Zero Sum Nature of Commodity Trading & Forex Trading
There are many that do not understand that commodity trading and forex trading are a zero sum game. In other words in order for one forex or commodity trader to benefit ( make money) another trader loses money. It is very clear to me after all these years of commodity trading. Consistent winning commodity traders can only profit to the vast extent that other traders or speculators are willing to lose. Wait a minute..what does it mean "willing to lose". Yes, as Ed Seykota has pointed out,everyone gets out of the markets what they seek. Sadly there are many commodity and forex traders that want to gamble or just play. They get excitement out of the markets…it is fun…or a challenge. These same traders have no plan. They have no risk management. They just trade because they think they know the future. They trade on their intuition. They know better than the market in which direction the market will go. Many times they refuse to take a loss.
I am sure all of us know these type of traders.
This is one of the reasons that there exists a zero sum nature in commodity trading and forex trading. These traders losses put money in the pockets of trend following commodity trading advisors & experienced forex traders that do have a plan and understand risk. Hedgers, speculators as well the "gamblers" add liquidity to the markets. This is why trend following works…and will always work over time.
So, What separates winners from losers? Successful trend following commodity trading advisors & successful forex traders have a plan. They know it will work out over time. They know any trade means NOTHING! They know their money is made over a long period of time. They know they are not playing or gambling.Successful commodity trading advisors and successful forex traders have an edge. Their edge is that they have discipline that the majority does not have. Their edge is their patience. Their edge is that they realize they do not know the future. They realize they can have multiple small losses…and eventually they will "Stumble" into a some great long term trend and they will make alot of money.
To compound your way to wealth ( if that is your goal) you must have your edge. Your edge can be as simple as allocating to successful trend following commodity trading advisors…or if you know…NOT BELIEVE you have the discipline and patience then trade for yourself and enjoy the freedoms that commodity trading and forex trading provides.
Andrew Abraham
www.myinvestorsplace.com
Futures and commodity trading involve substantial risk.People can and do lose money trading.
Questions and Answers
Article Tags:
commodity trading
,commodity trading advisor
,forex
,forex trading
,investments
,trading
,wealth building
,commodity futures trading
,trend following
The question always comes up what is riskier, the Stock Markets or commodity trading? Firstly both are, but what I have an issue with is that the initial response when one hears that I am a commodity trading advisor or involved in commodity trading is that is RISKY. How many people forgot how they listened blindly to CNBC or Bloomberg during the tech bubble and lost their retirement money with Enron, Worldcom and countless other stocks.
For any of those contemplating investing in the commodity markets, they need to be very aware that losses are part of the game. As Ed Seykota has taught so many commodity and forex traders… losses are like breathing.
A question I encounter often is, what are the correlations between your trading and other commodity trading advisors. More so…what makes you different.. Both are great questions..First in my opinion out of the thousands of commodity trading advisors, I would only consider diversified trend followers
One of the biggest reasons investors fail in commodity trading or forex trading is unrealistic expectations. In conjunction to unrealistic expectations… too many lack my holy grail of Discipline and Patience.
The fully automated service sends an email confirmation in receipt of the amount and then processes the order. Among the reputed agencies to order foreign currency from is Pawnbroker.
Created by David Lambert, the CCI was first used as an indicator for determining reversal points in the Commodities Markets. It was then discovered to be very useful in the share and forex markets. It is based on the theory that all activities move under the influence of cycles. The Maxima (+100) and the Minima (-100) occurring at regular intervals. The CCI measures the speed of price fluxuations as determined by oscillators.
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Can You Lose Money By owning Gold? So many gold bugs think this is absolutely impossible. However as a commodity trading advisor... I believe anything can happen and stick to a thought out plan. Let me give you an example, In the 1980s gold reached $1223 and investors were throwing money at gold. However almost 30 years have gone by and nada..I mean even in a savings account someone would have out performed gold.
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2010 is fast approaching. I have had conversations with colleagues..and the issue that was brought up so many times was 2007-2009 just a fluke or the beginning of something more serious. As usual... I told them to their discern I do not know the future. However in all reality... if we ran our personal households how the central banks and banks ran their portfolios we would be living on the street and I feel there will be a price to pay.
Will the last 2 months of 2009 make the year for trend following commodity trading advisors or will it be one of those lack luster years? It reminds of a football game and we are in the last quarter with only a few minutes left. The truth though is that trend following commodity trading advisors might not score...and have a good year.
There are those in the camp that successful commodity trading can be achieved from research. Honestly I am in the camp of being a trend follower…having no opinions..and simply reacting to price with a strong focus on risk.
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