The Keys to Successful Speculation Part I & II by Private: Daniel Ferrera
The Most Important Key to Successful Trading – RISK MANAGEMENT!
The secret to trading is not in the particular method. It’s found by manipulating the risk:reward ratio and applying that to whatever method you use. For example, if you assign a risk reward of 4:1 to your method and your bet size or risk amount is $1000 on any trade and you mechanically exit at 4x this or $4000 then on a $20K account you have 20 chances at hitting the target objective. Assuming your method is only 30% accurate, you would be right 3 times out of ten or 6 times out of 20. The 14 losses would draw you down to $6,000, but the 6 winners would boost the account to +$24,0000 giving an approximate balance of $30K. Biasing the Risk: Reward is the secret to success. That is what Keys to Successful Speculation is all about. People tend to overly focus on the method of analysis or position taking, but it really doesn’t matter. It’s how you manage the method that makes the money.
How is it that professional gamblers can earn a lucrative living from games of chance with lower odds of success than the financial markets? To answer this question, one has to study the account strategies used by this unique group of professionals. The secret to trading is not actually found within the particular method or approach to the market. Methods may provide some statistical advantage, but are primarily used to identify opportunities. It will not provide adequate advice as to how to properly expose your account assets for the possible opportunity recognized by the trading methodology.
Understanding and manipulating the risk to reward ratio and applying that understanding to whatever particular approach you utilize in your trading is the real secret to success. Proper management of the account balance, tolerable loss and fully understanding the speculative bias of Risk and Reward is the ultimate secret to long term trading success. That is what Keys to Successful Speculation is really all about, and it’s the same approach professional gamblers use to earn their profits from games of chance at casinos with far lower odds of success.
When you fully grasp the concepts within Keys, you will understand that the method doesn’t matter, which is what the majority of traders focus upon. What truly matters is how you manage your method because this is what really stacks the odds in your favor and makes the money for your account. For those who are new to trading, Keys to Successful Speculation provides you with a complete yet practical trading approach to get you started as soon as you feel ready. However, this approach to the market is not the only method that can be used with Keys. Absolutely any system can be traded with Keys once the main message of Risk to Reward ratio and proper account management are fully understood.
The course even provides a home trading exercise where the buy and sell decisions are literally based upon flipping a coin every 27-days and applying the trading and account management rules in Keys to grow the account. To my knowledge, every student who has completed this experiment has found it to be profitable even though the approach is completely random. This a direct result of Keys being based upon the same or similar methods professional gamblers use to consistently beat games of chance. So if you can make profits with a randomly generated trading signal, imagine what you can then do when you use better techniques that produce a better than 50% odds. Once you know how to trade through Keys, you can then focus upon timing and other analysis techniques that better skew the odds in your favor, to 60% or 70%, perhaps better. But even before you have ANY advanced trading techniques, and even with random trade indications, this methodology will have you making profits and limiting your losses. No trader using this approach will ever bankrupt their account again, but making bad decisions. The discipline taught here is THE KEY to successful trading!
Introduction & Overview
The most commonly repeated question we are asked over and over again by market students is, “What one book can I read that will teach me all the basics I need to begin trading?” This is a difficult question, because most books only give bits and pieces of the knowledge needed to begin from scratch and to learn all the necessary details of setting up an account, money management, risk management, entry strategies, stop placement, exit strategies, etc. The best response we can give is to outline a study course of the best works that are available, which every researcher must then integrate into a trading strategy for himself. Some are able to do this, in time, but many are not able to make the transition over that psychological gap between theory and practice. This problem has finally been resolved with the release of this Daniel Ferrera’s course, The Keys To Successful Speculation.
Those of you who have studied Ferrera’s other courses, know that his prior works have primarily focused upon uncovering the deeper and more complex, esoteric elements of Gann analysis, cycle theory, and the like. Yet Dan recognized that many students of this deeper analysis are blocked or confused when it came to developing successful trading strategies and applications from the more complex material. There is a huge gulf between analyzing the markets and trading the markets, a gulf that many researchers never successfully breach. This new trading course, what we consider to be a sort of Trading 101 Course, takes a radically different approach than anything he has produced before
The Keys To Successful Speculation presents a fully intact trading manual, which will clearly teach anyone, including those with absolutely no prior knowledge of the markets, Gann, or forecasting in general, to successfully trade in any market, from stocks, to futures, to options, in any time frame, from day trading to long term trading, beginning with very limited capital, as little as a few thousand dollars. This book is not esoteric, and is not focused on abstract analytical and theoretical principles, but is totally application orientated, specifically outlining a clear trading strategy which incorporates all of the necessary principles of money management, charting, risk management, swing trading, signal generation, the use of options and much more. We have never found another course that so clearly and easily provides all the needed instruction to take one from the confused status of an inexperienced trader or complete beginner, to the status of one who is able to make regular trades in the right way, producing consistent profits for their efforts. Taking this first step from confusion to a clear trading program and strategy is essential for anyone who desires to be a successful trader.
Besides laying out a trading plan that anyone can understand and learn to apply, Keys provides a strategic logic upon which more advanced analysts can overlay their deeper understanding and market research to produce even more successful return streams, and more powerful trading systems. Successful trading requires that one have a plan of strategy, whatever the level of trader, and this course provides that logic and strategic thinking that is required to develop that trading plan.
We feel that this course will provide the first and most important step to the long sought success that many aspiring traders have been working towards.
Overview of Keys Principles & Methodology
We asked Dan to give a brief overview of this trading methodology and some examples and he responded with the following:
- System objectivity/discretional approach. The approach is very straight forward and easy to apply and understand. Subjectivity is eliminated as much as possible.
- System%predictability/timeframe: The methods workon all time frames without changing any rules and works in a consistent manner.
- Win/losses/drawdown/min capital req. Average capital would be $5,000 but someone could start trading it with options for less upfront capital. Drawdowns are kept well under control if you follow the entire method and the number of winners should out do the losses by an average of 6 to 1 with a risk to reward ratio that is always greater than 3 to 1.
- System return/time. This depends on what time frame you use when you trade it. In the book, I illustrate a trading run on the S&P emini that resulted in a 200% return in 9-months using only one of the trading approaches presented in the material. I made every attempt to keep things simple.
- System math/logic support. The logic is based on laws of motion and laws of attraction, but no complex math formulas are used nor needed to exploit these advantages. Only a new perspective is required.
- Psychological and other consequences/amount of work to learn and make/stick to decision. The approach is pretty easy to learn. I cannot predict how long it will take anyone to overcome any psychological issues they may have from prior experiences, but I personally believe that if one really follows everything discussed in KEYS, that they will and should make money from trading in this way.
I hope this information is helpful,
Here are a few examples of Keys trades in Soybeans and in Bonds. I did one on a daily and the other on an intra-day so that people can see that it works on all time frames. The trades were generated using the first 3 swing patterns. There a 7 entry methods in total, so this is about half. Anyway, the entries used were Lost Motion, 2-lower tops or 2-higher lows and 4th time at the same price.
Authorized purchase of this course gives access to the Keys To Speculation Ferrera Trading Salon, which is dedicated to trading and applied principles, and contains over 600 posts of questions and answers between Ferrera and students of this course over a period of 4 years. Ferrera no longer monitors this forum, but every imaginable questions has been asked and answered here, with 100’s of examples of applications of these techniques. Every question you will ever ask has already been answered in this Private Online Forum.
Trade Station Indicators
Ferrera also has developed a few TradeStation indicators which are available for those who request them, since not as many people use TradeStation anymore. The indicators are in no way necessary to easily apply the techniques in this course.
It is a pleasure to write this recommendation for Dan Ferrera’s Keys to Successful Speculation. Over the last ten years I developed a number of unique tools for trading markets, but never felt like I had the correct method for utilizing these tools. I never had risk and money management rules that I could rely on. Recently I was going to through my library looking for some guidelines and picked up Dan’s Key’s again. I was blown away by how perfect this book is for what I was looking for. What I found was not what I expected to find. I expected forecasting techniques, which I already have in abundance, but what I found is far more useful; I found how to make forecasting techniques very profitable. What I found is how to favorably bias the risk / reward equation as the primary rule of trading. What a gift!
With this any method of trading becomes profitable. One can use moving averages, Gann Theory, Cycle theory, Elliott Wave, Fibonacci, trend line methods, stochastics, it does not matter. The true objective is not to make a smarter trading system, its to make a smarter trader and Keys is the one book I have found that does that. It does not matter what trading system you use, Keys provides a “Statistical advantage” before you even begin to trade by applying both account management skills and then consciously biasing the risk:reward ratio of the game. I am convinced that this is the only way to make a living in the trading business.
Everyone always talks about the upside of trading believing that with unlimited gain potential and limited losses that it’s eventually inevitable that given enough time and resources that you will surely hit it big. However in reality, success in this endeavour is very low because nobody truly understands how to apply this concept when they begin actual trading. Keys teaches this and if you really look at it from a consistent theme basis, you will see that all the entry triggers in the book are just techniques to begin applying Dan’s real message of skewing risk : reward in your favor all the time. I am very grateful for Dan’s work and wanted to write and tell you so.
SR – Fairfield, IA…