Trading Commodities and Financial Futures: A Step-by-Step Guide to Mastering the Markets

by George Kleinman

Overview

Published in its fourth edition by FT Press (2013), this book by George Kleinman provides a structured education in commodity and financial futures trading, progressing from foundational concepts through advanced strategies. Kleinman brings decades of practical trading experience to a subject that many find intimidating.

The Four Essentials

Kleinman identifies four prerequisites for trading success: Patience (the ability to wait for high-probability setups), Knowledge (understanding of markets, instruments, and analysis), Guts (the courage to act decisively when opportunities present themselves), and Health/Rest (physical and mental well-being as prerequisites for sound decision-making).

Futures Primer

The book covers futures market mechanics including long and short positions, margin and leverage, delivery months, basis risk, hedging (both long and short hedges), the roles of speculators and hedgers, price determination, and order placement. Kleinman uses real-world anecdotes to illustrate these concepts.

Options Course

A substantial section covers options on futures including types of options, strike prices, pricing determinants, exercise mechanics, and advanced strategies (straddles, strangles, ratios). Eight winning option trading rules distill practical wisdom.

Technical and Fundamental Analysis

The intermediate and advanced sections cover fundamental supply/demand analysis, technical charting (trendlines, channels, support/resistance, breakouts, classic patterns), volume and open interest analysis, RSI, stochastics, Elliott Wave analysis, point-and-figure charts, Japanese candlesticks, and spread analysis.

Algorithmic Trading Impact

A dedicated chapter addresses the transformation of futures trading from open outcry to electronic markets, the rise of algorithmic trading, rogue algorithms, and exploding volatility. Kleinman discusses how to adapt traditional strategies to this new environment.

GK's Pivot Indicator

Kleinman presents his proprietary Pivot Indicator method, a trend-following system that generates buy and sell signals based on price pivots. The system emphasizes diversification across multiple markets.

25 Trading Secrets

The appendix distills professional trading wisdom into 25 actionable principles covering trend following, money management, emotional discipline, and risk control.