Historically, commodity trading has delivered the greatest fortunes worldwide. It originated centuries ago, even ahead of the stock markets came into existence, albeit traded then in a numerous manner, than as observed right now on electronic exchanges. I have quite often quoted that " If trading in the speculative markets, then Stocks & Equities is for boys but Commodities & Forex is for males" (No gender bias intended). Wealth creation is not a matter of opportunity. It is a method that desires sharp analysis & a lot of operate time. Plan your play and then play your strategy. Pleased investing!
The similarity in Stocks & Commodities begins & ends at the point that they are each speculative trade markets, but there are a lot a large number of differences in each these markets. In contrast to the stock markets exactly where even a highly valued stock could ultimately see all it is commercial-worth becoming eroded due to various factors, the values of commodities may possibly see corrections on a substantial provide but at some point will only improve again with time, as the inherent imbalance in the demand and supply ratio would often favor demand alot more than supply due to quite a few influencing factors like growing populations, rising economies and superior lifestyles to name a couple of. All adverse scenarios like geo-political tensions, wars, climatic imbalances, catastrophes and other man-created disasters, and so on. which pull the stock markets down commonly push the commodities up (in particular Agro-Commodities & safe haven instruments like Gold), basically due to the differentiating aspect that these commodities typically are also regular necessities to normal life and not basically investment instruments. Most Commodities are traded globally & the price tag rigging in these is next to impossible in contrast to, as noticed in a lot of equity instruments exactly where manipulation is a lot simpler & occurrences of traders receiving duped are rampant.
Enormous wealth creation is potential by means of Commodity Trading & Investments if completed the ideal way & with a lot of strict discipline. But if performed the incorrect way, which is generally the most followed path, there will be enormous losses also. You can start out off equity trading or investment with smaller sums of income, but would need deeper pockets to be in a position to do some modest trading in the Commodity Exchanges & also to sustain the "Mark to Marketplace" volatility in the Commodity Markets. The gains & losses in both also grow to be proportionately major or smaller eventually. I would now like to highlight some standard Do's & Don'ts for the most frequently observed habits & perhaps unknowingly committed errors, which I have observed in most traders & had to address to a quantity of occasions as a Marketplace Analyst & a Commodity Market place Trade Advisor.
1] Do not trade with hesitance, half heartedly or in more than confidence. You may possibly incur modest but repeated losses if you are scared of the markets or heavier ones if you are overtly brave and foolhardy.
2] Be patient when your trade positions are moving in the correct expected direction to extract maximum gains and ensure the gains by improvising the cease-loss level, time and again. Do not be pessimistic here or else you can book gains pre-maturely & may later repent on exiting early. This could lead to keeping on re-entering the similar trade at additional levels & repeatedly exit at compact reversals in panic, which in turn would erode earlier smaller gains & also construct losses. It's not no matter if you happen to be ideal or incorrect that is critical, but how considerably revenue you make when you're correct and how substantially you shed when you are wrong & that makes all the difference in between Winners & Losers.
three] Do not be over optimistic when trades have hit the suggested stop-loss levels and make confident you exit there. You may well miss greater and a number of opportunities on getting stuck in offers gone wrong top to higher and higher losses each and every day.
4] Do not talk about your open positions with a single and all. This will lead you nowhere and confuse you way more, as all would air their personal views on the similar (if knowledgeable or not) and quite a few a times, would make your trade decisions appear as foolishly and hastily taken. If only you would have consulted them earlier...
5] Do not develop a tendency of becoming a Bull or a Bear in these markets. There is only one particular side to the markets and that is neither the Bull side nor the Bear side - But ONLY the Right Side at the Appropriate Time. Trend is King, so comply with it at all times.
6] Understand that you are in a negative situation and exit rapid when you want to pray for relief at each rise or fall in a trade which is top you further in a deep pit towards heavier losses.
7] Adhere to ONLY a single Analyst's or Technical Advisor's guideline at a time, as way more guidelines will once again build a lot of confusion. You can opt for or look out for an alternate guidance when the earlier guideline proves to be less productive or loss producing, but not simultaneously.
8] Be honest to your self as hoping or praying for some thing several, than the actual reality or circumstance is absolutely nothing less than fooling your personal self.
9] There is Nothing at all such as Significant, mind-blowing and sky-high profit makings overnight, as assured by quite a few to win a prospective client. YES, there are sizeable gains and high returns for a disciplined trader and could return specifically the opposite, if not worse, for the non-disciplined. Do not enter this trade marketplace under any illusions of obtaining to be a Billionaire overnight. It will never ever take place. In truth all that you now possess may perhaps also be lost.
10] DO NOT BORROW or trade with funds that are not yours or pump in significantly more funds by borrowing to hold on to loss producing trades. Trade only with personal funds that are spare-able and be ready mentally in losing even that in totality, in the worst case.
11] By no means trade or enter / exit positions in panic. Volatility is a non-separable component of this trade industry and will be present most of the instances.
12] Do not be a party to rumors or be guided or misled by these. Verify & double-check on the source for genuineness.
13] Stay away from the people who have a habit of saying "I had told you - See now?". These are the especially very same persons who would never put something on paper or ever trade on their own views- with their personal funds, as in reality they do not have any concrete views or know-how. They are mere sponges on an ego trip, who keep soaking or gathering tidbits of information from anyplace out there irrespective of their reliability, put all together and spread the newly formed news. If what they say goes wrong, they would disappear and would be seen nowhere or if found, might now have some stronger views and reasons for why the wrong happened as usually these type of men and women are really great convincers & are blessed with the gift of gab. Listening to these characters and their views is rather risky. As the smart always stated: - "Half expertise is usually the most risky", "Ignorance is Bliss" and "Blessed are the completely knowledgeable".
14] DO NOT Try to be the TREND SETTER or the first 1 to know where a specific trade will turn from. No 1 can possibly be, except by a sheer matter of chance, the perfect seller or the top buyer - so why attempt it? You could finish up losing a lot of money and also becoming the laughing-stock for all. Adhere to the trend and make respectable gains, "Quietly".
15] Do not enter the Commodity Markets with Stock Market trading ideas. Although each are speculative trade markets, there is a substantial difference in both and usually have opposite trading patterns and thumb guidelines, as elaborated earlier.
16] Offering past performance records is not a mandatory rule for Analysts or Advisors, and the identical information (wherever posted) can be misleading, as the similar can be manufactured by the finish of day to dupe potential clients. Do not attempt to appear for one thing that can misguide you & lead you on the incorrect path, ending up in losses - cash-wise & also confidence-sensible. Upon subscription by the trader, the very same individuals showing incredible results on their internet websites, but performing poorly in genuine-time, could possibly later not be offered even for a discussion or could later say that "Past performances are not an assurance of any future good results". So take a Trial for a fortnight or a month (not for a day or two), do some reside paper trading & only trust the live performances. Judge the genuineness of the study superior and true-time trading help only on the basis of reside knowledge and not by past efficiency records. Most of these records could be fakes. Far better to spend for the Trial & come to the perfect conclusion, rather than loose a lot of capital by trading on faith generated by seeking at & acquiring impressed by the past performances.
17] "Trading without having a Cease-Loss & however making gains is sheer Talent - Not attempting such stunts is Intelligence". The stop-loss practice is for your own benefit as this provision has utmost importance and is not supplied on every trading ticket by the exchanges, just for the heck of it. If the trades turn & move in the opposite directions beyond entry levels, they could additional move incredibly fast in a volatile manner & the losses accrued, in the absence of a quit-loss, can be un-imaginable. There are several points happening across the globe regularly, which affect the price tag movement, direction & volumes in commodity trading, as fundamentally they move in accordance with demand and supply scenarios & are also drastically affected by the Geo-political scenarios all over. It is not humanly probable to track each & each occurrence, watch out for economic data's released all about the globe and have an understanding of the level of their impacts on the trade movement & path of all commodities, though you may well be consistently updated on most of the developments, most of the time. A large number of times the reaction or the impact of these developments is so rapid & huge, that large & rapid movements in rates are immediately triggered with high volatility, even prior to the news on these developments reach all over the globe. In such a scenario, you could never know as to what level these trades could go to & the losses (although sustainable by a couple of) might be rather massive. These losses are not the only losses that you incur if caught in such a situation - you also miss out on the chance, the similar commodity is offering, in the opposite path and also by other trades as most of your attention and funds will now be concentrated and caught up on this certain trade gone wrong. Keep in mind - Developing wealth is crucial, but safe guarding seed capital is even alot more essential. It really is much easier to resist & also absorb losses at the beginning than later.
18] Averaging in loss producing positions is a practice which is most generally observed & frequently leads to far more risky losses. This is also recommended by a quantity of advisors, but I certainly do not suggest it. In reality I strongly oppose it. Remember - YOU are incurring the loss & not your advisor.
19] Placing all your eggs in one particular or a couple of baskets could prove to be additional risky for the day trader. Getting a wider investment or a trading spectrum would be a lot more powerful. All entered trades might in no way go incorrect simultaneously but a stray a single or two could and what, if you have traded in only those? It might also take place that the 1 or 2 trades that you have entered into, have moved in the correct path, but have not achieved the expected high outcomes or gains in comparison to the ones you have left out. So it is only advised and not stressed upon - that the trader should take positions in a wider range of trading / investment possibilities to attain superior results.
20] Do not be biased to a particular commodity. Look at all commodities (getting healthy trading volumes) only as profit generating possibilities & not at the English name or Social status of the commodity.
21] Often recall -"You can't use yesterday's tips for today's business and anticipate to be in home business tomorrow". Be prepared to accept and implement alter immediately and regularly as "Change" is the only element that is constant in the globe - every little thing else keeps altering and its meaning is all the significantly more accurate in these extremely volatile and ever-changing marketplace scenarios.
Adherence to the above is sincerely proposed to trade and attain gains in these ever volatile Speculative Trade Markets.
