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Have the most money at the table. You have to be able to make messy entry mistakes from time to time and still have enough reserve funds to hold on till your trade set ups work as probability commends. This is done by trading small positions relative to your account size. Figure how far the commodity market must move to actually make you wrong and then work out how gigantic a position to put on.
Here 's a fast trading tip. I have got a long -term slicing market model I use for writing commodity options for premium collection. It is composed of 2 sub-models for each commodity, bull and bear. These are moderately complex models with a fair quantity of PC code. Just today I started messing with an easy moving average that blocked signals if against the major trend. It made a measurable difference in the future performance! I found the proportion of win / loss went up as well as the profit / loss proportion.
The other most vital thing I learned is that most new and green commodity futures traders lose and blow out their accounts. It's simply a matter of time before the commissions, bad research, ego generated mistakes, order mistakes, over-trading and the rest can reduce the account to nothing. I realized this when the auditor was shocked that I was really earning profits with Max. Later I found this to be in actuality. The statistical data in stock trading are not different. Future's trading isn't unique from that viewpoint.
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Most commodity futures markets will tip their hand when it is time to reverse direction. Understanding how to read its language is the challenge. It is not easy. This is critical information, since this is all you really need to know! Volatility is a clue as well as price synchronization. Read on about these unique observations. This information can be applied to most any swiftly traded market of any timescale.
Chance allows for everything. Each eventuality will play out ultimately. If you stay focused and are prepared to drop things that don't work and keep trying new ideas, you might be capable of finding the right mix that fits you to a 'T.' that's the full commodity futures and options game. You want to work out your strengths and weakness. Then match up a commodity trading program where you are feeling comfy and guaranteed enough to take consistent action.
There are a number of standard hazards changed return measurements, the most popular of which being the Sharpe ratio. The Sharpe Proportion compares the return relative to the base volatility in the investment. While essentially we are in complete agreement with the Sharpe Proportion's logic, we feel it has one serious problem. The flaw is that the Sharpe ratio only points of view past volatility and makes no effort to try to outlook future volatility. As a effect, we feel the Sharpe proportion doesn't give an OK view of the probable hazards engaged in a program.
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Posted by financeforyu
at 4:19 AM EST
Updated: Friday, 5 February 2010 2:08 AM EST