Would you invest with a commodity trading advisor that had been around for approx 13 years and had a rate of return of approx 31% annual return over those 13 years? I would bet so many fund of funds would love this story and throw money on him. The only problem is Neiderhoffer blew up.The fact is, it is so important not just use quantitative measurements…but truly understand the risks…more so…how the trader achieves those results as well as of course the qualitative measurements. In 1997 Victor Neiderhoffer was short a ton of SP 500 put options. Neiderhoffer was sure of his position. The problem was the market fell even further on Oct 27. Actually 500 points further. As successful as Neiderhoffer was for 13 years… he felt he was right..( the market was wrong) and would bounce back. Well, before he was right…He was out of business.. He did not control the risk. My point is all it takes is one moment of not exactly following a plan even the most successful commodity trading advisor can blow up. Thirteen years down the tubes (maybe ego)… Neiderhoffer did not manage the risk. Lesson to learn for commodity traders…Focus always on the downside risk…or what Salem Abraham from Abraham trading says.. “What can kill my trading?” Lesson to learn for those who invest with commodity trading advisors… Never allocate no more than 5% of your assets or net worth to any idea. PERIOD! More so…when you do have those good runs with a commodity trading advisor…scale back a little bit if you exceed your 5% allocation… ( trim your commodity advisors garden). If you adhere to these simple rules… You can be trading up to your golden years like Roy Longstreet.

Andrew Abraham

A.Abraham@AngusJackson.com

www.AJpartnersinc.com

www.myinvestorsplace.com

Futures trading involves risk. People can and do lose money

Tags: Abraham, Andrew Abraham A.Abraham, Blow, Commodity, commodity trading advisor, commodity trading advisors, Legendary, Neiderhoffer, Roy Longstreet, Salem, Trading, Victor, Victor Neiderhoffer