Trading in commodity futures market requires a good plan and there are a number of aspects which should be observed to trade profitably. The market is confronted with risks that leave many traders at the losing end. About 85 to 95% of traders in this market do not trade profitably and this means that the money is earned by a few traders. These are the traders who apply strict trading discipline and manage their losses effectively.
If you are a beginner, you should not risk trading with a large amount. You may begin with a few hundreds of dollars and trade carefully. It is essential that you do not go for big profits because this means trading with big risks. The larger the amount you trade with, the more you risk losing that money. Therefore, when you are wrong, you will suffer big losses. This can send you out of the market fast than you anticipated.
Commodity futures market can shift in price movements unexpectedly. Most of the successful traders make a lot of losing trades but the good thing is that they leverage what they have to lose. They trade with manageable amounts and even when they trade with big money, they apply the stop loss order strategy very effectively.
When you realize that you are faced with a margin call, it means that something is wrong in you trading. You should never accept to be confronted with margin calls because it implies that your trade is not correct. You have to check the contract size. For example, if you have$5,000 account equity, you should not trade with more than $250 in any one given trade.
You need to give yourself a risk or loss margin of about 2% and this will ensure that in the event you trade in loss, the total amount lost is not too big. Losses cannot be eliminated and therefore you have to manage them. You will incur numerous losses as you trade but you have to keep them minimal. When you get a profiting trade position, you have to optimize that chance.
This means that you have to hang on in that position until you have earned something substantial. The numerous losing trades you face are covered by the large profiting trades you occasionally get. In essence, if you are a beginner in futures commodity trading, you should not risk your money by trading with big amounts.
You need to trade with a plan and follow the trend. Trade with low amounts and scale down your losses significantly. With about $200 dollars, you can start trading in a commodity futures market. This means that you will not get a lot of profit but the good thing is you are gaining experience.
As you begin to understand how the market trades, you can increase the amount successively. You need to have a long term goal and avoid short end goals that will only plunge you into pitfalls. Many beginners who trade in this market lose their amount before they even learn the basics and tactics of trading in commodity futures markets.
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