Elements of a Successful Trading Plan--The Markets You Trade

Another trading plan consideration is the markets you trade. There
are about forty futures markets with sufficient liquidity to allow
prudent speculation. However, it is important to select a good
universe of markets that are appropriate for your account size, risk
level and trading style.
It also important that your market universe be diversified. There are
always a number of big market moves every year, but no one knows
in advance where they will be. If you trade a diversified portfolio,
there is a greater chance that you will catch some of the truly big
moves that make for successful trading.
Another consideration in choosing a market to trade is its historical
propensity to have more big trending moves. Since the trend is your
edge in trading, you can maximize your edge by selecting the most
trendy markets. The following are some of the best trending markets
in various trading sectors.
The currencies are the best trending sector. The currencies to trade
are the Swiss Franc, the German Mark, the Japanese Yen and the
British Pound.
Interest rate futures are also good trending markets. T-Bonds
represent long-term interest rates and Eurodollars are for short-term
interest rates.
In the energy complex, Crude Oil, Heating Oil and Natural Gas are
good trading vehicles.

In the food sector, Coffee, Orange Juice and Sugar are
recommended.
In metals, you can trade Gold, Silver and Copper.
In agriculturals, Corn, Oats, Soybeans and Cotton are the best.
Now you have the outline of an overall plan to trade commodities.
The key to success is to test whatever strategy you intend to apply
before you trade with it. Remember that the conventional wisdom
that you read in books is mostly ineffective. When applied
consistently, most trading methods don't work.
You can't test your plan unless it is specific. The rules must be
precise and objective. Having a thoroughly tested plan is crucial to
maintaining the confidence necessary to keep trading the plan
through the inevitable losing periods that every good system and
every good trader must endure.
The reliability of non-computerized testing is highly suspect. Using
computer software that tests a particular approach or a variety of
approaches is preferred. You must learn the correct way to test and
evaluate trading approaches.