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The “The 3 Realities In Commodity Trading " article examines and elaborates upon on the three inevitable attributes of commodities trading: winning, losing, and preparation.
You will lose .
There is no two ways about it. In excess of 90% of participants who trade commodities and futures markets lose money. The odds are not in your favor.
That being said, there are few other alternatives that will produce the returns that the commodities and futures markets can provide to the properly prepared investor. Some traders have made fortunes by making only one out of 20 successful trades.
The most important thing for any trader is to be prepared for losses. You must have sufficient funds to survive during unprofitable trading periods. Prior to beginning training, an individual should have a strategy in place in order to limit and manage the inevitable loss aspect of commodities and futures investments. No one likes losses. But unless you're ready to go through periods which at times can seem very long, you will ultimately fail at this endeavor. You must possess the desire to succeed despite adverse conditions. There will be many battles that you lose. But unless you want to win the war, it will also be lost.
You will win .
Due to the leverage inherent within any commodities or futures contract, when you make a successful trade, the return on that trade is phenomenal. Just as important as knowing how to manage the negative aspects of trading, one must be able to maximize the profitable results as well. They are both simply two sides of the same coin.
Even if you have the ideal loss management strategies and techniques in place, unless you can replicate this endeavor on the profit side, you may find yourself a loser just the same – not because of the lack of a proper loss minimization mechanism, but because of the lack of a proper profit maximization strategy. Only in the commodities and futures trading markets can someone start with only a few thousand dollars and turn it into a hundreds of millions of dollars after only a few years. These individuals are real and known throughout the trading community. Whether you will become one of the legends is a matter of self determination.
Be prepared.
The commodities and futures markets are not casinos. There is no gambling involved here. There are those who have done their homework and reap the rewards, and there are those who have not who lose their portfolios.
Unless you're willing and able to put in the long hours of preparation needed to become a profitable trader, you should not waste your time. A thorough analysis of every market under consideration needs to be done before hand. When the research has been properly done, the odds turn your favor. Though most traders lose money on most of the transactions they make, whether they are successful or not, some traders can record outrageously successful track records. They trade much less often, but are always far better prepared than their counterparts.
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