Top Secret for Successful Commodity Trading

by William Davies
(UK)

Probably the biggest secret for achieving success in commodity trading is discipline.

And the biggest hurdle the commodity trader faces and must overcome is probably her emotions. It seems many commodity traders in the market lose because they don’t follow a trading plan.

What do they do?

They see a few losses, they get all excited, make a rash decision to abandon the plan and start to taking wild shots in the market.

But the commodity traders who set out a sound, solid set of trading rules that meet their personal financial situation and objectives, and then stick by those rules, will likely increase their chances of successful trades.

In fact it could be said that trading discipline may be more important than your commodity trading system.

Using a disciplined approach means you become mechanical in your trading activity, as and when certain price actions are alerted.

Just close off your emotions to all the noise out there, and do not take one trading signal over another.

A disciplined commodity trader will let her profits run and cut losses short by sticking to rigid rules.

But remember, trading discipline does not guarantee you perfect outcomes. Even when you create a diversified portfolio, you realise that you are likely to suffer losses in some markets.

Yet, by being disciplined you will trade the whole portfolio and this means you don’t need to second guess your system.

If you have a trading system that is shown to have been successful, then discipline may be the key criterion for you to secure a profitable return.

Remember that these ideas all work together - you cannot have the right commodity trading system and yet have no discipline.

And equally you can’t select the right trade without the right trading system, and you can’t diversify without having an adequate capital base.

If you follow these rules of money management closely, trading may well not be as glamorous and exciting as you once imagined it would be.

But by employing sound money management techniques, you will diversify your risk and take a cautious approach which aims to get 25-50% returns on your capital, year after year.

Now that sounds like a good return on investment by any measure, and I believe that’s the approach any new trader should take towards the commodity markets.

Based on an article on trading discipline by Adam Hewison, Market Club and INO.com


Using this discipline, you could trade crude oil. Watch the video here