corporation in New Mexico in the eighties and then spent the next seven years working for Motorola.  Although I thoroughly enjoyed my time with such prestigious fortune 500 companies as Intel and Motorola, I wanted to achieve a greater level of success in my life.  Most importantly, I wanted to be free to pursue my own interests.  I've never been one that just wanted to sit around. I've always kept very busy,  and I enjoy being busy!   However, I wanted to be busy doing what I wanted to do, and not what I had to do to please my boss.  I always knew that I wanted to start my own business, but never knew what that would be.  I knew it had to involve technology because that was one of my passions as well.  It wasn't until I discovered my passion for trading and for the markets however,  that I knew beyond a doubt what I wanted to pursue!  Nothing really excited more than the markets and the study of the markets.  Here was my opportunity to combine technology and my ambition to run my own business!  You see, part of my passion has been to figure out how things work.  As a child, I didn't play with my toys, I spent my time disassembling them to see how they worked!  This eventually led to a degree in electronic engineering.  Finally, this curiosity led to the discovery of the markets, one of the biggest mysteries I have ever encountered.  I decided trading and professionally assisting others with trading & tracking futures via my computer programming skills would be my business and my way of life!   To this day, that is what I continue to do!

I spent a great deal of my spare time and money researching the investment world while working as an engineer. My dream has  always been to be self-sufficient. I never wanted to rely on anyone for my financial well being but  myself.  My greatest desire was to be financially independent. Unfortunately, I discovered this was not a possibility by simply working for someone else. Even though I had a very good salary, saved over 20% of my yearly pay, I could not get where I wanted to be for at least another 15 - 20 years.  I needed a business. 

I knew there was an enormous amount of money in the investment world.  I had already started trading stocks and had experienced some success at it. I knew others were making money as well. Stocks were slow however and I did not want to wait ten years for a stock to go up or recover and I did not have the hundreds of thousands of dollars needed for adequate leverage. I found out it was a slow process. Next, I investigated stock options. I found stock options certainly had the ability to multiply my money several times in a very short period, but here again, I made some money and lost money. There was no consistency to it. I had no system and relied on information from the media, newspapers, friends, and gut instinct.  All of these sources proved to be inconsistent and unreliable.  I needed an approach and a system.  

Finally, I decided to try commodities. I really knew nothing about commodities when I made my first trade. I read enough about commodities to understand how they worked, but I did not yet know how to trade them. I started out like everyone, reading the Wall Street journal religiously and buying Barrons every weekend and spending hours looking at charts and reading books. Soon, I found I ended up with the same scenario. I made some money and lost some money. It was then that I made one of the worst mistakes of my trading career.  I decided to let a so called expert show me how to trade. A broker. He did worse than I did. I lost my profits and nearly lost all my investment money with the broker in charge. Discouraged, I considered doing what most people do, give up. Somehow though, I found myself unable to quit. I believed I could make money at it, but I was finding that like everything else in life, I had to be patient and wait for the right opportunities. I learned that I could not trade just because I needed the money.  The markets weren't going to yield opportunities every time I needed money! Therefore, I had to make sure I had other ways to ensure adequate money for my day-to-day living expenses, while I researched the markets, and waited for the real opportunities.  When the opportunity presented itself, I learned to pounce and I quickly made money at it!  However, here too, I learned something.  I learned that even the best looking opportunities do not always yield a profitable result.  Thus, I learned that I had to combine risk containment with my patience.  Over and over again I found that if I waited, and if I was cautious, I was able to make money.  If I wasn't patient or if I was reckless, I almost always lost money!  There was a pattern developing here!  There were opportunities to make money, but they did not happen every day, and they were not easy to identify.  Thus, I had to build a complete system for tracking and identifying these opportunities!  By this time I had already spent a small fortune on different software packages, systems, programs and data providers, which none provided me with consistent results or the clarity I was seeking.  I figured if I was going to do this right, I had to get all the data and build my own system completely from scratch, based on what I found to work!  

I began the long process of filling up my computer hard drives with all the commodity price data I could get. I got historical daily data and Intra-day tick data spanning decades of time. Using my knowledge in statistics and engineering background combined with my programming skills, I designed my own trading system based on repeating patterns and conditions characteristic to individual commodities. What I found from computer back testing was amazingThere is an underlying order in the commodity markets not found in the historic price movements of individual stocks!  In my research I discovered specific patterns in commodity prices unique to each market. I found that these patterns are highly correlated to the positions held by the participants in the commodity markets.  Using fundamental information supplied by the U.S. government, I have been able to separate the open interest for each commodity into three distinct groups.   While everyone else has been looking at prices or price structures for core indicators (there are tens of thousands of indicators derived from old prices),  I developed my proprietary trading & tracking system using the data from the three unique groups of traders tracked by the U.S. government.   This finally led to an entire proprietary trading system, complete with unique indicators,  derived from the core government data and further supplemented with traditional but proprietary, price indicators.   There is no other system like this in the world.  Everything from the indicators to the charts themselves has been created by myself from scratch.  Finally, with this software and trading system, and the knowledge I obtained from all my hard work, I decided a career change was in order and was able to quit my corporate job for good!  I now spend my time doing what I love, trading, tracking and studying the markets!

Nothing about what I have done has ever been easy.  First of all, it is not easy breaking free from the corporate world to venture out on your own.  You must be prepared, financially prepared and psychologically prepared.  I also recommend having several potential sources for generating cash flow.  There is no law that says you can have only one business. I found that there are many ways to make money, of which trading is only one of them.  Furthermore, you can trade stocks, commodities, bonds, options, all of which I trade myself.  In addition, you can invest in real estate as well as other investments.  I decided early on that it would be wise not to place all my eggs into one basket. Trading will always have its ups and downs.  That's just how the markets are.  You need to be financially prepared for that.  Few mention this, but its true.  If you plan to rely 100% on trading, which I do not,  then you better have enough money saved up to pay for all your expenses in the case you have a down year. 

I became a CTA to help others learn what I have learned about the markets through my research and hard work. Assisting others inherently keeps me more focused on the markets and my system while generating additional cash flow in exchange for my contribution.  While not for everyone, I like working with people, and found that trading can be lonely, especially if you come from corporate America. This job fit perfectly with what I love to do.  As you can imagine, when I left the corporate world to go out on my own, there were many unknowns. I left with one goal in mind, to pursue my dreams and to live my life my way.  I didn't want to work for anyone else. Once on my own, I had the time to pursue my stock investments, futures trading, real estate investing, as well as the time to build my proprietary trading system and software.  Now that software and system is available to anyone in the world. If you want to use the free daily price charts (pit-session), you can do that too, for as long as you like!  I was never willing to give up on my dream.  You shouldn't either.  Whatever your dream, only you can make it happen.  Be smart about it however.   Never put all your eggs in one basket.  

During my years as an "employee",  I got to know many people who were unhappy in their careers or jobs, but did not know how to break free, or were to afraid to do it.  You need to have a plan if you are going to strike out on your own.  Futures trading was my plan.  My system gave my the confidence to leave the corporate world behind. Later I was able to contribute my trading experience and software to help others learn as well, and that also helped provide me with the means to continue doing what I love!  However, even with a plan, it takes guts to leave the security of corporate America to try something completely on your own.  Futures traders are entrepreneurs in my opinion, and both major risk takers.  I certainly fall into that category, as leaving a comfortable 6-digit yearly income for the unknown was risky.  I believe we must be willing to take calculated risks in life in order to achieve and to obtain our dreams.  You also must dream and believe in yourself.  

Thank you for taking the time to read about my background.  If you want to learn more about my trading system,  I would be happy to work with you on a personal basis and teach you everything there is to know about my proprietary position trading system.  If you are an established commodities trader already and simply want to improve your edge in the markets,  I would be equally happy to assist you.  One of the key elements to my system is the combining of fundamental and technical data.  Fundamentals clearly determine prices, not the technicals.  Technicals always lag fundamentals.  Remember that, this is one of the keys to what I have discovered in the underlying order of commodity prices.  Fundamental conditions setup the big bull markets as well as the bear markets.  Using my system, we are able to measure the fundamental conditions in each market, and understand when the conditions are statistically significant, indicating a potential major turn in the market.  

Very Respectfully,
Floyd W. Upperman Jr.

"Those that do this for a living have acquired the necessary skills and knowledge through years of experience and meticulous market observations."
 Floyd Upperman Jr. CTA



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NO TRADING SYSTEM CAN GUARANTEE PROFITS
No guarantees can be made for success.  Past performance is not a guarantee of future profits. 
Futures trading is NOT my only means of income.  I also invest in stocks, real estate as well as 
generate income from other businesses. I have both winning trades and losing trades. 
I trade professionally, but not daily.  I wait for what I believe to be ideal trading opportunities. 

Very Respectfully,
Floyd W. Upperman Jr.

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F L O Y D  U P P E R M A N   &   A S S O C I A T E S
Copyright 1997 - 2001 by Floyd Upperman & Associates.  All rights reserved.
Revised: 23 Mar 2011 20:43:24 -0400.

Futures Trading is a risky business.  
Do not trade with money you can not afford to lose.
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Only those who will risk going too far can possibly find out how far one can go.   

T. S. Eliot
American-British Poet