COMEX Futures Veteran Insights (Guest: John Johnston)
Mar 15, 2025
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This week, trading veteran John Johnston shares his journey from the chaotic trading floors of COMEX and NYMEX to modern markets. He reflects on the legendary silver squeeze of the 1970s and his current trading picks. The conversation also dives into the emotional challenges traders face, the significance of stop-loss orders, and the evolving landscape of trading strategies. Johnston evaluates the interplay between gold, equities, and currency dynamics, offering engaging insights into today's financial climate and market trends.
John Johnston illustrates the camaraderie and competitive nature among traders during his early years on the trading floor.
The silver squeeze of the late 1970s serves as a pivotal moment that defined the volatility and excitement in futures trading.
Patrick Ceresna emphasizes technical analysis and disciplined trading approaches as essential for navigating market psychology and volatility.
Options trading strategies are highlighted as effective tools for risk management and position adjustment during market downturns.
Deep dives
John Johnston's Career Insights
John Johnston, a veteran of COMEX and NYMEX, shares anecdotes from his extensive career on the trading floor, detailing his entry into the industry as a runner on Wall Street in the 1970s. He recalls how he utilized his connections to transition from a sales role to trading, highlighting the camaraderie among traders and the shared goal of profitability in a competitive environment. Johnston also reflects on pivotal moments in his career, including the silver squeeze of the late 1970s, which significantly impacted the futures market and his own trading strategies. His personal journey is characterized by resilience, as he navigated personal challenges while building a successful trading career.
The Silver Squeeze Experience
During the late 1970s, the silver market experienced a dramatic surge, primarily driven by the Hunt brothers' attempt to corner the market. Johnston recounts the volatility of that time, illustrating the wild fluctuations in silver prices and the impact they had on traders. He vividly describes the atmosphere of the trading pits during this frenzied period, capturing the excitement and risk associated with trading silver futures. This episode became a pivotal moment in Johnston's career, solidifying his reputation as a trader who thrived amidst chaos.
Technical Analysis Insights
Patrick Ceresna shares his expertise on technical analysis, emphasizing the importance of understanding market trends and price patterns. He delves into the analysis of price charts and outlines various strategies for identifying key support and resistance levels. Ceresna advises traders to be vigilant about the psychological aspects of trading, particularly the tendency to buy into rallies without proper analysis. He underscores that successful trading requires a disciplined approach, where technical indicators are used to inform decisions rather than emotional impulses.
Market Volatility and Strategy
The discussion touches on the concept of market volatility and its implications for traders. Ceresna highlights the significance of recognizing volatility patterns in order to craft effective trading strategies. He discusses how traders can respond to increases in volatility, suggesting that times of heightened market activity create both challenges and opportunities. By implementing structured trading strategies in response to volatility, traders can better navigate market fluctuations and enhance their overall performance.
The Merit of Options Strategies
Options trading strategies are presented as a viable tool for managing risk and enhancing returns. Johnston explains how options can be utilized to repair stock positions, particularly during periods of market decline. By employing strategies such as ratio spreads, traders can adjust their break-even points and mitigate losses without significantly increasing their risk exposure. The potential of options for creating a cushion during downturns makes them a valuable asset for any trader looking to enhance their market approach.
The Role of Gold and Silver
Gold and silver are discussed not only as precious metals but also as integral components of a diversified investment strategy. Johnston emphasizes that gold tends to shine during times of economic uncertainty and inflation, serving as a safe haven for investors. The recent movements in gold prices are scrutinized, with Johnston noting that strong upward trends can attract more investment capital. Silver, often overshadowed by gold, is highlighted for its potential as an emerging opportunity, especially when market conditions favor precious metals.
Market Sentiment and Behavior
An examination of market sentiment reveals how traders often react to price movements, exhibiting behavioral tendencies that can lead to irrational buying or selling decisions. Johnston explains that understanding market psychology is crucial for successful trading, as emotions often dictate actions rather than rational analysis. He encourages traders to remain objective, particularly during periods of extreme market fluctuations. This mindset can prevent them from falling prey to common pitfalls, such as buying high in euphoric markets or selling low in panic-driven sell-offs.
The Future of Trading: Insights and Predictions
The episode concludes with discussions on the future of trading and the evolution of market dynamics. Both Johnston and Ceresna express optimism about the ongoing adaptation of traders to new market conditions, driven by technological advancements and changing global economic landscapes. They emphasize the need for continuous learning and adaptability in the trading world. As new tools and strategies emerge, traders must be prepared to embrace change and refine their approaches to maintain a competitive edge in the financial markets.
This week, Kevin & Patrick welcome to the show, John Johnston. They’ll discuss his career on the trading floor, explore the silver squeeze of the late 1970s, and reveal what he’s buying and selling today.
