Here are 4 of the most familiar reasons, why commodity traders and investors lose money. If you can have the regulation to consistently conquer these common type of mistakes, you will place the odds lots of in your favor.
Lack of Education on Commodity Trading
Many types of new traders do not teach themselves on, how to deal commodities properly. This goes further than learning the futures margins, ticker symbols, Online Books, Free Commodity Tips and agreement sizes of a variety of the commodities. You are opposing against other dealers who have had the top training in the big business and have been dealing professionally for lots of years. Trust me, they will not get it very easy on you. You remain score with the money in this big business and everybody is trying to attain as many points as likely – no charity here.
At the extremely least, I recommend understanding several books on the basis of trading, starting with Trading By The Intelligent Investor Best Books on Commodity Market.
Over Leveraged Commodity Trading:
Almost every small trader who projects into commodities decreases into this trap.
There is enormous leverage when the trading in commodity futures and couple bad deal can wipe out the over-leveraged dealer. Fortunately, there is a very easy rule you can pursue to take care of this trouble - do not take the risk your entire account on a single trade. Also, do not deal an agreement that is too big for your account volume. For example, you should not trade 3 futures agreements that average a 2,000 dollar move a day when you have a 10,000 dollar account.
Do not take risk more than 5% on any one deal. Most of the professional money traders risk less than 2% on any one deal. This is tougher if you create trading commodities with simply a 10,000 dollar account. In this case, you must risk no more 500 dollars on a deal. If you desire to risk maximum 500 dollars on a deal, all you have to perform is place an SL (Stop Loss) order 500 dollar away from your entrance. It doesn’t assurance you won’t displace more than 500 dollars, but it is as shut as you can obtain.
Commodity Trading Plan:
I cannot pressure enough how significant it is to have a dealing plan in place previous to you begin dealing commodity futures. A dealing plan is your show to how you will manage your dealing. It must be in writing & reviewed frequently. The trading plan must include the trading markets you will deal, your money management, trading strategy and even a preparation to stop dealing for a period of time if your account commodity drops to an assured level.
The trading without a plan or proper experts tips such as Live MCX Tips with news Headline and will guide to erratic & undisciplined trading, which eventually leads to aching losses.