For Successful Commodities Trading

Transcription

1 For Successful Commodities Trading

2 Before entering a trade, know what you re willing to risk. In trading, you can t control when you will make a profit and when you will experience a loss. You can control how much you will lose when you are wrong. Knowing how much you are willing to risk before entering a trade will help limit your losses and make the decision to get out of a losing trade easier to make when it comes time.

3 Stay disciplined to your trading strategy or style. In order to be a successful trader you must have a set of rules or a strategy that cuts your losses, lets your gains run, and keeps your emotions under wrap. Your trading strategy should always be followed and breaking these rules almost never ends up in your favor. As you learn and grow, your trading strategy can be analyzed and adjusted but never while you are in a trade.

4 Keep your personal emotions out of trading decisions. Being in the market is a constant battle with your emotions. In trading, emotions are bad. You can t make rational decisions when you are upset with what the market just did or if you are excited because your past five trades went your way. And if you let your emotions control your decision making ability a good trade can go bad and a bad trade can go really bad, very quickly.

5 Limit losses to a minimum and hold on to gains. The best way to be a successful trader is to limit your losses and let your gains run. One of the biggest mistakes traders make is holding on to a losing trade, thinking and hoping it will come back, often to see it go against them even more. The opposite is also true of getting out of a winning trade early just to lock in profits and watching it run up more without them.

6 Diversify. Limit your trading to uncorrelated markets that you are interested in and that fit your appetite for risk. By diversifying your portfolio with uncorrelated markets, a loss in one market can be offset by gains in others and by trading markets you re interested in, you are more likely to be eager to learn more and follow those markets diligently.

7 Expect to have trades go against you. Expect and be ready to have some trades go against you. No commodities trader can say they never had any loses. Losses are a part of the game, and to be successful you need to have your gains overpower your loses. Getting wrapped up in a loss can have a much bigger effect on your trading than the initial loss, so expect a few losses and learn from them.

8 Learn something from each trade. Whether you lose or gain money there is a lesson in every trade. Figure out what you did wrong or right and see what you could do differently next time to avoid or repeat the event. Maybe it wasn t anything you did wrong, the trade just didn t work, and that happens. Don t consider losses a bad trade, consider it an expense for the lesson you learned that will make you better for next time.

9 The market doesn t have to make sense fundamentally to be right technically. The market trades off fundamental and technical information and sometimes follows one and goes against the other. If you focus too much on one or the other it sometimes just doesn t make sense. To be successful remember the market doesn t always have to make sense and that it can remain irrational longer than you and I can remain solvent.

10 The trend is your friend. This old saying is perhaps the best piece of information for both new and experienced traders alike. Follow the trends and you will most likely be successful more times than not. Buy into bullish trends and sell into bearish trends on corrections to avoid getting stopped out and watching the market run past you.

11 Never pick a top or bottom. As much as your research shows a top or a bottom, wait until you can confirm a trend forming before entering into a trade. Trying to get the top or bottom tick will most often than not go against you and just isn t worth it.

12 If everyone knows the news, it s already priced into the market. By the time you hear the big news story it is already priced into the market. Making trades off of breaking news isn t the best strategy because the professional traders heard the news and expected it to come long before you did and already priced it into the market.

13 Sometimes the best position to be in is on the sideline. The market won t always fit your trading strategy and instead of trying to force something, take a break. Taking time off, relaxing, and doing something to take your mind off the markets can benefit your trading in the long run. With a clear and refreshed mind, you ll be surprised at the results you can get.

14 Thank you for reading Contact Paragon Investments : /contact or call toll free DISCLAIMER: Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading. Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions, market data, and recommendations are subject to change at any time. This brief statement does not disclose all of the risks associated with trading commodities, futures, and options.