Lessons Learned From 37 Years of Futures Trading by Attain Capital

Managed Futures have come a long way in the past 37 years, and so has Barbara Mueller, who will be retiring at the end of March after nearly four decades dealing with futures trading. Barbara has been working in the industry since 1973, and has been an invaluable asset to Attain Capital since 2006.

In honor of her retirement, we’re taking a break from our traditional analysis this week to pay tribute to Ms. Mueller. It has been an honor to work with someone as knowledgeable, talented and motivated as Barbara, and here she provides us with her (often comical) insight from 37 years of experience in the world of futures trading.

Moving Forward, Looking Back

When Attain asked me to come up with a list of the best things I’ve learned after more than 3 ½ decades in the futures industry, it was pretty daunting.  After all, 37+ years ago, we were in the stone age of trading. We did have the wheel (and telephones), but there were no personal computers, no fax machines, no stock index futures, no US options on futures, no 24 hour markets, and gold was trading at $135 an ounce.  There were no Treasury bond futures or other financial instrument futures. The CFTC and NFA (the futures regulatory agencies) did not exist yet.  We were governed by the CEA -the Commodity Exchange Authority.  And the list goes on.

Typical commissions were $75 to $100 round turn. Account forms were only 1 page!  Some of the prices were still written on blackboards at the Chicago Board of Trade and you could inspect physical grain there as well.   The whole managed futures industry was an still an embryo, with Richard Dennis not teaching his Turtles until 1983 and Paul Tudor Jones still a clerk on the trading floor. S&P futures, the most popular trading system vehicle in the world, wasn’t launched until 1982 (the minis didn’t start trading until 1997!) Options on commodities in the United States weren’t authorized until 1984 and System Writer, the precursor to Trade Station, wasn’t launched until 1989.

As one of the first women brokers in the futures industry, it’s been quite a journey-and an accidental one at that.  I was just waiting for a teaching job to open up in the Chicago Public School System and my Dad suggested I go to work for one of his friends at the Chicago Board of Trade in the interim. Thirty seven years later, I guess I can no longer call this an “interim” job!

In the beginning…

My first real “brokerage” job in the industry was with Conti Commodities-a division of Continental Grain. Fortunately, that eventually led me to the world of system trading and managed futures.  I was a nice Jewish girl from the Chicago North Shore suburbs, and trying to make a living calling farmers to tell them how to market their crops was laughable!  I didn’t know the first thing about agriculture, and besides, most of America was not used to doing business with women.  Being a 23 year old “girl” and cold calling men at night was a huge challenge (their wives were not thrilled, to say the least).  I used to pretend I was the long distance operator just to try to get to talk to their husbands.  In fact, I patterned my voice after the character, Ernestine, performed by Lily Tomlin on Saturday Night Live in 1976 (see here).

That same year I discovered technical trading. It allowed me to bypass all those USDA supply and demand stats, not to mention all the regional weather reports.  Charting at that time had to be done by hand from prices in the commodity section of the Wall Street Journal.  However, even charting trend lines, point and figures, Fibonacci numbers, Elliot Wave, etc. seemed to be lacking the precise trade discipline I sought.

Enter systems

I read a book in the late 70’s by Charles Lindsay called The Trident System. I was hooked. I programmed it into my calculator and off I went.  As I started craving more sophisticated systems, I attended dozens of system seminars  presented by Larry Williams, Wells Wilder, etc. for  $3000 a piece-(that was a lot of money back then)  In fact, an early client of mine who used to also attend, started the Club 3000 network to review all these systems and report on their claims. (This was 3 years before Futures Truth first published.)

My career has taken me from a being cold calling saleswoman at Rosenthal Collins back in the London Options’ days, to the hay day of Conti Commodity; from the junk bond, Michael Milken, days at Drexel Burnham Lambert, to Bear Stearns. In between were stints at Blunt Ellis and Lowe, Stotler, Index Futures Group, MF Global, LFG, and Refco.  Of all those clearing firms, only MF Global is still around.  I’ve outlasted everyone it seems!

Moving Forward…

If you read the embarrassing moment story above, you realize that was not the end of my professional career.

In 1999, I started my own trading firm, Growth Financial, a firm totally committed to Managed Futures.  In 2006, we merged with Attain, and I quickly knew they were the ones to carry the torch:  A firm that was, and continues to be, a leader in new, cutting edge technologies.  A firm based on knowledge of the markets, integrity and honesty. We had a lot of offers from other firms, but Attain was the only choice as far as we were concerned.  At Attain, the client has always come first.  That’s why I’m keeping my accounts with them and like most of you, will be a client.

So after taking this long, incredible journey, what have I learned and what can I pass on to you?  The number one thing that struck me as I was going through all the boxes I have been schlepping around for all these years and re-reading articles and newsletters I wrote is this:  No matter how much has changed in the world: technology, the global nature of the markets, the economy, etc. ; the economic principles I’ve espoused and preached for all these years, still retain their importance today.  All the tenets I adopted so long ago are still the ones that hold true for successful investing in today’s global economy.  It is what we at Attain still preach to clients.  Some of these are actual excerpts from articles and newsletters I wrote in the early 90’s!

Without further ado, 20 things I’ve learned after 37 years in the futures business:

#1:  DISCIPLINE, DISCIPLINE, DISCIPLINE.  It was my first rule then and it’s my first rule now. Whether you are an investor, a broker or a CTA, emotional decision making is often a trader’s worst enemy.  Automated trading systems and many CTAs rigidly follow proprietary trading systems which remove this emotional element from trading.  And, frankly, most individual investors don’t have the ability to be that disciplined.

#2:  Your largest drawdown is always in the future. (This is the only part of trading that is guaranteed!)

#3:   The markets can remain irrational far longer than you can remain solvent!  (I had this printed    above my desk for years!) That’s why you need #1!

#4:   Manage risk successfully and the rest will take care of itself.

#5:   When

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