Commodity & Forex Trading Mistakes

<h1>Commodity & Forex Trading Mistakes</h1>Author: <a title="Andrew Abraham" href="http://www.articlesbase.com/authors/andrew-abraham/38925.htm">Andrew Abraham</a> Trading mistakes are common in commodity and forex trading. I became involved with my partners in order to learn from the mistakes of other commodity traders (and plenty of my own mistakes). In my opinion after being involved in commodity trading and trend following the basis of trading mistakes all boil down to three issues. 1. Fear 2. Greed 3. Ego. So many issues in trading are against our own human nature. A simple example is that commodity traders risk their hard earned capital on a trade. Isn’t it logical that if you put your hard earned money in an idea… you would expect it to work and make money…otherwise why would you risk hard earned money? You believe that the trade will make you money..that is why you put it on in the first place, Right? Wrong… just because you put on the trade..it does not have to work.. Too many a trader do not sell and take a quick loss because they think they are right.. Guess what…The only thing that is right is to follow your plan with discipline and patience. The real crux of successful commodity and forex trading boils down to how you think. Emotions such as the above mentioned can destroy ones commodity trading career. I have seen it… I do this everyday except Saturday and Sunday. I live it… Here are some simple examples of mistakes that I have seen commodity traders make. 1. The commodity trader exits a trade early. He does not follow his plan…or mechanical trading system. He has a small open trade loss which has not gotten to his stop loss and because of fear ( maybe ego)… he exits prematurely and does not let the trade either get stopped out or work. 2. A commodity trader quits trading during a draw down ( probably right before a nice rebound). I have seen investors in commodity trading advisors quit and blame the commodity trading advisor & say that trend following does not work any more ( FEAR). Shortly their after if they had stayed in with the commodity trading advisor their account would have rebounded and they would have continued to compound their way to wealth. Draw downs are all part of this. More so the greatest draw down is always ahead of you. 3.I have seen commodity traders take profits and exit before their stops have been hit. They over ride their plan or mechanical trading system because they are afraid of giving back an open profit. One of the major tenants of trend following is LET YOUR PROFITS RUN!. These traders miss the big moves because of a combination of fear …or maybe greed. 4.I have seen traders not take a loss when they should of. Again they over ride their plan. Maybe out of ego…they do not want to accept they were wrong and the trade did not work. Worse.. I have seen commodity traders insist they are right and add to their losing position. Doing things like this are the seeds of destruction of a commodity trader. Really I can keep on going…but in order to succeed…one needs to park their emotions and let the market tell them what to do. This is the whole basis of trend following. So what is the point here… if you want to succeed in commodity trading, you have choices.. you can learn and trade yourself. This takes tremendous work and commitment. I know.. I have been there…If you are committed…develop a plan…you follow it with patience and discipline you stand the chance of succeeding over time. Another alternative is to allocate to a commodity trading advisor that has done the work and learned what has the chance of succeeding overtime. You must understand how the commodity trading trades…and probably more important how they think about risk and money management. I trade with my colleagues which reinforces the needed discipline and patience…as well as allocate to other commodity trading advisors. Finding the right commodity trading advisor is surely not easy. However an initial four quick questions you can separate the potential successful commodity trading advisors and the want to bes.. 1. What is their risk per trade 2. What is their risk per sector 3. What is their total open trade risk 4. What is their margin to equity.. Ask these questions…know what you are comfortable with. I wish you much success in your commodity trading career. Andrew Abraham A.Abraham@AngusJackson.com <a href="http://www.AJpartnersinc.com" target="_blank">www.AJpartnersinc.com</a> <a href="http://www.myinvestorsplace.com" target="_blank">www.myinvestorsplace.com</a> Futures trading involves risk. People can and do lose moneyAbout the Author: My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I am a commodity trading advisor/co manager of a commodity pool who adheres to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets us apart from other Commodity trading advisors and commodity pools is that we are not only concerned about the return on investment but how much risk you will have to tolerate to achieve your goals.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/wealth-building-articles/commodity-forex-trading-mistakes-1427063.html" title="Commodity & Forex Trading Mistakes">Commodity & Forex Trading Mistakes</a>

Trading mistakes are common in commodity and forex trading. I became involved with my partners in order to learn from the mistakes of other commodity traders (and plenty of my own mistakes). In my opinion after being involved in commodity trading and trend following the basis of trading mistakes all boil down to three issues.
1. Fear
2. Greed
3. Ego.

So many issues in trading are against our own human nature. A simple example is that commodity traders risk their hard earned capital on a trade. Isn’t it logical that if you put your hard earned money in an idea… you would expect it to work and make money…otherwise why would you risk hard earned money? You believe that the trade will make you money..that is why you put it on in the first place, Right?

Wrong… just because you put on the trade..it does not have to work.. Too many a trader do not sell and take a quick loss because they think they are right.. Guess what…The only thing that is right is to follow your plan with discipline and patience.
The real crux of successful commodity and forex trading boils down to how you think. Emotions such as the above mentioned can destroy ones commodity trading career. I have seen it… I do this everyday except Saturday and Sunday. I live it…

Here are some simple examples of mistakes that I have seen commodity traders make.

1. The commodity trader exits a trade early. He does not follow his plan…or mechanical trading system. He has a small open trade loss which has not gotten to his stop loss and because of fear ( maybe ego)… he exits prematurely and does not let the trade either get stopped out or work.
2. A commodity trader quits trading during a draw down ( probably right before a nice rebound). I have seen investors in commodity trading advisors quit and blame the commodity trading advisor & say that trend following does not work any more ( FEAR). Shortly their after if they had stayed in with the commodity trading advisor their account would have rebounded and they would have continued to compound their way to wealth. Draw downs are all part of this. More so the greatest draw down is always ahead of you.
3.I have seen commodity traders take profits and exit before their stops have been hit. They over ride their plan or mechanical trading system because they are afraid of giving back an open profit. One of the major tenants of trend following is LET YOUR PROFITS RUN!. These traders miss the big moves because of a combination of fear …or maybe greed.
4.I have seen traders not take a loss when they should of. Again they over ride their plan. Maybe out of ego…they do not want to accept they were wrong and the trade did not work. Worse.. I have seen commodity traders insist they are right and add to their losing position. Doing things like this are the seeds of destruction of a commodity trader.

Really I can keep on going…but in order to succeed…one needs to park their emotions and let the market tell them what to do. This is the whole basis of trend following.
So what is the point here… if you want to succeed in commodity trading, you have choices.. you can learn and trade yourself. This takes tremendous work and commitment. I know.. I have been there…If you are committed…develop a plan…you follow it with patience and discipline you stand the chance of succeeding over time. Another alternative is to allocate to a commodity trading advisor that has done the work and learned what has the chance of succeeding overtime.

You must understand how the commodity trading trades…and probably more important how they think about risk and money management. I trade with my colleagues which reinforces the needed discipline and patience…as well as allocate to other commodity trading advisors. Finding the right commodity trading advisor is surely not easy. However an initial four quick questions you can separate the potential successful commodity trading advisors and the want to bes..
1. What is their risk per trade
2. What is their risk per sector
3. What is their total open trade risk
4. What is their margin to equity..

Ask these questions…know what you are comfortable with. I wish you much success in your commodity trading career.

Andrew Abraham
A.Abraham@AngusJackson.com
www.AJpartnersinc.com
www.myinvestorsplace.com

Futures trading involves risk. People can and do lose money

My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I am a commodity trading advisor/co manager of a commodity pool who adheres to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets us apart from other Commodity trading advisors and commodity pools is that we are not only concerned about the return on investment but how much risk you will have to tolerate to achieve your goals.

Rate this Article:

0 / 5 stars - 0 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/wealth-building-articles/commodity-forex-trading-mistakes-1427063.html

Related Videos
Related Articles
Ask / Related Q&A

Play

Day Trading Forex Tips

Play

Learn about Forex Trading Myths

Play

How to Avoid Forex Trading Scams

Play

What is Fair Trade Coffee

Play

Trading Is A Mental Game

Latest Wealth Building Articles
More from Andrew Abraham

Im a Stay at Home Boyfriend with The Money I Make from eBay

By: MPetrone | 29/11/2009
One of the very first things I did when I ventured into making money off of the internet, was look into eBay. While everyone knows about eBay, I was interested in how some people seemed to make a killing off of it, while the other 99% seemed to just be making a few dollars here and there. Thats when I started searching for something that all of these sellers had in common, and I found it.

Transparency In Hedge Fund Investing Is Critical For Investors

By: Dwayne Strocen | 29/11/2009
Due to some recent high profile fraud cases within the hedge fund industry, many investors are seeking greater transparency from their investment managers. While many managers protect their proprietary trading programs, there is one sure fire way to address this issue.

Learn How to Find Foreclosures in Your Neighborhood

By: Lerin Roberts | 29/11/2009
http://www.foreclosures-expert.com This is how I have found pre-foreclosures on the county web sites recorded docs notice of trustee sale.

Finance Sector

By: Pinki Gupta | 29/11/2009
Have you ever wondered how adorable relatives manage to buy thus divers investment properties? I can tell you that Revaluing & Refinancing your Investment Property is the quickest and easiest way to be able to buy your next finances.

3 Habits to Your Financial Independence

By: Joel | 28/11/2009
Apply this simple 3 step system and watch your life become stress free in no time. Learn how to become stable and financially free so you can begin to build wealth.

Jamie McIntyre - 3 Steps to Online Wealth

By: marcelo maia | 27/11/2009
Jamie McIntyre says on his courses that are 3 methods to create wealth: Real Estate, Stock Market and Business. If you choose Business the Internet is the quickest way to generate money with a minimum level of risk when you are starting. With just a few hundrend dollars you can test your concept on the web. In order to make money with your Internet business you can follow a simple 3 stage system: 1) Choose a produte to launch in the market Your success will depend on ...

Wealth and Asset Information

By: Hannah Allen | 27/11/2009
Asian Wealth management is often referred to as an advanced strategy in relation to popular knowledge in terms of investment which involves specialist fiscal services and finance planning. The first targets are providing the family unit engaging with services in business, sound legal advice, financial support, and tax advice targets to continue and grow long term wealth. Financial planning can help the individuals who are amassing wealth or have just done so. Asian wealth ma...

Wealth and Asset Information

By: Hannah Allen | 27/11/2009
Asian Wealth management is commonly seen as an advanced strategy in relation to popular knowledge in terms of investment which takes into account expert finance services and fiscal planning. The main first steps are helping the family unit dealing with services in business, sound legal advice, asset advice, and taxes recommendation aims to keep steady and grow long-term wealth. Monetary planning can help the people who are accumulating wealth or have recently done so. Asian ...

Is This The End of The Stock Market Rally?

By: Andrew Abraham | 27/11/2009 | Investing
There are really no isolated incidents in the world. Today we are waking up to the news that Dubai might be defaulting on its debt. Stock Markets around the world are plummeting. There are many other issues that hardly made the news.

Why Is The Price of Gold Moving?

By: Andrew Abraham | 26/11/2009 | Investing
If you think...that I or anyone else really know why the price of gold is moving...you will need to find another article. Guess what...everyone has opinions..The fact however is that the price is going up...and that is why virtually every trend follower ...every commodity trading advisor has purchased gold.

Courage and Knowledge in Commodity & Forex Trading

By: Andrew Abraham | 24/11/2009 | Currency Trading
Yesterday I had an interesting conversation regarding courage and knowledge in commodity & forex trading. If you have been reading my blog you probably know my favorite two words for success in commodity trading are...Discipline and Patience..

Societe Generale “Warning” Of Global Economic Collapse!

By: Andrew Abraham | 22/11/2009 | Wealth Building
Socgen has issued a warning to its clients for a Global Economic Collapse! Seems the timing could not be better with 2012 in the movie theaters all over the world. Before one scoffs off Societe Generale’s warning one needs to take into context that they have been right in the past.

Mechanical Trading Systems

By: Andrew Abraham | 18/11/2009 | Currency Trading
If you look in any commodity or forex publication you will see advertisements for mechanical trading systems. This is an area in which commodity traders as well as forex traders seek to find their holy grail. Well in reality this will not happen with any mechanical trading system on the market.

Mechanical Trading Systems

Randomness of Commodity Trading Advisors & Forex Traders Returns

By: Andrew Abraham | 13/11/2009 | Wealth Building
The reality is there exists a great deal of correlation between trend following commodity trading advisors... But there are always a difference in their returns...