Lessons Learned From 37 Years of Futures Trading

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

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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 trading managed programs, allow for double the historical drawdown both emotionally and financially. Have an exit strategy in place before you start trading, as once you are in a trade or program, you are no longer objective and you are managing your thought process emotionally.

#6:  Consider booking the profits on one program before the trading level is increased and use them to fund a different program.  This can help build a diversified portfolio with the house’s money, so to speak, which may help smooth your equity curve.

#7A:  Don’t double up on your investment at new equity highs. A normal drawdown at 2 times speed will likely exceed the profits you just made.

#7B:  Do consider adding new programs and systems during a drawdown.  This is hard to do since confidence levels are always highest at the equity peak and lowest at the equity valley.

#8:  Don’t trade FOREX unless you are a bank!  This will probably get me in hot water with all the Forex system developers out there.  But really folks, I have never spoken with a single investor who has made money with FOREX in real time (despite what all those ads say).

#9:  Don’t cherry pick trades.  When you are following a system, take all the trades, not just the ones you agree with.  After all, if you were such a trading genius, you wouldn’t need a system to begin with.  This is the best reason I know for managed futures!

#10:  Don’t fall prey to Great Trade/Month/Year Syndrome – This is what I call the condition which seems to occur after a nice run for an investment causes someone to believe they are a financial genius – inevitably leading to poorer investment decisions.

 #11:  Don’t bargain with God as your primary method of risk management.  It rarely works-unless you are one of the chosen few (none of whom I personally know).   I learned this lesson the hard way in the late 70’s when I was trapped for 10 consecutive trading days in a limit move and all the praying in the world couldn’t get me out.

#12:  Choose the right broker.  As technology exploded, so did the sophistication and popularity of systems and managed futures.  The sheer number of systems, CTA’s, and futures based hedge funds offered today seems infinite.  You need an expert pilot to navigate these waters.  Clearly, I think Attain is the best possible choice.

#13:   Develop strong relationships with your clients.  Otherwise, you are only as good as your last trade. A personal aside: many years ago I had a client who had never made money with me- mostly because he cherry picked only certain trades from a system (see #9). He called to tell me he was leaving for another broker and I wished him luck and told him if things didn’t work out-he could always come back. About 2 years and many brokers later, he called to say he wanted to reopen his account.  I was astounded and asked why-his answer was that he’d tried a number of other brokers and had not made money with them either.  He said that if he was going to lose, he wanted to do it with someone he trusted and felt cared about him.  So men-listen up-let your warm and fuzzy flag fly!

#14:  When the “you know what” hits the fan-don’t hide!  Communicate with your clients and reassure them you are minding the store and understand their discomfort. It’s what you would want if the shoe was on the other foot, and what you owe to them in the relationship.

#15:   Put your money where your mouth is.  Share your own personal investment decisions.  If the recommendation isn’t good enough for you-why should it be good enough for your clients? And system developers, if you don’t have the confidence to trade your own system-why should I?

#16:   Be honest about what you know and don’t know, then offer to find out the answer if you don’t.  Don’t try to B.S. or finesse the answer-you’ll look and sound like a fool and destroy any trust you’ve built.

#17:  Don’t choose your broker solely by the lowest commission rate. Remember, in life, you typically get what you pay for!

#18:  Check what commission rate you will be charged INCLUDING ALL FEES.

#19:  Don’t ever pay up front for a trading system (excluding newsletters subscriptions and software).

#20:  Allow enough for slippage and commissions when analyzing a track record.  Most vendors and brokers deduct little or nothing and this will drastically alter a system’s performance.  Mostly, this applies to systems, as registered CTAs are required by law to show net results.  Attain Capital is one of the few firms who show net system results.


In the land of should, the above rules are easy and no doubt seem obvious and simplistic. However, even after all these years in the business, maintaining discipline is sometimes a challenge.  After all, I’m an emotional creature like everyone else, and like you, I detest losing money.   There is nothing we hate more than getting out at the bottom; and it is that fear that keeps us at the party too long. Thankfully, Attain will be watching my back!

As to what’s next, I don’t know, but I’m definitely looking forward to the adventure! So, as I sail off into retirement, I’d like to thank Attain Capital for allowing me to finish out my career on a high note.  Sometimes it was a struggle. When I first joined them, they wanted a paperless office and had to literally pry my rolodex out of my hands (they had never seen one before). I came late to advanced technology and the learning curve wasn’t always smooth. Thanks, Attain for putting up with me, (most of the time).J

I’d especially like to thank all of my clients.  It’s been an honor and a privilege to work with you.  To all the clients who followed me over the years from firm to firm, you and your families have become close friends, and it is those relationships that kept me focused when the going got tough.

My warmest regards,