As
we all Commodity Trader & Investor, so this post is actually very much
imperative to know as well as require understanding the truth...
If
you have not heard by now, mainly people who trade commodities and lose money.
Most of the estimate range in the 75 to 90 percent range of those who have lost
or who are losing in the world of trading commodities. Those statistics are
dismal for somebody who needs to venture into trading commodities. Auspicious,
lots of the losers have common traits that contribute to their losing and they
can serve to assist others become successful.
Here
are four of the mainly general reasons why commodity traders lose money. If you
can have the disciplined to consistently rise above these common mistakes, you
will put the chances much more in your favor.
Lack of Knowledge on Commodity Trading
Lots
of new traders & investor don’t educate themselves on how to trade commodities
properly. This goes away from learning the ticker symbols, futures margins and
contract sizes of a variety of commodities. You are competing against other
traders who have had the most excellent training in the business and have been
trading professionally for lots of years. Believe me, they will not take it
easy on you. You keep score with wealth in this business and everybody is
trying to score as lots of points as possible – no charity here.
Over Leveraged Commodity Trading
Approximately
all small trader who ventures into commodities falls into this trap. There is
vast leverage when trading commodity futures and a couple bad trades can wipe
out the over leveraged trader. Fortunately, there is a simple rule you can
follow to take care of this problem – don’t risk your whole account on one
trade. Also, don’t trade an agreement that is too large for your account size.
For example, you shouldn’t trade three futures contract that average a $2,000
move a day when you have a $10,000 account.
Money Management
Don’t
risk more than 5% on any one trade. Generally professional capital managers
risk less than 2 percent on any one trade. This is tougher if you begin trading
commodities with only a $10,000 account. In this case you should risk no more
$500 on a trade. If you want to risk no more than $500 on a trade, all you have
to do is place a stop loss order $500 away from you enter. It doesn't promise
you won’t lose more than $500, but it is as close as you can get.
Commodity Trading Plan
I
can’t pressure enough how important it is to have a trading plan in place
before you begin trading commodity futures. A trading plan is you’re direct to
how you will control your trading. It should be in writing and reviewed
regularly. The trading plan should
include the markets you will trade, your trading plan like Accurate MCX Tips
and Commodity Tips Free Trial,
money management and even a plan to stop trading for a time of time if your
explanation equity drops to a certain level. Trading without a plan will lead
to unpredictable an undisciplined trading, which ultimately leads to painful
losses.
Author Bio:
Mr.
Anil is a web professional specialist with Indian InfoTech written a quality
based articles on Accurate Commodity
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