| George Lane completed his 47th year of trading | | | | of the price range. Conversely, in down-trends, |
| in December 1996 and is still going strong. After | | | | the closing price tends to be near the lower end |
| many years of trading in the grain pits in | | | | of the range. Two lines are used in the Stochastic |
| downtown Chicago, Lane has shifted to screen | | | | Process-the %K line and the %D line. The %D line |
| trading during his "retirement" in a small | | | | is the more important one and is the one that |
| community about 80 miles south of Chicago. | | | | provides the major signals." |
| However, retirement means different things to | | | | "We had %A and %B-we went through the |
| different people, as Lane was up until 2 a.m. | | | | whole alphabet twice, working on things. Then we |
| trading Italian bonds the night before he spoke | | | | discovered %K and then %D and the darn thing |
| with this reporter. Lane said, "I was having fun! ... it | | | | worked. So, we quit the research and went into |
| beats working for a living!" | | | | the pit every day and started making a living," |
| Early in his life, Lane was set on becoming a | | | | Lane said. He calls himself a strictly technical |
| physician-as his father had been. But, then "I was | | | | trader. "I read the fundamentals, but the |
| out roaming around Chicago one afternoon. I | | | | fundamentals are not the way to trade---the |
| wandered into a building to buy a cigar and I | | | | technical side is so much more lucrative." |
| heard a bunch of noise upstairs. I went up and | | | | But, "it is hard work if you are going to be a |
| saw these men standing around yelling," Lane said. | | | | trader- you've got to be looking at your |
| "All of a sudden, I was hooked and medicine | | | | computer five to six hours a day," Lane said. |
| dropped from the picture," Lane said. | | | | Currently, in his "retirement" Lane trades "about |
| While initially Lane worked as a broker, he said | | | | four to 12 times per day." His time frame is "45 |
| "that didn't work out very well ... because as a | | | | minutes to 1 1/4 hours," with average gains of |
| broker you want to give customers advice that is | | | | "$150, $350, $750" per trade. "They all add up at |
| in their best interests. Sometimes what you think | | | | the end of the day." |
| goes against what the firm thinks." | | | | "You can make $5,000 a day trading one-lots," |
| In the late 1950s, Lane purchased a membership | | | | Lane said. From his screen, Lane trades primarily |
| on the Chicago Open Board of Trade for $25 and | | | | off of three-minute, 15-minute and 30-minute |
| started trading the grains. The Chicago Open | | | | charts, relying on "stochastics, volume and |
| Board of Trade, now known as the MidAmerica | | | | trendlines." |
| Commodity Exchange, was originally founded in | | | | Recently, Lane has been trading the S&P 500 |
| 1868. | | | | futures contract at the Chicago Mercantile |
| At first, Lane said, "I wasn't doing very well. An | | | | Exchange. He sticks to liquid markets, avoiding |
| old timer came over to me one day after the | | | | thinly traded contracts such as pork belly futures |
| dose and asked me how I was doing. Every night | | | | or lumber. |
| after trading, he and I went down to the local | | | | Lane doesn't confine himself to U.S. markets, |
| tavern and as long as I bought the whisky, he | | | | however, estimating that 20% of his trading |
| taught me everything he knew about the | | | | extends to foreign futures markets. "German |
| markets." | | | | bonds and Italian bonds trade very actively," Lane |
| "He introduced me to the Taylor trading method, | | | | noted. |
| which is a three-day trading cycle" Lane explained. | | | | However, Lane said he never trades without a |
| Lane began to pick up trading and started to see | | | | stop-loss order protecting his position. "That's the |
| some success in the pit. He eventually became | | | | secret to making money in commodities-control |
| the president of the Investment Educators Inc. | | | | the size of your losses." |
| "I'd trade all day and then we'd meet at night," | | | | Lane recommends that beginning futures traders |
| Lane said. In that capacity, he invented 64 | | | | read "John Hill's three books on charting basics-if |
| "stochastics," a widely used momentum indicator. | | | | you are a good chartist-the charts talk to you." |
| "Stochastics measures the momentum of price," | | | | "You can learn how to do it yourself," Lane said. |
| Lane explained. "If you visualize a rocket going up | | | | "Brokers are salesman. Never take advice from a |
| in the air- before it can turn down, it must slow | | | | broker. Because, then you are admitting that you |
| down. Momentum always changes direction | | | | don't have enough smarts to make your own |
| before price ... It is a very sophisticated tool," he | | | | decisions." Asked what was a key factor in |
| said. | | | | success in commodity trading, Lane replied |
| According to John J. Murphy's book Technical | | | | "greed." |
| Analysis of the Futures Markets, stochastics "is | | | | "Trading is fear and greed and if you have enough |
| based on the observation that as prices increase, | | | | desire to have a successful financial life-you can |
| closing prices tend to be closer to the upper end | | | | do it," He concluded. |