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Have the most money at the table. You must 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 really make you wrong and then work out how enormous a position to put on.
Here 's a fast trading tip. I've got a long term slicing market model I use for writing commodity options for premium collection. It is composed of two sub-models for each commodity, bull and bear. These are moderately complex models with a fair amount of PC code. Just today I started messing with a simple moving average that blocked signals if against the major trend. It seemed to make a measurable difference in the long run performance! I found the amount of win / loss went up as well as the profit / loss proportion.
Most commodity futures traders are reckless with their trading. Many just guess or look for tips. They come, play for one or two months, get blown out and never come back. Then a new group comes in and the cycle repeats. Only a small p.c. hangs around long enough to learn how to get to break even. Even that might be a massive achievement. Later with endurance, learning and good fortune, they pull it off by making some cash yearly.
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In those days, you had to call the trading desk to order an order. The commodity market was touching an enormous resistance area as shown by a methodology I keep on using today. I was under the impression it had to have a pullback. I did not consider the power of the last half hour on a Fri. Afternoon, nor exploited the future's time cycles I use today.
You want to plan, survive and be in a position to trade another day too. Work out a money management trading plan which is going to let you trade like a pissed sailor for brief periods and still stay intact. Because everyone trades poorly from time to time, whatever how hard we try hard not to. Demand that your commodity broker describe his account survival plan to you. And don't accept the answer, well, you can always send in additional money if we risk everything now. That would be a cop out. We must work with whatever account balance we have. Use only money you are able to stand losing. This keeps you thinking more clear too.
Over the last 7 years, the quantity of money professionally managed in the commodity futures markets has more than quintupled! According to the hedge fund tracking firm Barclay's, assets under management rose from roughly 41 bn. Bucks in 2001 to above 219 bill dollars today!
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Posted by financeforyu
at 4:17 AM EST
Updated: Friday, 5 February 2010 2:27 AM EST