Commodity Trading – Chapter 10: Commodity Trading – a losers Game?

This is chapter number 10 out of 13. Read the rest:

Read Commodity Trading – Chapter 1: History of Commodity Trading
Read Commodity Trading – Chapter 2: Commodities Trading
Read Commodity Trading – Chapter 3: What is traded?
Read Commodity Trading – Chapter 4: Using Commodity Trading as an Investment Vehicle
Read Commodity Trading – Chapter 5: Advantages of commodity trading
Read Commodity Trading – Chapter 6: Disadvantages of commodity trading
Read Commodity Trading – Chapter 7: Risks of Commodities Trading
Read Commodity Trading – Chapter 8: Risk Management
Read Commodity Trading – Chapter 9: Steps To Undertake While Trading In Commodity

A substantial percentage of people who have tried their hand in commodity trading actually lost money. This ratio is estimated to be as high as 95%, a pretty high numner really. Nevertheless, this does not imply that your failure rate is as high. A careful study of the reasons why the majority of individuals lose their money can help you understand the pitfalls.

There is a small group of experienced and highly skilled traders who have embraced the trade well and consistently profit from the markets. It is possible to study these individuals and learn what separates them from the rest of the pack.

Although the basics of commodity trading are simple, it is not an easy task trying to trade well. You have to take trading seriously and not regard it as a part-time hobby. This is actually the distinction between amateurs and professionals. They regard commodity trading as a serious business with profits to be made.

Another difference between those who are successful and unsuccessful is a matter of planning and following that plan. Successful traders formulate a plan and adopt it in their trading. Amateurs on the hand are more or less gambling rather than trading professionally.

The successful ones also have two main psychological traits which distinguish them. They have patience and self discipline. While it is good to have carefully formulated trading strategy, you will still need inner strength to be able to carry out your strategy religiously. Even the most experienced of us sometimes have the temptation to divert from our plans. Therefore you will really need discipline to be able to resist your temptation.

Patience is also needed to enable a trader to wait for the right time to execute his trading strategy. He must be able to forestall his emotions from attracting to do trade outside what was planned. When exception comes into the picture, both these traits are crucial to bring a person back on track.

Although it might sound pipsqueak easy now, in essence when real money is on the line, nothing can be further from the truth. This why sometimes we see professional traders very stressed as it is really emotionally draining. Many have failed because they cannot overcome their emotional weakness. Having said that, perhaps you have what it takes to be different?

Read Commodity Trading – Chapter 11: Learning to Trade Commodities
Read Commodity Trading – Chapter 12: Creating a Trading Plan
Read Commodity Trading – Chapter 13: Stress of Commodity Trading