The 40 Rules of Consistently Profitable Commodity Futures and Option Traders, PART 1 - Follow Them
- Date: 2007-02-19 - Word Count: 603
Share This!
Are you following these forty commodity trading guidelines? Follow them all and you have a better chance of becoming a consistently profitable commodity futures and options trader. Design your trading plan around these rules. Don't underestimate their value for your success.
Calculate "Pot Odds" For Each Trade
1) Before entering a commodity futures contract trade, have a good idea of the approximate risk/reward. This is the equivalent of "pot odds" when playing poker. Every futures contract or options trade is different and requires its own unique mental weighting that goes beyond a simple stop loss order and system objective. If the futures market acts poorly, some trades can be kicked out quickly while others may be good enough to average down once or twice. Be flexible and keep watching for clues as the market unfolds.
Have a General Target for Both Price and Time
2) Have a time frame and price area expectation for exiting a profitable trade. The futures market has time cycles that are always changing. Be aware of the current cycle pattern and look for it to continue until it actually changes.
Like Your Broker
3) Traders do better with a broker they like. Be sure you have a good relationship or find another broker. Finding a commodity broker with a compatible personality to yours and the skills you value is worth the search.
Patience To Wait For The Right Set Up
4) Be on guard to getting into a trade too early. This is a common problem plaguing even good traders. We recognize the trade set-up, but don't let the pattern fully complete before entering. There is always time to buy another dip or sell another rally, so don't rush in thinking it's your last chance.
Trailing and Protective Stop Loss Orders
5) Unless you have well developed self control and discipline during chaotic times, use stop loss orders that are working in the commodity futures market. Even disciplined traders without close stops still need to put in far away catastrophic stops that get triggered in case of an emergency. Remember the 9-11 drop in the S&P 500 futures contract? It was a free fall that happened suddenly. Also remember that there is no guarantee that your futures contract stop will be executed at your price during an extreme market move. This also applies to stock trading.
Know When to Buck The Trend
6) Know the main trend of the futures market. Most of the time, it pays to look for set ups in this same direction. There are times to buck the trend to catch the crowd off balance. Tally up your trades to see if you are spending too much time on the wrong side. Taking trades with the trend is one of the few true market lore rules.
Trade Only When In The Zone
7) Long-term traders need to do their homework and decision-making while the market is closed. Day traders need to stay in the "now moment" and flow with the futures market in real time to succeed. Be sure you understand the difference as it applies to you.
Learn To Love Your Losses
8) Learn to take your losses with a smile. They should have little effect on you. Small losses are nice compared to large ones, of course. Know when to average down occasionally when the trade is of high probability. Know when to dump everything when averaging doesn't work after adding two additional positions. Averaging down can improve your bottom line if you do it only during exceptionally high probability trade setups.
Part Two of Seven - Next!
There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.
Related Tags: money, finance, stocks, trading, investing, forex, stock trading, futures, mutual funds, commodity trading, commodities, commodity advice, commodity broker, commodity futures contracts
Your Article Search Directory : Find in Articles
Recent articles in this category:
- The Secrets to Getting Low Down Payment Car Insurance
Upon purchase of a new car, there is almost always a requirement to buy an auto insurance policy as - The Wisdom Behind Auto Insurance Comparison Quotes
No one in his right mind would not go for a good deal. In fact, everyone is out on their feet and ru - The Benefits of Auto Insurance Comparisons Florida
Insurance can be expensive. This is something everyone knows about especially in the sunny state of - Auto Insurance Florida: The No-Fault Policy
There are different kinds of car insurance offered by a wide range of providers today. Different sta - Finding the Cheapest Auto Insurance Companies
Everyone is asking and searching for the cheapest auto insurance companies available today. Consider - How do You Compare Private Health Insurance Cover in Australia?
Deciding what is the best and most affordable private health insurance cover can be easy if you take - How Payment Protection Insurance Was Mis-Sold
For over six years the issue of Payment Protection Insurance (PPI) and how it was mis-sold to custom - Finding Quotes For Auto Insurance Online
One of the many concerns when you are shopping for auto insurance is being able to get access to quo - How You Can Find the Best Auto Insurance Online
When it comes to renewing your car insurance you are going to quickly discover that there are a numb - Guidelines For Searching For Auto Insurance Online
The internet can be a great source of discounts and values related to auto insurance. However, many
Most viewed articles in this category:
- Trading Forex With Pivot Points
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days mo - Where To Search For Free Grants
Where do you look for free grants? The search must be thorough or it could be an exercise in futilit - The Connection Between High Blood Pressure and Salt
We are a society of Salt Addicts. It cannot be denied. When you look at the things we do and the pla - Tips For Avoiding HYIP Scams
Before knowing about HYIP Scams, refer to the functioning of HYIP or "High Yield Investment Programs - Getting Credit After Bankruptcy
Consumers do not have to live sans credit following a bankruptcy. By following certain steps consume - Tips For Choosing A Credit Card
Are you looking for that perfect credit card? If so, you may be confused about what exactly to look - Cheap Car Insurance For Teens Online
Many elements determine a car insurance policy. Car insurance companies look at the person's age, hi - What Exactly Is Free Grant Money?
You can apply for free grant money from various government agencies. But where exactly does this mon - Small Business Owners Marketing and Customer Service
Marketing can be time-consuming, but it doesn't have to be hugely expensive now, thanks to the Inter - Apply Online For A Credit Card - How To Choose A Card?
The best type of credit card for you will be dependant on how you intend to use the credit card. Are