In the last year, long term trend followers have performed quite well while trading the futures markets. However, over the last few years, their performance has been quite sporadic. Now that many commodities have had huge runs, more attention is being focused on these markets. The question is, can the small trader successfully trade a trend following system in the futures markets?

My answer to that question is no. I believe you must have an account size of at least $100K to have a chance at trading successfully. The typical breakout strategy, even a Turtle style trading system, will chop you up while markets are not trending. At the same time, the volatility in these markets is now far too great for the small trader to keep risk to a minimum.

However, I believe it is important to study these trading strategies, because the fact is, many hedge fund players and large commodity trading advisors are still applying these strategies in their trading. There are opportunities for small traders in both trending and non-trending market conditions.

Furthermore, I believe a good trend following strategy can be applied to high momentum stocks. These can work on the short side as well as on the downside, although my preference would be to stick with the long side when conditions are favorable.

Overall, I think conditions are pretty tough for the small speculator these days, so don't quit your day job!

scott@kungfutrader.com