Commodity Future Trading: How to Navigate the Uncertainty

The business of commodity future trading can be very confusing for many traders. The commodities market represents many uncertainty and can fluctuate greatly from day to day. Here are a few things to consider about how to navigate the uncertainty that comes with the commodity futures trading market.

Educate Yourself

One of the best ways to eliminate uncertainty is to educate yourself. A good education in the commodities market can go a long way towards making you feel more confident about your ability to trade. With a good education, you will understand the intricacies of the market itself and have some idea of what to expect. While no one can predict the future and certain market movements surprises, education can make a difference. Read everything you can on the subject of commodity trading. Attend a seminar on commodities. You might even take a class on commodity trading from a number of different resources. There are even online programs by some of the worlds leading commodity futures trading experts. Regardless of whichever you choose, make sure that you thoroughly educate yourself in the ways of the commodity futures market.

Test Strategies

Before getting too deeply involved in the commodities market with real money, you should test out any potential strategies first. Using a demo account can be a great way to use fake money and try out your trading strategies in real time. This will help you determine whether or not a trading strategy is worth its weight and it will help you greatly eliminate uncertainty. When you have consistently made profits in a demo account, you will feel much more confident about your ability to trade in a live setting.

Money Management

Once you start trading with real money, you need to make sure that you use a sound money management strategy. You should never put too much money at risk on any one particular trade. Most professional traders will tell you to never risk more than 2 to 3% of your entire account on one trade. However, many traders will ride successful trades as far as they can. This will allow them to take advantage of large moves in the market and to limit their losses to small ones. Utilize stop loss orders to make the most of your trading experience in the commodities market. It will allow you to stick around for the long-term and keep trading.

Anticipate Losses

In the world of commodity futures trading, there will be losses. In fact, you may experience a great deal of losses when you first get started. While your winning ratio might increase, you will never be able to be a perfect trader. Many people get discouraged when losses occur and decide to leave the commodity market indefinitely. If you are going to succeed in this market, you need to be able to live with loss. Just know that you can always make up your losses, if you make the right choices and stay for the long term.

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