Timing Techniques for Commodity Futures Markets by Colin Alexander

Timing Techniques for Commodity Futures Markets by Colin Alexander

Timing Techniques for Commodity Futures Markets by Colin Alexander is a book devoted solely to trading commodity futures. The book is structured well, as it begins with an explanation of the tools and indicators the author uses in trading. Colin Alexander then explains how he uses the indicators along with chart patterns and different timeframes to make his trading decisions. He sums his strategies up with the entry and exit checklists and two case studies of commodity trades.

Colin Alexander relies mainly on the stochastics, MACD, 25 and 45 day moving averages and Bollinger Bands. Stochastics work well for determining whether a market is overbought or oversold. MACD sometimes overlaps stochastics and it helps to determine the strength and direction of a trend. The moving averages and Bollinger Bands help determine direction of trend and good buying or selling areas.

There are also formations within the indicators that are reliable trading patterns. The author likes to see a double bottom or “W” formation on stochastics to buy and a double top or “M” formation to sell.

The author discusses chart patterns that work and don’t work. He does a good job of explaining the setup and reasoning of each pattern and how to trade them. Chapter 13 is one of the best chapters in the book to read.

Alexander also uses trend lines and previous highs and lows as support and resistance levels. These are not new concepts, but they are the simple and important concepts to use in trading that many unsuccessful traders toss out in search something new. It is also important to look at several timeframes of charts to get the bigger picture. If you are trading on the daily or 60-minute charts, you should look at the weekly chart to determine the overall trend and support and resistance points.

The author dedicates a few chapters to discussing more theories, reports and information used in trading commodities. Some of these include seasonals, cycles and COT Reports. This is good reading, but I wouldn’t get too caught up in using much of this in your trading strategy. As the author states in the book, you cannot use any one of these techniques alone. He stresses that you should use the indicators and patterns together to help put the odds in your favor.

Colin Alexander prefers to use an entry and exit checklist when entering or exiting trades. The theory is that you assign a check or weighting to each indicator. The more factors you have in your favor, the greater your chance of success should be. It also may prevent you from taking trades that don’t measure up. Often times, people trade commodities on emotions. A checklist should eliminate taking trades on a whim.

At the end of the Timing Techniques for Commodity Futures Markets, the author gives you two case studies – gasoline and copper. He provides several charts and indicators and how these should be interpreted in order to place trades.

I thought the author did an excellent job on the first ¾ of the book, discussing the indicators and patterns he uses in his trading. He also gives you a no-nonsense answer to what does or doesn’t work and why. Colin Alexander does not have over-complicated strategies for trading, which makes this book a better read. Successful trading is not about using a complicated strategy - it is about learning how to read and interpret the markets and utilizing the tools that give you an edge in trading.

I would have liked to see a better wrap up at the end of the book. The entry and exit checklists make sense, but I feel like there could have been a better explanation for taking and exiting trades. While the author does mention that not all trades and strategies work all the time, it would be useful to see some examples of trades that don’t work. Overall, Timing Techniques for Commodity Futures Markets is an excellent book on trading commodities. The information is accurate and it gets straight to the point. It not only covers technical analysis, but the fundamentals and other issues on commodity trading are covered. You can put together a complete trading strategy using the information contained in this book.

Alexander does not include or hype any fluff, secrets or promises in this book. The content comes from someone who has experience in the commodity markets and it should be very useful to new or struggling traders. It might not be a book for experienced traders who are looking for the newest strategies, but they will still benefit from reading the book.