Those who dont master the art of successful timing or the equally essential art of money management, generally lose their money trading commodities. Moreover, it should be noted that this includes most speculators. Small speculators, who frequently enter the market with just a few grand in initial trading capital, tend to have the largest attrition rate.
One thing I always tell new traders, among all other things, is “Do expect to LOSE. Because you will”. Now, I don‘t mean, “Oh, you know, you will maybe experience a losing trade now and then”… What I mean is that every single trader, (minus probably one person in the world who accidentally got lucky), […]
Forecasting techniques make it easier for a trader to develop a directional bias, anticipate changes in a trend, and pre-plan strategies. When we develop a *bias*, it must be understood that it is solely for the purpose of planning a strategy to implement if a certain scenario unfolds.
We must be careful not to attach too much energy and emotion to a bias for the purpose of being *right*. Our goal is to make money by planning for possible scenarios – regardless of a market direction.
Analyzing market direction and incorporating forecasting techniques does not seem easy at first, and as such, is ignored by many traders. It takes some time and effort to learn. However, the more aggressive traders tend to gravitate towards these methods, knowing full well that hard work and better tools will pay off in the long run.
While you might want to follow and analyze as much markets as you can master (which is usually a plethora), I did learn – the hard way, what else – that one shouldn‘t try to go and trade more than say two to four at once.
And very often it may be a good idea to try to specialize in one area and concentrate on a group of markets – such as say soybean complex or the meats, the metals, or what have you.
Diversification in the futures markets isn‘t exactly the best idea, since the demands of doing a perfect analytical job are far too great.
Guess what… trading is A BUSINESS, just like anything else. Now I know that you‘ve heard this before, perhaps zillion times over. But I think that most of us take this statement much too lightly. Let‘s put it in a different angle for a minute, shall we. Let‘s look at it from my usual weird […]
Low risk / high probability trading and diversification – that’s my approach to trading in a nutshell. My losses are small and frequent. But gains are modest, sometimes large… and about as frequent as losing trades. My philosophy is having a performance level whereby my percentage of winning trades oscillate at roughly 40 to 60%. […]
I wish that you print this message out and keep beside you at all trading times. I also wish it could be printed out with 24K gold letters. It‘s that important. Basically, there are only two ways to make money trading futures. One is having enough capital in order to buy when the market is […]
Heres my own guideline for account management (not just margin management) — it has been working for me but may not be suitable for you. I try to not put at risk more than 10% of my account on any one trade. For example, lets say I start with $2,000 in my account. That means […]
You know, since I run this website and communicate with lots of my course students as well as other traders on a daily basis, its amazing to me how some folks seem to complicate this business. I have been trading for several years and do my best to keep it as simple as possible. I […]
Hi there. I often write about the hazards and difficulties involved with trading futures. It takes a high level of discipline and consistency, mental toughness, the ability to preserve during times of adversity, knowledge, etc. New traders with trading ambitions should, by all means, investigate trading and experiment on paper. But dont be so quick […]
Many analysts, trading industry vendors, teachers, gurus, almost everyone and their brother will suggest that a newbie trader attempts to trade the stocks/commodities on paper first, before he or she takes a plunge in the real markets. Paper trading is simply selecting a trade and writing it down but without actually committing your hard-earned funds […]
Basically there are two schools of price-forecasting methods in the commodity markets: fundamental analysis and technical analysis. Fundamentalists are oriented toward forecasting the market in terms of supply-and-demand factors. Technicians stress price behavior and the movement of such tech indicators as open interest, volume, moving averages. The fundamentalist says that the key to the direction […]
(Q) Even though I am not futures trader myself – I have been trading stocks exclusively – I go here now and then and enjoy reading a lot of posters. What I particularly like about this place is that nobody forces their opinions or their specific methodology on you. Refreshing. And being a stock trader […]
The question we are getting quite often; there seems to be some confusion about daytrading margins; You may have been told that margin requirements are ment to protect the client (in a way, they are). The real purpose of margin requirements is to protect the brokerage firms from having to deal with accounts that fall […]
Having turned my trading screens off… I sat in the near dark, sipping coffee and watching the full moon outside. I thought of the coming next few days. The Christmas which marks 2000 years since Christ was born, and the approaching new year which brings the very last moments of this millenium and the possible […]
Emotions are probably the biggest obstacle any commodity trader has to overcome. Many traders become losers because they are not able to follow a PLAN. They experience a couple of losses, start panicking, abandon their plan (if had any) and start to take wild shots at the market. Those who develop a set of sound […]
(Q) Would someone with experience please describe exactly how a trade works with a discount broker, compared to a full service broker? I mean do they call back with fills, etc. (A) You asked how discount differs from *full-service*. The order execution part of the business is done the same way. Neither is there a […]
Howdy folks. I have been asked several times if and how diversification can help us trade better; I believe diversification is one of the crucial factors in the success of a trading plan besides having a good trading system and sound money management. It may in fact make the difference between success and failure of […]
When everyone thinks alike, everyone is likely to be wrong. Not my words, altho I could easily second them. These words were spoken of Mr.Neill, the father of contrary-opinion trading as we know it. He believed that the crowd, whether in politics or economics, always made its greatest mistakes at the point in history when […]
Before you start thinking of some trading program of yours, you may want to select one area of specialization. One way to do this is to limit yourself to one type of commodity: the grains, metals, meats, etc. A meat trader, for instance then concentrates just on cattle, bellies and hoggies. Or a trader specializing […]