CTCR: Interview with Bill Gary Part 4

We had some people walk in here a couple of months back from Oklahoma and they made $12 million on the corn move. These were subscribers to our newsletter.

There are all kinds of USDA publications that you can subscribe to. They cost but they aren't very expensive. They have supply/demand reports and all kinds of things. They are also available free by going into the USDA computer. You can go into their database and drawdown what you want. They have fax on demand. They have menus. You pick what you want and they will fax you what you want. There are all kinds of statistical sources: the CRB Yearbook of course as well as our Stat Book. It's how you put it together and how you approach it. What we try to do is to come up with an overall case for the marketplace and then sit back and look at thesimilar years. There's a publication called Consensus. They have all the USDA reports in there. I've got every copy since they started putting it out in 1970. It's a mess. I have a whole storage unit filled with Consensus. It's a great history. We can go back and pull out an issue from 1973 and read the market letters that the brokerage houses were putting out. What were they saying and thinking? Why did this happen? It can give you a perspective in the marketplace you can't get by just listening to what is going on today. You get to know something that nobody else knows, which you need to do to make a lot of money in the markets. Take this Corn analysis that we did for you and our report from last year, The Grain Drain. We had some people walk in here a couple of months back from Oklahoma and they made $12 million on the corn move. These were subscribers to our newsletter. They decided to come and meet me. I sure didn't make that much! One thing I like to do in a good realizing move is to establish a base or core position. That is what we are doing in the Beans right now for this year. We wanted to get a base position established on a price dip such as this weather selloff we're in or because of harvest pressure in the near future. We want to get this core position set. Once we get the core position set, then we want to know if this is going to be an anticipatory or realizing year. Hopefully, it's going to be a realizing year where the real tightness will not become evident until we get into late winter or next spring because the market will go higher than if it was an anticipatory year and it will give us plenty of time to build this position. We should be able to make more money. We have a core position that we are not going to get out of until the move is over. Period. Then we use our technical analysis to determine when to add to our core position, which we have just done. The next thing we want to do is to look for a place to take a profit. We'll probably do that technically.

How do you integrate technicals and fundamentals?

We use basic chart formations, stochastics, RSI (relative strength index), and ADX. That's all we really go into. We have our own way of dividing a price chart into zones and legs and so on that's patterned after Elliot Wave Theory. We've refined the Elliot Wave to meet our needs. These are all just tools to help us trade the market. For example, we've used this double bottom in the Beans to give us our objective for the upcoming move. We'll also use some measured techniques. As we approach those price objectives, we will begin to reduce our position but we will never go below our base. We'll end up reducing our position and taking some profits. Then, hopefully, we'll get a setback and then we will reinstate that position and add a little more. Then when the next big upmove comes, we'll have a little more. We'll go through a series of these types of things. Eventually, if it is a good bull move, a person will start with two or four contracts and end up with 50! That's where the big money is made.

How do you control risk?

We use primarily technical support and resistance. For example, we added to our Beans today (August 8). Let's say we come in tomorrow and the crop report is bearish and the market breaks. If it breaks back below our breakout point of today, then we'll get rid of everything we added. But we'll stick with our base. We let the market tell us when to exit using technical analysis. Then there are days like today. They were calling beans two to three cents higher this morning. I thought there was a good chance we'd open six to eight cents higher and a high probability of getting the market 20 cents higher during the day. I didn't use technical analysis. That is just living the markets and looking at the fundamentals and seeing what's going on. We've got a sold out market on our hands and a public that is bearish right now. The market has already discounted those known negatives. We tried to put the market down early this week and couldn't do it. You know you've got shorts in here and they are going to be under pressure between now and when the crop report is released on Monday morning. They couldn't get the market down so there was a good chance they were going to have to cover their positions. We've been waiting for that this week.Those are just minor inputs that come into play and help you trade the marketplace. The more you know the better off you are.

Can someone use your style of trading from home or does it require a full time commitment?

My style would require a full time trader but I have clients and subscribers that aren't. Very few of them are full time traders. Everybody has to approach the market on their very own individual basis. If we had promised and guaranteed everybody that Corn was going to $4.50 a bushel but didn't tell them when, some people would have made a lot of money but the majority of people would have ended up losing money even though they knew the market was going up. The reason is the human emotions that come into play in the marketplace. You've got to have a plan and discipline. If the Beans go back through that breakout point, you've got to have the discipline to get out of those additional contracts that you bought. You also have to have discipline to hold that core position. It's a process of learning and feeling and going through these things. The longer you do it, the more often it happens, the more mistakes you make, the better you become. That's kind of the way it works. There's nothing easy. No one makes a whole lot of money easily.

You trade for your account, right? Our previous article said that you had retired from the brokerage business.

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