Commodities & Capital
Trading Futures With Charles LeBeau
by Jayanthi Gopalakrishnan
Charles LeBeau, who has been trading stocks and futures for more than 40 years (20 years of which was with E.F. Hutton & Co.), is a noted author, lecturer, and system developer and the co-author of Technical Analysis Of The Futures Markets, which is considered a classic of technical analysis. Currently, LeBeau is director of trading for Tan LeBeau LLC(www.tanlebeau.com), where he supervises the trading for a small hedge fund. He also operates an educational website for stock and futures traders at www.traderclub.com. STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan called LeBeau on September 4, 2003, to chat about futures trading.
Waiting until you have lost money to review the system is an inexcusable mistake, but that is the standard approach system traders have always taken.
How did you first get involved in trading?
Back in the early 1960s, my professors at California State University, Long Beach, were authors of several best-selling books about trading in the stock market and the commodities market. Their names were Richard Teweles, Charles Harlow, and Herbert Stone. I took an investment class from Harlow, and he took a liking to me and became my mentor. He was a third-generation commodities trader, and he taught me about trading commodities. I used to make commodity charts for him using data from The Wall Street Journal. Those simple, handmade bar charts and point & figure charts were considered state-of-the-art technical analysis back in those days. I made my first trade in corn on the Chicago Board of Trade in 1963 while I was still in college. I made a couple of hundred dollars and I was hooked on trading. I've been doing it ever since.
Did you trade just corn initially, or did you diversify in the beginning?
No, I was a struggling college student at the time, and I didn't have much money. Corn was about all I could afford to trade.
Did you trade often while you were in college?
No, I didn't do it very much at all. It took time to watch the market, and I was busy with my classes and so on, and I didn't realize until I tried it how risky it could be. I only made a couple of trades back then.
When did you start diversifying into other commodities or futures?
I was drafted into the Army after I graduated, and I was out of the country for about five years. When I got out, I went to work for E.F. Hutton & Co. That was in 1967, and that's when I started doing some trading and working with clients on a professional level.
You used to trade futures, and now you trade stocks. Has any of the knowledge you've gained in trading futures been valuable for trading stocks?
In terms of technical analysis, I haven't found any significant difference between trading stocks and futures. From an operational standpoint, stocks are more difficult to short than futures, because you need to borrow stock and wait for an uptick. Those are problems you don't have shorting futures. You also have the influence of general market direction, which needs to be taken into account trading stocks. If you buy a stock and you are on the wrong side of the market direction, you are probably going to lose money, so you have to correctly forecast the direction of the stock and the direction of the market at the same time.
...Continued in the November 2003 issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the November 2003 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2003, Technical Analysis, Inc.
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