Yet another stockbroker

Despite what some people may lead you to believe; day trading, swing trading and trend trading is not anywhere as difficult as they would like you to think. It really boils down to two key components.

First, you have to have an approach that helps you identify trades that have a consistently high probability of making money. Once you have this you must exploit this “edge” over and over again.

The only way to do this is to use the necessary discipline to never deviate from your system. The minute you start tinkering or tweaking things is when you will lose your edge!!!

You will most likely be tempted to do this after you have had a few losers. This is the time however to keep your focus and remind yourself that your system has a statistical advantage that has held up over time.

Think about this for a moment? If you go gambling in Las Vegas and can even gain a 1% advantage over the house you can make a literal fortune by exploiting this edge. That little one percent advantage can make the casino lose a whole lot of money over time. As a matter of fact the minute they notice that you have a viable system they will label you a cheat and ban you from the playing. It sure is a good thing that can’t happen to traders!

Now consider what happens if you have a trading strategy that produces trades that go into the money more than 60 to 80% of the time?

Now the second step to success is to manage your emotions. Two of the biggest indicators of a trader who is not managing their emotions are FEAR & GREED. These two emotions will wipe out every trader over time, both experienced and inexperienced alike.

Let’s talk about them for a minute…

FEAR: Fear of losing money or fear of being wrong is what causes traders to have this emotion.

“Trading with scared money” often causes the fear of losing money. This is when a trader is risking money that should be used for the rent, food, children’s education etc. If this is the case the only solution is to find additional funds that you are willing to put at risk. This helps to put the mind at ease and reduces the fear.

Fear of being wrong is simply the part in all of us that just doesn’t like to be wrong. The cure for this is to simply realize and accept that losses are part of this game. Think about this? A baseball player only need hit the ball once for every three times at the plate and this will get him into the Hall of Fame.

I feel this every once in a while and remind myself that… My approach for trading has both historically and real-time produced consistent winning trades. This gives me the confidence to step up to the plate and keep swinging. Also I tell myself that the only way to earn the big money is to get into the game.

GREED: Traders who are greedy are often the exact opposite of the ones who are fearful. They have no fear and this can get them into trouble. They will tend to over trade, not follow the rules and basically “wing it”. Sometimes this will work, but it always ends up back-firing.

One of the biggest problems when greed sets in is the inability to know when to take profits. These traders are so bent on making a killing that they are never happy. If they are up 10, 20 or 30% they don’t even think about cashing out, as they want more. This often leads to the inability to see the trade turning against then and they will allow winning trades to turn into big losing ones.

One solution for this is to realize that making 3, 5, 10 or 15% on a regular short time basis adds up really quick. I know for me personally, once I was confident in my methodology, I no longer felt the occasional feelings of greed. Now I don’t worry about “going for broke” as I know that there is always another good trade waiting for me.

Dr. Jeffrey Wilde, a trading veteran with 16 years of experience is a trading coach to over 3500 traders in 63 countries. His new blog http://www.askjeffwilde.com offers free trading articles, tips and advice. He also teaches a variety of courses found at http://www.win-at-trading.com and http://www.fastforexprofits.com

Technorati Tags: trading, greed traders, trading system, stock market

Commodities are products traded solely on the basis of price. The products are undifferentiated products, goods or services that are not traded based on quality and features, only on price. Historically, commodities were items of value, of uniform quality that were produced in large quantities by many different producers. The items from each different producer were considered equivalent. Commodities are defined by an underlying contract and standard, rather than the quality of the product.

History

Chicago was the birth place of the first commodities market, way back in the 1840s. Farmers would bring their wheat to the market and exchange it for good, hard cash. Futures contracts developed from there. A farmer would contract with a dealer to sell a set amount of produce to him at a set date for a set price. It was comforting for both parties – the farmer knew how much he was going to get paid and the dealer knew exactly how much he was going to pay for these commodities.

This practice of commodities trading evolved over the years that ensued. The farmer would decide not to sell and cede the contract to another farmer to fulfil, or the dealer might decide that he did not want the produce anymore and then on-sell the contract to another dealer.

Naturally supply and demand entered the equation. If the harvests were poor, the produce would fetch a much higher price and if the crops were abundant, a leaner price prevailed. Before long, speculators were in on the act. They started trading the futures contracts in the hope of buying the commodities at a low price and selling these for a handsome profit.

What defines a successfully tradeable commodity?

To successfully trade, commodities must:
Be standardized. If the commodities industrial or agricultural, it must be unprocessed. Have an adequate shelf-life, if these are agricultural.

There should be sufficient fluctuation in supply and concomitantly price. The reason for this is that without the risk factor, profits are meagre and unappetising. Examples of commodities are: electricity, wheat, chemicals, metals, pork bellies, RAM chips, labour and currency.

Difference between commodities and stocks The main difference between stocks and futures contracts from a trading perspective is that, unlike stocks, which you could keep for a very long time, commodities are held for a very short time only. Futures contracts are used to hedge commodity price-fluctuation risks or to take advantage of price movements, instead of trading the actual cash commodities.

How are commodities traded? Commodity Future and option trading take place at exchanges such as the Chicago Board of Trade, Euronext.liffe, London Metal Exchange and the New York Mercantile Exchange, and other online trading systems. At the exchanges, areas are provided, each designated for a different futures contract. Those trading on the floor must be members of the exchange and registered with the Commodity Futures Trading Commission. Those traders, who are not members, work through brokerage firms who are.

To conclude Commodity future option trading is both complex and risky, so the shoe may not necessarily fit just anybody’s foot. If you are considering commodity future option trading, you should evaluate how much you are prepared to lose should push come to shove. Choose a trading method that you are comfortable with and that is best suited to achieving your objectives. The bottom line in commodity future option trading is that, if you exercise good judgment and manage your risks effectively, commodities trading are likely to richly reward your efforts!

Discover awesome, proven techniques for trading online; stocks, shares, currencies, FOREX etc. for both the novice and experienced trader at http://www.TradingOnline4u.com

Technorati Tags: commodities trading, stock market, commodity market, options trading