Commodity Trading – Chapter 11: Learning to Trade Commodities

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Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 11 out of 13. Read the rest: Read Commodity Trading – Chapter 1: History of Commodity TradingRead Commodity Trading – Chapter 2:

Commodity Trading – Chapter 11: Learning to Trade Commodities

This is chapter number 11 out of 13. Read the rest:

You can go about learning how to trade correctly by finding a mentor. Try to look for a successful trader and ask him to teach you precisely how they become successful. Nevertheless, you should note that it is not easy to find such a person and if you do find one, who has the free time to mentor you. Furthermore, having a successful trader to teach you will not automatically make you a successful trader. You will definitely lack the years of experiences which they have. Furthermore, your personality might not necessarily suit their trading style.

An alternative way is to go about learning by trail and error. This is the method adopted by most people even though they do not realize it. The problem with the trial and error methodology is that mistakes in future trading will not necessarily generate losses. Sometimes even when you trade by the book, you still make losses. In fact several of the most ideal methods resulted in losses most of the time. Losses can come about continuously even when you are using the most effective method adopted by traders. Conversely, if lady luck is on your side, you could even make a fortune in ignorance. Psychologists termed this as “Random Reinforcement”. And it is this situation which makes trail and error an inefficient method of learning how to trade well.

The most practical way to go about learning to trade correctly is through books. You should find the best selling books on the subject matter by well known authors and experienced traders to learn from them. Although this is the method which most of us adopt to gain knowledge in our lives, it is slightly challenging when it comes to commodity trading.

It is an open secret that most of what we read in books are theory in nature and are not practical in reality. Even the methods advocated by the most successful of these traders have “holes” in them. You might be surprised to know this but you can practically say that virtually no commodity trader authors have managed to show the effectiveness of their methodology. What you can hope for is a few good examples or some perfunctory tests.

You need exposure to new ideas and the practical experience of observing the market daily to be able to learn how to trade well. Furthermore, this learning process will take time to mature and blossom inside you. You cannot learn to be in tune with the market in just a few weeks. Give it time!

Read Commodity Trading – Chapter 12: Creating a Trading Plan
Read Commodity Trading – Chapter 13: Stress of Commodity Trading