Benefits Of Commodity Trading Plan
Planning plays an important role in any action of our lives and similarly sketching
out commodity trading plan before beginning futures trading can be very handy. You will have set action plans in line to your objective, helps you to be consistent and track actions of your futures broker.
Having at least a minimum knowledge of commodity futures, futures trading strategies makes it easier in drafting a sound commodity trading plan. Don't complicate your trading plan and aim to keep it simple and well-designed. Let's look into few key aspects a good commodity trading plan should cover:
Choice of Commodities Markets : With the presence of many commodity markets like grains, metals, energy, livestock etc, it is crucial to decide on the markets you would enter. Depending on your knowledge, experience and risk appetite, you can chose to trade either in one or more markets.
Account Size : Normally it is believed to be difficult to survive with less amount in futures account, however, with prudent trading strategies one can make good profits. Don't expand your finances and start off with large trading accounts, instead after gaining certain experience in commodity trading, it is advisable to increase account size in a phased manner.
Trading Strategies : The most crucial part is having sound commodity trading strategies in place. Regular information about your target commodities, general market, economic situation, technical and fundamental analysis and a smart commodity broker can aid you in framing apt strategies. Though constant changing of strategies is not recommended, a regular revision as per the existing conditions is prudent.
Risks in Trading : Keep yourself abreast of all the risks involved in executing a trading order and plan the amount you are prepared to risk on it. A Stop Loss order often is seen as a tool to limit your losses on trading. Stop loss order is a form of futures order, which requires you to specify the limit of loss on any futures trade. It helps you to restrict your losses and enables you to survive for a longer period.
Maintain Records : Keep track of all the trades you made, the strategy used in the trade, the market conditions, profit or loss made on the trade etc. Such records themselves form a very useful guide for your portfolio in the long run enabling you to plan well.
by: kellyprice1225
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