From the "Introduction" (Pages 13-14): "...there isn't a 'best tool,' only a best way to use the tool. The paramount approach to any trading tool, whether technical, seasonal, or fundamental, is to use it—or better yet, a combination of a few—to form an educated opinion in your expectations of market price. With their findings, traders should approach the market with a degree of humbleness and with realistic expectations."
From Chapter 1, "A Crash Course in Commodities" (Pages 29-31): "The easiest way to understand the spread between the bid and ask is by coming to peace with the fact that there are essentially two market prices at any given time. There is a price at which you can buy the contract (the ask) and one in which you can sell it (the bid). As a retail trader you will always be paying the higher price and selling the lower price... One of the biggest mistakes that I have witnessed beginning traders make is to ignore the repercussions of large bid/ask spreads. ...Many beginning traders mistakenly assume that the commission and fees charged to them will depend on the number of order tickets rather than the number of contracts, but this is not the case. ...Each round turn is accompanied with exchange fees, minimal NFA (National Futures Association) fees, and possible transaction fees charged by the clearing firm."
From Chapter 2, "Hedging Versus Speculating" (Page 43): "...speculators in the futures markets enjoy, or perhaps suffer from, a considerable amount of leverage. The source of the leverage stems from low margin requirements set by the exchange to buy or sell futures contracts relative to the actual value of the commodity that is traded."
From Chapter 3, "The Organized Chaos of Open Outcry and the Advent of Electronic Trading" (Page 48): "Electronic trading is now offered nearly
24-hours per day in most futures markets."
From Chapter 4, "Account Access, Trading Platforms, and Quote Vendors" (Pages 57, 59, 63): "...to gain access to real-time quotes and charts, a trader must either subscribe to a quote vending service or utilize a trading platform that offers a live data feed, most of which require subscription fees. ...It has been my experience that most retail commodity traders, whether futures or options, find that their needs are sufficiently met with their brokers' free trading platforms...delayed by 15 minutes. ...In many cases I recommend that traders use an affordable platform upgrade if the free platforms provided by their brokerage firms lack in terms of real-time quotes."
From Chapter 5, "Choosing a Brokerage Firm" (Page 80): "...you should be researching brokerage firms and prospective brokers nearly as much as you research the markets."
From Chapter 6, "Finding a Broker That 'Fits' and Choosing a Service Level" (Pages 84-85, 93): "You might be disappointed to discover that the only requirement to becoming a commodity broker is a passing score on a proficiency exam...the hurdle seems to be low considering the responsibilities
that come with passing the test...research your choices. ...there is a substantial amount of risk involved in trade execution..."
From Chapter 8, "Making Cents of Commodity Quotes" (Page 113): "...becoming comfortable with commodity quotes and calculating profit and loss in each market is even more critical than accurate market speculation. ...each commodity contract has its own set of rules."
From Chapter 9, "Figuring in Financial Futures—Stock Indices, Interest Rates, and Currencies" (Page 139): "...in both the futures and options
markets, contracts with expirations other than the front month have dramatically lower liquidity. This is especially true in the case of the futures contract. Therefore, in most circumstances futures traders should avoid trading distant month contracts because the lack of liquidity creates large bid/ask spreads... I have found that beginning traders interested in holding a position for a considerable amount of time often want to trade in a back month to avoid the hassle and costs involved in rolling into the next contract month. In my opinion, this is destructive behavior..."
From Chapter 11, "The Only Magic in Trading—Emotional Stability" (Pages 179, 188): "In my years as a broker, I have come across droves of retail and institutional traders and just as many trading strategies and methodologies. I have yet to discover any individual system or style that is capable of making money in all market conditions and without excessive dedication to research and adjustment. In other words, there is no Holy Grail or easy money. ...If you are looking for magic, go to Disneyland..."
From Chapter 12, "Trading Is a Business—Have a Plan" (Pages 190-191, 201): "...one of the most important characteristics of a profitable trader is the ability to adapt to ever-changing market conditions. Being nimble is key; being stubborn is detrimental... ...Although trading systems, as opposed to trading plans that can be modified, have grown in popularity due to technological advances and the availability of such system software to the general public, the odds of success facing retail traders hasn't seemed to improve. This leads me to believe that...there are still significant challenges to creating a profitable trading model."
From Chapter 13, "Why You Should Speculate in Futures" (Page 215): "...the convenience of gaining leverage and the ability to quickly buy and sell trading instruments in any order creates an extremely efficient means of betting on anticipated price changes. Also the tax benefits of profitable speculation in commodities, as compared to equities, is dramatic and has the potential to have a profound impact on the overall results."
Per its name, the book is entry level. It does not describe or cite formal research on commodity futures trading such as that referenced in Blog Synthesis: Investing/Trading in Commodities and Commodity Futures. For example, the book does not mention the Commodity Futures Trading Commission's Commitments of Traders (COT) reports as a means to measure hedging pressure. Nor does it contain the term "roll return" or the word "momentum."
In summary, Carley Garner's A Trader's First Book on Commodities is a well-calibrated introduction (as advertised) to trading commodity futures and options, but readers will have to dig deeper for robust investigations of trading strategies.
