Top Mainly Reason of Losing Capital in Commodities Trading

As we all Commodity Trader & Investor, so this post is actually very much imperative to know as well as require understanding the truth…

If you have not heard by now, mainly people who trade commodities and lose money. Most of the estimate range in the 75 to 90 percent range of those who have lost or who are losing in the world of trading commodities. Those statistics are dismal for somebody who needs to venture into trading commodities. Auspicious, lots of the losers have common traits that contribute to their losing and they can serve to assist others become successful.

Here are four of the mainly general reasons why commodity traders lose money. If you can have the disciplined to consistently rise above these common mistakes, you will put the chances much more in your favor.

Lack of Knowledge on Commodity Trading

Lots of new traders & investor don’t educate themselves on how to trade commodities properly. This goes away from learning the ticker symbols, futures margins and contract sizes of a variety of commodities. You are competing against other traders who have had the most excellent training in the business and have been trading professionally for lots of years. Believe me, they will not take it easy on you. You keep score with wealth in this business and everybody is trying to score as lots of points as possible – no charity here.

Over Leveraged Commodity Trading

Approximately all small trader who ventures into commodities falls into this trap. There is vast leverage when trading commodity futures and a couple bad trades can wipe out the over leveraged trader. Fortunately, there is a simple rule you can follow to take care of this problem – don’t risk your whole account on one trade. Also, don’t trade an agreement that is too large for your account size. For example, you shouldn’t trade three futures contract that average a $2,000 move a day when you have a $10,000 account.

Money Management

Don’t risk more than 5% on any one trade. Generally professional capital managers risk less than 2 percent on any one trade. This is tougher if you begin trading commodities with only a $10,000 account. In this case you should risk no more $500 on a trade. If you want to risk no more than $500 on a trade, all you have to do is place a stop loss order $500 away from you enter. It doesn’t promise you won’t lose more than $500, but it is as close as you can get.

Commodity Trading Plan

I can’t pressure enough how important it is to have a trading plan in place before you begin trading commodity futures. A trading plan is you’re direct to how you will control your trading. It should be in writing and reviewed regularly. The trading plan should include the markets you will trade, your trading plan like Accurate MCX Tips and Commodity Tips Free Trial, money management and even a plan to stop trading for a time of time if your explanation equity drops to a certain level. Trading without a plan will lead to unpredictable an undisciplined trading, which ultimately leads to painful losses.