Mistakes When Investing With A Commodity Trading Advisor

<h1>Mistakes When Investing With A Commodity Trading Advisor</h1>Author: <a title="Andrew Abraham" href="http://www.articlesbase.com/authors/andrew-abraham/38925.htm">Andrew Abraham</a> There are exist numerous mistakes when investing with a commodity trading advisor. After being on both sides of allocating to commodity trading advisors as well as being one myself it has become very clear to me some of the mistakes that investors make. 1. It is imperative that the investor fully understand the methods used by the commodity trading advisor. 2. The investor must understand EXACTLY how the commodity trading advisor approaches risk. 3. The investor must understand trend following is almost like fishing. One can be the best fisherman but if the fish are not biting then this best fisherman will not catch any fish. The same holds true for a commodity trading advisor. There must be trends. If there are not any trends ( and no promises you there will be for any period of time) virtually all commodity trading advisors will not generate returns. Some will argue they are counter trend…or pattern traders.. but I have never seen them make any money during periods there are not trends. 4. The investor must be committed to at least 3 years to any commodity trading advisor… 5 years is more of a better time frame. 5. The investor must temper his expectations… Commodity trading is a marathon. If one truly wants to succeed, they will only do so if they are patient and realize that any 1 year..or even 2 years does not mean anything. It is the compounded annual rate of return over many years. The reality is that investors throw money at commodity trading advisors after they had a good year ( like last year) and then this year..when nothing has happened ( yet) they get nervous and start redeeming. I have seen this over and over again. I have had phone calls throughout this year…asking why are they not making any money. My answer is simply nothing has to happen when trend following. There are no real trends.. We had a nice Sugar Trade… a nice sell short US dollar…and not maybe a gold trade cooking.. but nothing extended… 6. Remember these words.. or better yet write them down.. Patience and Discipline. If one can maintain these attributes they stand a very good chance of compounding their money over time. It is extremely hard. I have been there. You start to question yourself if trend following does not work any more. However with experience and maturity ( and logic) trends have always existed historically. Even since the time in the Bible with Wheat in Egypt there have been trends. It is beyond improbable that trends will stop now. 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/mistakes-when-investing-with-a-commodity-trading-advisor-1433903.html" title="Mistakes When Investing With A Commodity Trading Advisor">Mistakes When Investing With A Commodity Trading Advisor</a>

There are exist numerous mistakes when investing with a commodity trading advisor. After being on both sides of allocating to commodity trading advisors as well as being one myself it has become very clear to me some of the mistakes that investors make.
1. It is imperative that the investor fully understand the methods used by the commodity trading advisor.
2. The investor must understand EXACTLY how the commodity trading advisor approaches risk.
3. The investor must understand trend following is almost like fishing. One can be the best fisherman but if the fish are not biting then this best fisherman will not catch any fish. The same holds true for a commodity trading advisor. There must be trends. If there are not any trends ( and no promises you there will be for any period of time) virtually all commodity trading advisors will not generate returns. Some will argue they are counter trend…or pattern traders.. but I have never seen them make any money during periods there are not trends.
4. The investor must be committed to at least 3 years to any commodity trading advisor… 5 years is more of a better time frame.
5. The investor must temper his expectations… Commodity trading is a marathon. If one truly wants to succeed, they will only do so if they are patient and realize that any 1 year..or even 2 years does not mean anything. It is the compounded annual rate of return over many years. The reality is that investors throw money at commodity trading advisors after they had a good year ( like last year) and then this year..when nothing has happened ( yet) they get nervous and start redeeming. I have seen this over and over again. I have had phone calls throughout this year…asking why are they not making any money. My answer is simply nothing has to happen when trend following. There are no real trends.. We had a nice Sugar Trade… a nice sell short US dollar…and not maybe a gold trade cooking.. but nothing extended…
6. Remember these words.. or better yet write them down.. Patience and Discipline. If one can maintain these attributes they stand a very good chance of compounding their money over time. It is extremely hard. I have been there. You start to question yourself if trend following does not work any more. However with experience and maturity ( and logic) trends have always existed historically. Even since the time in the Bible with Wheat in Egypt there have been trends. It is beyond improbable that trends will stop now.

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.

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Article Tags: commodity trading, trend following, forex trading, forex

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