Questions About The Course.....

[Trader Question]

Thanks again for the explanation.

Re: pricing… I guess I misunderstood you. I am not a full time student, but I'd like to study DG full time, since I'm on disability and have plenty of time.

Also I'm just curious… Are you an active trader yourself, or you've retired rich by now? How about Charlie – I know he' was on the way to $100 mil in 1979? What markets have you been most successful with? Have you been using DG exclusively or in conjunction with something else?

[pldot]

well... I have some sympathy for your situation and although you're not a full-time regular student you might come close to that in other ways...and so if you're ready to make commitment to this course of study

Yes, I am normally an active trader although I have taken a few months off in order to develop this new website and get some of our new software concepts tacked down and made available to Drummond Traders. I don't think I have much interest in "retirement" because I cannot understand the idea of not being very intellectually engaged and active. Charlie continues with his development work as well, and does some but not a lot of trading. It is safe to say that he made his goal of $100 million and then some, and so today trades only for entertainment or research, when he does.

I like to trade bonds, emini s&p, and gold, but occasionally dabble in other things -- nikkei, copper, crude oil, etc. I don't use any other form of analysis other than Drummond Geometry.

[Trader Question]

I really liked the "How to…." book, but it makes me wonder how relevant the book is to the DG course methodology nowdays and Charlie's present stand on trading? In the book he emphasis the knowledge of particular market fundamentals, understanding of open interest, volume and conventional technical analysis patterns in conjunction with P/L charting. In his book he claims, that fundamentals underpin the technicals, however I recently heard him mentioning that knowing fundamentals "can be dangerous" and he doesn't seem to care about fundamental at all. I'm kind of confused in this juncture and wonder if his "How to…" book has more of the historical value now, or should I still follow the direction given in this book together with the course? Should I be concerned about market fundamentals at all?

[pldot]

=== P&L is just introduced in the "How to..." book, and is not treated in all that much depth; much that was in existence in 1978 was not included and there have been great strides made over the years since then. So the book is best regarded as background, and an introduction to a lot of general concepts about trading, and to the particular mindset that Charlie brings to trading. Much of the material, including the psychological aspects, is still central today. As to the relationship between the economic fundamentals and the technical aspects.... the statement that fundamentals underpin technicals is not that far off, however it is extremely dangerous to make trading decisions based only on fundamentals. You can never know what facts you do *not* know, and you can never make accurate judgments about timing based on external fundamentals. Certainly what appears in the general news media is old news and already in the market. It might be useful to have the general understanding that the US Dollar is over valued, for example, but that is of little help in trying to determine the market direction of the next day, or the next week. Knowing fundamentals is not "dangerous" in and of itself, but it can be difficult to avoid a bias if you give them too much credence. On the other hand looking at technical aspects you can see what the market is saying right now, and have the same basis for interpretation that every other market participant has. And you have the special advantage that DG methodology gives you in determining accurate support and resistance levels. So if you are interested in economics, then fine, it can make an interesting field of study. But don't try to make trade decisions based on fundamental analysis. If you have a very long time-frame, such as several years, then fundamentals may come more strongly into your thinking, but even then the technical aspects should dominate. Never take a trade where the technicals are not supporting your decision.

[Trader Question]

Also, since I'm rather a beginner and heard Charlie mention that one should chose one market to follow on daily basis, instead following a bunch of different markets, what would be your advise in that matter? What market is good to start? At this point I'm leaning toward ES, since I've been watching it for a while? Is possibly YM better for a beginner? Grains? I know you trade also Copper and Nikkei? Does it matter at all, what will I trade? I'd welcome your suggestions very much.

[pldot]

===Yes I think this is good advice, to pick one or several markets and follow them closely. It does not make a lot of difference what they are as long as they are freely traded. I like the YM and of course the ES is also widely followed. If you are a beginner you might look at other mini contracts on the CME exchange, since they have real market action but the contract size and thus the risk levels are less. Copper and the NIKKI have some special difficulties regarding slippage and trading hours, and so maybe stay away from them until you have more experience. When you are learning look for the smallest and most liquid contract you can find.

[Trader Question]

Regarding market fundamentals… You said that " it is extremely dangerous to make trading decisions based only on fundamentals" therefore it makes me wonder if one can make sound trading decisions based only on the P/L dot analysis and DG methodology itself without completely knowing the underlying market's fundamental bias? Charlie has mentioned that this is energy what creates reality, but is there the chance that the reality creates energy as well?

[pldot]

yes, in actual practice P&L/ DG is all one needs; I read the news but don't pay much attention to it -- indeed nay attention to it -- in my trading since it is outdated and often dead wrong. The philosophical issue you mention can be fun to discuss but in the end is not relevant to the practical matter of trading.

[Trader Question]

Regarding the choice of the markets to trade… It occurred to me that it would make a lot of sense to follow at least two markets simultaneously for an added benefit of potential play of their interrelations e.g. ES vs. NQ if spotted correctly. Do you ever use this concept in trading, or it's always better to focus strongly on the single market and use its directional bias at the moment? Ultimately, is DG geometry going to be also useful in trading pairs of instruments?

[pldot]

Following a couple of markets could be instructive . I have never looked at Pairs trading with DG but see no reason why some relevant observations could be developed for that if you are so inclined. I'd look at relative strength/weakness of flow in DG terms as one likely source.... (Lesson 27). My personal style would be to focus on one or several unrelated markets... YM, Bonds, Gold, Crude, etc.