scose-no-doubt
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lol
one side is risk,the other side is paradise.
rathcoole_exile
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your risk is very very low.
and to prove it, I'll take the other side of your trades
and to prove it, I'll take the other side of your trades
Everything you do in life has risk. With risk comes reward. Volatility is like a double-edged sword. It can work for you or against you.
By having volatility, it allows for large price movements that can create larger profits, but also larger losses. The way to limit your risk is to have the power of knowledge, know what is going on in the markets, and plan ahead of time with your strategy before you enter the trade. One of the most important things about trading is physcology, most people get too emotional and cannot get out of a trade when they are making a profit and end up losing it all, or people don't know to get out when they've already lost what they can afford to lose. Learn basic trading orders such as stop orders and limit orders as well as OCO, and trailing conditional orders.
The best way to learn is by using a hands on method, which means getting a demo account. PM me know if you need a contact or further advise.
Commodity trading is risky because you attempt to make more than 0.2% which is the "risk -free" rate, if something like that exist anymore.
But I think it is less risky than stock trading because except in the case of some commodities that can make several limit moves, up or down, you seldom see futures lose half of their value in one day and never see any go bust like with stocks.
Start here: Futures contract - Wikipedia, the free encyclopedia
london88
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Probably biggest risk in commodity futures is their ability and tendency to gap, as angelnish said make sure the trade is setup before you enter it. Another point your research habits will need to change slightly as compared to equities, all commodities are influenced by a different range of factors, think of wheat as opposed to copper!
You seen very eager to get into futures but dont understand the basic risk, I suggest you do a little more reading and start to narrow down the type of futures you want to trade, you margin requirements will be higher compared to other forms of trading and you risk being eaten alive.
You seen very eager to get into futures but dont understand the basic risk, I suggest you do a little more reading and start to narrow down the type of futures you want to trade, you margin requirements will be higher compared to other forms of trading and you risk being eaten alive.
Benj1981
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you are a chortler
Patricia12
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Not only future but also all trading is highly volatile and risky.
Benj1981
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not if you use stop loss. Then have bigger winners than small losses and you win at final.
Patricia12
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If I use trailing stop, hedging etc. then!!!!!
Benj1981
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maybe - trailing stop is a good idea for unlimited gains, especially if its not possible that time to know how far the move goes. Then all your left with is profits after small losses. = you win not loose.
justtellingitasitis
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price noise + spread = you won't make money long term, you'll lose. What you're suggesting is that you let winners run, cut losses, and you cannot lose... You clearly can lose. You will only make a significant gain if you pick literally the very bottom, or the extreme top of a move - to base your strategy on being able to do that is lunacy!!
Shakone
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You don't need to pick the very bottom to profit from cutting losers and running winners.
justtellingitasitis
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True, you don't have to pick literally the top or bottom. That was an exaggeration - I should not have been so flippant. The point I am trying to make is that if you have stops, market noise will stop you out more often than not. Obviously, if you pick the direction and run a position sensibly to profit, then you will make money. Statistically, you need to beat the odds to make a profit in terms of picking a move - regardless of what stops you have or don't have.
The big 'however' though, is that this isn't a forgone conclusion. It is not reasonable to say that by having stops and letting winners run, you will make money. If that was the case, every man and his dog would make money. Noise and the costs of trading mean that you would have to beat the odds to make money. It's a simple point, that I have probably waffled through and made overly convoluted.
There is no sure way to profit, and if you have less information than everyone else in the market, which you undoubtedly do as an independent trader apart from VERY rare examples, you are likely to fail over time. Stop losses won't hide that long term.
The big 'however' though, is that this isn't a forgone conclusion. It is not reasonable to say that by having stops and letting winners run, you will make money. If that was the case, every man and his dog would make money. Noise and the costs of trading mean that you would have to beat the odds to make money. It's a simple point, that I have probably waffled through and made overly convoluted.
There is no sure way to profit, and if you have less information than everyone else in the market, which you undoubtedly do as an independent trader apart from VERY rare examples, you are likely to fail over time. Stop losses won't hide that long term.
london88
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Stops must be part of your money management strategy and setting a defined exit strategy before you enter the trade will ensure you get out with what you went in for. Yes noise will on occasions stop you out but you can't run a profitable trade indefinitely??
Could stagger the exit..
justtellingitasitis
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To go back to the original point I was disputing, I will try and make myself clearer - I am not for a second saying it is not possible to have a profitable trade, nor am I saying stops are a bad thing or shouldn't be used. My point is that in order to make a profit, you have to predict the market direction more often than not - regardless of how you skew the payoff in terms of stop vs take profit.
Assume the following:
A liquid asset trades at S
Your stop is at S - n
Your profit is S +xn where x is bigger than 1
If you have many more losing trades than winning trades, fine, you have a big value for x required. But that is only a very simplistic model. Assume you have a standard stochastic process obeying Brownian characteristics, which is reasonable in this example. That means you have a 50/50 of the price going up or down. However, the end result is path dependent. It is the fact it is path dependent that makes the difference.
In essence your stop is a knock out level. So, your upside optionality is reduced, because you can knock out your profitability. Smaller the stop, larger the probability of knocking out, larger the x you need.
It doesn't need to be complex in any way - in order to profit, you have to beat the market. Your returns have to be better than the statistical average. Given than any independent trader has limited information, limited access to liquidity, limited reaction time, and is a price taker only, it is highly unlikely that you will make money without having an edge. In turn, its very unlikely you will have an edge on the market.
Assume the following:
A liquid asset trades at S
Your stop is at S - n
Your profit is S +xn where x is bigger than 1
If you have many more losing trades than winning trades, fine, you have a big value for x required. But that is only a very simplistic model. Assume you have a standard stochastic process obeying Brownian characteristics, which is reasonable in this example. That means you have a 50/50 of the price going up or down. However, the end result is path dependent. It is the fact it is path dependent that makes the difference.
In essence your stop is a knock out level. So, your upside optionality is reduced, because you can knock out your profitability. Smaller the stop, larger the probability of knocking out, larger the x you need.
It doesn't need to be complex in any way - in order to profit, you have to beat the market. Your returns have to be better than the statistical average. Given than any independent trader has limited information, limited access to liquidity, limited reaction time, and is a price taker only, it is highly unlikely that you will make money without having an edge. In turn, its very unlikely you will have an edge on the market.
robertdaley
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Limit-locked moves, on average how often do they happen and how long do they last for in say the crude oil and soybean markets? Just want an idea from someone with a lot of experience.
Thanks. Rob
Thanks. Rob
