Trading education » New Traders

Commodity Trading Blunders I, PART 1 – My Early Days As A Novice Trader

admin — Sat, 22 May 2010 23:59:33 +0000

There is always “year one” for every commodity futures trader. I had mine and made every mistake a trader can make and more. Here’s my story of how I stumbled into the lion’s den, got gored a few times and even made some money. My hope is that beginners will read this and avoid some of the more obvious stuff. Here’s to all new traders!

It all started in the spring of 1979. I was 28 years old. I was in the office of my new retail electronics company. I was going over some paperwork and got a call from a young and excited broker from Boston Commodities, or some name like that. He must have had the list of new businesses and was cold calling the small business owners.

I had no idea, but at the time sugar was in a major bull market trading at around 11 cents and destined to reach 45 cents later in the year. Gold, silver and copper were also making new highs. Bunker Hunt was cornering silver on its way to $50 an ounce. Gold was destined to hit $800. Anyway, this kid from Boston was on fire and told me I was missing the opportunity of a lifetime in sugar futures contracts. He wanted to mail me some hot news off the commodity news wire. He was looking for a $15,000 stake; a lot of money in the late 70’s. He said he would buy me four futures contracts of sugar. I didn’t know anything about commodities at this point, but told him to send over the info anyway.

When it arrived, it was the usual bullish hype about shortages, disease and reasons sugar had nowhere to go but up. Somehow he knew to call the moment I received it. He convinced me I could make an easy double or triple, so I agreed to send him $15K. Now, this part gets interesting. I hadn’t opened an account or sent him money yet. He said he needed to put me on the phone with trading to lock in my four futures contracts for the next day. I was confused, but agreed.

The next thing I knew a guy answers the phone with a gruff voice and yells, “TRADING!!!” I said I didn’t know if I should be talking with him because I didn’t know what to order. I think they had me on a speaker-phone because I heard some guys laughing in the background. He said, “OK, you’re locked in for four Oct sugar commodity futures contracts on tomorrow’s open.” I said, “OK, I guess,” and hung up. By the way, why is it the most aggressive brokers put on a gruff, hoarse voice act, like they’ve been in the trading pit yelling all day? I hear it all the time… ridiculous.

The kid commodity broker called right back to congratulate me on my smart decision. He sent me the commodity account forms by overnight service. I must admit I was excited. I had no idea about the commission rates, risk potential, position sizes… nothing! But I wanted in! I was the perfect sucker. When the account forms arrived I filled them out and was getting ready to send everything back.

By coincidence, I got a call from my CPA on a different matter. I explained to him about this new venture. Somehow he knew something was amiss and told me to let it go. I called the Boston Commodity Kid back and told him my CPA gave it thumbs-down. I had a hard time getting the kid off the phone. He called me spineless; he said I needed to be a real man, and I’d regret missing out. He also said I needed to stop acting like a woman. For the next three days his buddies took turns working me over trying to close the sale. Meanwhile I started reading about commodity futures trading. That was the first right move I made!

Part Two of Four – Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

By: Thomas Cathey

Forex Trading Made Easy – How to Win at FX Trading When 95% of Traders Lose

admin — Fri, 12 Feb 2010 04:54:36 +0000

How can Forex trading be made easy, when such a huge amount of traders lose money? The answer is it can, if you get the right education and adopt the right mindset which most traders fail to do. Let’s look at how you can make a great second income from Forex trading in around 30 minutes a day.

The first point we need to make is while you can win at Forex trading and it’s easy to learn a strategy which can help you make money, you do have to make some effort and most new traders don’t do this.

Most traders buy one of the hyped Forex robots or Forex Expert Advisors and think they will get a life long income, with no effort and all for under a couple of hundred dollars! These systems look to good to be true and they are; they don’t work so avoid them and get some decent education.

When learning Forex trading, it’s important to keep two key points in mind firstly, you don’t need to work hard and secondly, you don’t need to be clever to enjoy success. When trading you simply need to learn the right knowledge, you get no extra money for effort or working hard, just being right with your trading signal. You also need to keep your Forex trading strategy simple, because the more complicated you make a strategy, the more chance there is of it having to many elements to break.

Anyone can learn a simple strategy which can maske money but you need to clear one more hurdle before you can enjoy Forex trading success and its this – you need to adopt the right mindset to become a winner.

To win at Forex trading you need to focus on staying disciplined and keeping your losses small. You are going to hit periods of drawdown and it’s how you deal with these periods which is very important. If you get frustrated when you lose and start to run losses or over ride your trading signals, you will lose. You have to keep your losses small and preserve your equity and if you do this, you will get trades you can run for big profits.

The hardest part of Forex trading for most traders, is keeping their emotions out of their trading and its a fact anyone can learn a strategy which can win but most traders can’t trade it with discipline and lose.

Getting the right mindset is based on a good education, confidence in what your doing and an acceptance that you have to lose in the short term to win long term – it really is that simple.

By: Samuel Leslie Berkovits

Forex Trading Education – 2 Simple Tips To Start Winning

admin — Fri, 29 Jan 2010 22:13:13 +0000

In this article I’m going to share with you 2 uncommon tips that most losing traders don’t know about. Try demo trading with these tips in mind, and chances are you’ll find that you’ll become a better trader.

Tip #1 – Trade Less

This doesn’t mean that you should pay less attention to your trading charts. What I mean is that you should enter into fewer trades which have a higher probability of winning.

Many new traders make the mistake of entering into every single “decent” trade setup that they see. The problem with this approach is that these traders are concentrating too much on maximizing their chances of winning (more trades, more chance to win right?), without considering that they are actually increasing their chances of losing too! Generally speaking, the more trades you enter into, the more risk you are taking.

Forex trading is a risky business, so try not to increase the amount of risk that you’re already taking. When you enter into trades less frequently, you’ll naturally choose those with a higher probability of winning, and NOT enter into trades with a lower probability of winning.

Remember, in Forex trading, it’s not about how many times you win, but how MUCH you win. Even if you only have one successful trade each month, it’s enough for you to be rich if you can be consistent about it.

Tip #2 – Put Your Eggs In One Basket

I’m sure you’ve heard of the phrase, “Never put all your eggs in one basket” which refers to the diversification of your funds. Generally, this is good advice.

However, in the Forex market, a better piece of advice would be “Only put SOME of your eggs in one basket”.

Similarly to Tip #1, placing too many trades at the same time will dramatically increase your risk of losing. Trading too many currency pairs at the same time, is a tactic used by many inexperienced (and often losing) traders. They think that by diversifying their trades, they can better limit their potential losses.

This is a big mistake unless you have a large capital pool to trade with.

If you only have $2,000 of capital to trade with, for example, your stop loss levels are going to be very tight if you have too many trades open at the same time.

This often results in most of your stop losses being triggered, causing you to immediately lose in your trades.

By: Harold Hsu

Currency Trading Education – 3 Essential Facts You Need to Learn to Earn a Triple Digit Income!

admin — Mon, 25 Jan 2010 16:15:41 +0000

Currency trading education is essential if you want to make money in Forex because 95% of all traders lose money and they don’t lose because Forex trading is hard – it isn’t. They lose because they believe myths or get the wring education. Learn the 3 facts enclosed and there significance and you can get on the road to currency trading success.

Most new traders simply don’t bother putting in any effort at all instead, they buy a cheap piece of software and think they will win with no effort but the market soon teaches them some respect, by handing them a quick equity wipe out. If you really could win with no effort, a lot more traders would win and they don’t, so avoid these systems. Now let’s look at our 3 facts for currency trading success.

1. Currency Trading is Simple and Simple Systems Work Best

Many traders think if they put in a lot of effort and make clever complex systems they will make money but this is simply not true. The fact is you only need to learn a simple system because simple systems work best,

If you try and make a system to clever with to many inputs, it will break in the brutal world of real term trading. You don’t need to work hard and you don’t need to be complex to win so keep your strategy simple and robust.

2. Money Management is the key to long term Success

No system will win without strong money management and that’s a fact. Most traders have an entry strategy but put no thought into an exit strategy but its vital.

Money management is much more than just placing a stop – you need to learn how to do it in terms of, market volatility and also how to trail stops correctly and most traders simply don’t do this and lose.

3. Confidence and Discipline are the Key to Making Your System a Winner

If you cannot execute your trading strategy with discipline, you don’t have one and this is the bit of currency trading education which is the most important, as its lack of discipline which causes most traders to lose. They cannot keep losses small and they cannot stay in trends and hold them.

If you want to be a disciplined trader you can and it comes from a good currency trading education and confidence. Any trader can learn a simple method which has the potential to win but very few traders have the confidence and discipline. to trade the strategy as it should be traded and make it profitable.

Currency Trading Success is Open to You

You can easily learn to trade currencies in about two weeks and implementing your strategy should take no more than 30 minutes a day – but always keep in mind it is your mindset which is the key to your success.

If you see the significance of the above 3 facts, you can become a currency trader from home and enjoy success in the world most exciting investment – global Forex trading.

By: Kelly Price

Forex Trading Education – What Is A Trailing Stop Loss?

admin — Wed, 06 Jan 2010 01:51:10 +0000

Trailing stop losses are a very popular topic among new traders. It seems like trailing stop losses have the best of both worlds: you can protect yourself from losing too much, and also lock in more and more profits at the same time.

What Is A Trailing Stop Loss?

Basically, a trailing stop loss involves the moving of your stop loss level as your trade progresses in your favour.

For example, when you buy a currency pair and the price moves up 30 pips, your stop loss level (which was initially 30 pips below your entry price) is then moved to your entry price, ensuring that you won’t lose any money.

When the market rice moves a further 30 pips higher (a total of 60 pips above your entry price), your stop loss level will be positioned at 30 pips higher than your entry level.

However, when prices start moving against your favour, the trailing stop loss does not shift.

2 Types Of Trailing Stop Loss

Trailing stop losses can either be placed manually by the trader, or automatically placed by a trading platform.

Manual trailing stop losses are typically placed at prominent support/resistance levels, especially below previous swing lows or above previous swing highs. It is up to the individual trader to determine where to place the trailing stop loss.

A more popular way of using stop losses however, is to set a fixed pip amount to trail the market price. This can be done in most trading platforms.

In the above example, the trailing stop loss is set to trail the market by 30 pips. It is initially placed below the entry price by 30 pips, and as the market price moves up by 30 pips, the stop loss is shifted to the entry price (which is 30 pips below the new market price).

By: Harold Hsu

Forex Trading Education – Scam Artists Are Everywhere

admin — Mon, 04 Jan 2010 02:40:44 +0000

There are many sources of Forex trading information available on the internet today, and new traders are spoilt for choice when choosing whom and where to learn about trading from. Unlike most other topics of interest, however, Forex trading is particularly susceptible to online marketing scams.

In any area of interest which involves making money, there will always be online scam artists trying to make a quick buck out of ignorant web surfers. These scammers usually tempt new traders to buy their latest “trading system” which guarantees “instant wealth”. Needless to say, there are always unfortunate people who get conned by these scammers.

And because there are so many of these con artists, the genuinely helpful information about Forex trading has been buried among all the garbage information that these scammers produce.

After being online for more than 10 years, here are 5 tips that have served me well when choosing my Forex trading resources:

Look for a photograph: Most people who provide genuinely useful Forex trading information are not afraid to post up their photos because they have nothing to hide.

Look for a track record: Scam “trading systems” often don’t include a track record simply because those “systems” just don’t work. They’re just there to cheat you of your money.

Look for visitor comments: Most useful Forex trading websites will attract good comments and testimonials by its visitors. Good comments found on external (i.e. other) websites are even better.

Look for LIVE trading videos: Any “trading system” based on hindsight will always look good on paper. However, such systems are only useful if they can be used in live trading. Look out for live trading videos for proof of a system’s profitability.

Look for daily trade entries: See if you can find a blog that shows the daily trades taken by the trader who owns the website. A truly profitable trader will not be afraid to show his daily trades – even if it later results in a loss – because he has confidence that the system he uses will eventually lead to a net gain at the end of the month.

While the first three tips can generally be faked by scammers, the last two tips are hard to lie about, especially if you’ve been constantly visiting the website in question.

Basically, if a website promises you something that seems too good to be true, then you’re probably right. Common sense goes a long way on the net, and you should always listen to your own intuition before handing over your money.

By: Harold Hsu

Essentials of Stock Trading Education

admin — Fri, 01 Jan 2010 04:22:11 +0000

Many people have friends who tell them about various stocks but haven’t gotten into it themselves because they don’t even know where to begin. If you jump right in without knowing what to do exactly, you might lose your shirt. This is exactly what most new traders do. It is often quoted most new traders lose their account within 6 months and have to get out. Do not let this happen to you.

With a good education about the market, you will easily be able to tell when it’s the perfect time to buy and when you should sell to maximize your profits. If you know someone who is familiar with the stock market, you might be able to avoid reading dull books or paying for expensive classes. If they are good, they might be able to give you a basic education about the stock market and maybe let you watch what they do exactly for a while. It never hurts to have a “partner” either. It can be fun to have a friend to talk stock with instead of boring your significant other with details.

Courses that teach you about stock trading is always a good bet. These are offered all over the place from colleges to online. Just make sure you research the institution or teacher so you are getting the most for your money. Seminars aren’t as good as a 2-6 week intensive class that will
teach you everything you need to know. There are also tons of virtual stock market simulations you can mess around with online. These simulations won’t cost you anything so you can experiment with risky stocks as well as blue chips.

By: Mark Crisp

Selecting the Best Day Trading Broker

admin — Sat, 26 Dec 2009 05:47:29 +0000

Day trading brokers are essential to new traders. They do the transactions for you and even give suggestions as to which transactions to make, whether you should sell now or later. Your choice of broker is therefore crucial to your success. But other than this criterion, what other qualities must your broker have and how do you choose the best one in your trading company?

The first thing to consider is the cost. Some really good brokers can charge high rates for every transaction that he does. While this may give you more profit, still you may not earn much because a big chunk of the money goes to the broker. You should therefore be able to weigh the transaction costs and commissions that you will give your broker against the profit that you are supposed to have.

It is also important that you require financial stability from your broker. He must have enough capital or assets. This will lessen the probability of him running away with your money. More importantly, transfer of funds between the two of you must also be relatively quick and easy. See also if he accepts online payments.

He must likewise be reliable and with a proven track record in this field. To know this, you must do your own research. Ask the company for details on the broker’s record, such as the number of clients that he had, how many of them lost their money and how many of them actually made profit. Or you can ask fellow traders as to which ones are good and which ones are not. You can also search his name in the net. It is possible that his name may have been mentioned in forums or message boards, so you will have more information on how he works or operates.

Of course, there are other services that he can provide, such as technical support and chart analysis. See also if he uses a trading platform that you are comfortable with.

With the many day trading brokers available, choose one who can provide you with the best service at the least cost. Remember your goal as you ventured into this kind of business, and that is to gain profit. If a big part of your gain goes to commissions, then it is time to look for other brokers who can provide you with the same service at a lower price.

By: Miodrag Trajkovic

The Forex Platform Trading Top 3 Forex Scams

admin — Sun, 20 Dec 2009 04:17:26 +0000

Whenever there is money around you are going to find scam artists looking to take advantage of the unknowing. Like roaches in the dark, these scammers look to prey on the crumbs. The Forex market is the most liquid of all markets. It overwhelms all other markets in terms of capital moved n a daily basis. As a result, you can be assured that the roaches do not hesitate to come out. Listed below are the top 3 Forex scams.

1. The ubiquitous get rich quick Forex course. If you have been around for any period of time you know exactly what I am talking about. I have literally come across well over a hundred forex course promising riches in no time, “Buy this course and we guarantee that you will make $10,000 a month with only $100 start up money!” Don’t believe the hype.

2. The all important “Demo account.” I am not so sure that demo accounts qualify as a scam but they can be deceptive. The demo account on a trading platform is not a real benefit. The problem with these accounts are that they are not based in reality. Often, new traders get into a demo account and do fairly well and then wonder why they re doing so lousy with their real capital account. The reason of course is due to the inherent problems that arise when your actual money is on the line. My advice: stay away from demo accounts. Instead, get a quality forex platform trading and start with a real low amount (Start with an account of $100 or less. The link below leads you to a real quality forex platform trading site that can be started with only $50).

3. The Forex “Holy Grail.” When you read about one trading strategy that can make you a winner 90% of the time or the trading method that never fails do yourself a favor and run the other way. More than likely you have to pay an exorbitant amount of money and then get hit up again and again for more money. The truth of the matter is that no strategy works all of the time or is accurate 90% of the time.

By: George Knoechel