Commodity Futures Trading - How To Reduce Risk And Aim For Success
If you are considering going into and trading online commodity futures then do keep in mind that there is a large element of risk involved unless you reduce your risks and exposure with care. A such its sensible only to risk the capital that you can afford to lose and before doing anything take time to learn about futures trading to ensure your exposure is never more than it should be.
The key thing to keep in mind is to risk only that money you can afford to lose. Online commodity futures trading is not about rushing to make the biggest gains possible and then retire.
Compare that to traditional stocks and shares and this is not so with them. Stocks and shares can indeed be valued at nil. Look at the number of company bankruptcies in the past' months to understand what I mean.
You need to try as much as possible to detach your emotions from your trading. If you are emotional with your losses or with your gains you are in for a roller coaster of a ride.
Let us take an example to illustrate things, shall we. Let us presume that we invest in 100 ounces of gold which is selling at $1000 an ounce. The value of the gold would therefore be $100,000. The margin or good will deposit we have to make is $10,000 towards the $100,000 worth of gold - a total of around 10% is normal.
But if the price of gold were to reduce by that $100 an oz. and provide the trader with a value of $900 an oz. then the trader would be wiped out unless they were in a position to meet a margin call from their broker and place further funds into their account.
With this sort of exposure in the market we could end up with serious losses. Its all very well to see things very positively and continue to believe in profit after profit. But at the same time we need to be realistic and know that there will be times when we hit a few losses. As such we need to have the funds available to deal with the losses.
When trading in online commodity futures there are many advantages over the traditional method due to the ability of up to date information of the market. But this leads perhaps to an inexperienced trader being given a false sense of security leading to over exposure of available funds. Keep things in moderation and the chances are good that slowly and surely your trading account will flow with profits. - 23211
The key thing to keep in mind is to risk only that money you can afford to lose. Online commodity futures trading is not about rushing to make the biggest gains possible and then retire.
Compare that to traditional stocks and shares and this is not so with them. Stocks and shares can indeed be valued at nil. Look at the number of company bankruptcies in the past' months to understand what I mean.
You need to try as much as possible to detach your emotions from your trading. If you are emotional with your losses or with your gains you are in for a roller coaster of a ride.
Let us take an example to illustrate things, shall we. Let us presume that we invest in 100 ounces of gold which is selling at $1000 an ounce. The value of the gold would therefore be $100,000. The margin or good will deposit we have to make is $10,000 towards the $100,000 worth of gold - a total of around 10% is normal.
But if the price of gold were to reduce by that $100 an oz. and provide the trader with a value of $900 an oz. then the trader would be wiped out unless they were in a position to meet a margin call from their broker and place further funds into their account.
With this sort of exposure in the market we could end up with serious losses. Its all very well to see things very positively and continue to believe in profit after profit. But at the same time we need to be realistic and know that there will be times when we hit a few losses. As such we need to have the funds available to deal with the losses.
When trading in online commodity futures there are many advantages over the traditional method due to the ability of up to date information of the market. But this leads perhaps to an inexperienced trader being given a false sense of security leading to over exposure of available funds. Keep things in moderation and the chances are good that slowly and surely your trading account will flow with profits. - 23211
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Want to learn more about commodity future trading? We specialize in natural gas futures.
posted by X - Men @ 10:56 AM
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