SchollKelm813
De Wikis en Educación
Possibly the most important aspect to get right in trading is survival. This is number one. Without surviving the bad times we are gone, with no hope. Money management and risk may sound like boring subjects, but read on to see how exciting they can be once you learn the concrete reasons and logic for their use. You may never trade the same way again!
If you are trading at 70% accuracy, you can risk perhaps 10% on each commodity trade and survive the bad runs. But, even a 70% accurate commodity future option trader will have times when he is wrong 5-6 times in a row and more. The best traders risk less than 5% on each trade. That's what having a big bankroll is all about. Not to carry large positions, but to survive the bad times and be able to trade another day.
Commodity future option pros do not have the luxury of blowing out their accounts like someone who has a day job and trades for a hobby. It's like playing poker and having the advantage of the most chips at the table. Probability smiles on those who can hang in there the longest to let the odds swing their way. Those who are under-capitalized, thus in for a short spell, (risk a lot on each trade) have to be "lucky" to catch a run before their chips disappear. That's why we need to have a method that attempts to identify, "high probability, low risk" trades. Remember this phrase: "high probability, low risk trades" you have less commodity account money to trade with than you desire, you can also gain this "deep pockets" edge by reducing your trading size. Most commodity futures and options traders could easily reduce their normal position size by one-half and instantly become better traders. Reduced pressure and survivability are only two of many reasons to trade smaller.
The bottom line is not to beat yourself up when you do not get perfection from each future contract or options trade. No one does. Remember that - no one trades perfectly! The objective is to just be better than most. You don?t have to be the best to make money; just better than most.
A safer variation of the future is an option. Rather than binding the buyer to actually taking delivery, the option, simply gives the owner of the option or right to buy the commodity from the supplier at a date in the future for an agreed price. The seller is happy to sell short because they know they will at least get a predictable price no matter which way the market goes. If the value drops and the option isn't used then the seller still has the commodity to sell and the money they received from the holder of the option.
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.
I focus much on loss strategy because if you can greatly reduce them, then the profits will take care of themselves. Realize that losses are part of the commodity futures and options game and no perfect trading system exists. Demanding trading perfection of yourself is futile and a sure road to failure. To make money, you don't have to be the best trader in the world - just better than most!
