A Couple Notes On Day-Trading Commodities
July 20, 2020
It has never been easier to become a commodity trader. Nowadays you can trade from anywhere, anytime — even on your phone. But it has also become a lot more competitive and thus harder to make money CONSISTENTLY. Don’t be fooled by the seducing brokers!
“Trading” Has Never Been Easier
Yes, “trading” itself is now easier because you can press a button from anywhere, anytime. And the trade is done.
But remember that anyone can press the button and “trade”.
But very few make money over time. And consistency is one of the key elements in judging trading performance.
The 90/90/90 Day Rule
Anton Kreil, the ex Goldman Sachs trader, is well known for sharing his 90/90/90 day rule.
What’s the 90/90/90rule?
90% of the retail traders lose 90% of their money in 90 days.
How about that?
But “Trading” Is More Than Just Pressing Buy/Sell
Trading should be understood in terms of consistently making money in the markets. And that’s much, MUCH harder than just pressing BUY/SELL.
Technically, this means it’s never been easier to MAKE money. But don’t forget, it’s also much easier to LOSE your money. Probably even easier than ever before.
Brokers Want Your Money
Remember: brokers want your money, and for every winner, there is a loser.
Brokers want you to day-trade commodities hoping to make a profit. It’s very hard, most fail,
This means that they’ll try to make you trade as often as possible with the highest leverage available.
Don’t fall for that, let’s review a few tips about how not to lose all your money trading.
Do NOT Use High Leverage
No professional commodity traders use large leverages such as 50x, 100x, or even 200x. Forget about that.
Leverage is easy to set up, but very hard to risk-manage.
Yes, all brokers have the stop-loss order options, but STILL, it’s hard to chose a good level for your stop-loss, and might not be the ultimate level at which you square off your position. There might be slippage.
Start Practising With A Demo Account
Start with a Demo Account, with virtual money and 0 risk.
Don’t let brokers convince you with their 20USD vouchers.
Yes, they’ll give you 20 or 50USD with your first 500USD deposit.
But you’ll lose the 500USD earlier than you think.
Demo Account Trading Is NOT Real Life Trading
If you happen to be fantastically skilled at the demo account trading: Congrats!
However, note that trading real money is very different!
If you decide to go pro, don’t gamble-trade, practice trading strategies on your demo account first and learn how markets work.
Takeaways: Follow The Markets!
Experience is the best teacher, so the skills you learn trading on your own will be very useful in case you decide to apply for a full-time job at a later date.
RELATED: Tips About Commodity Trading Careers
If anything, getting a good retail broker like Interactive Brokers or IG can help you follow the market.
In my view, the mobile app for Investing is the single best resource.
There is no better way to get started than starting following the markets, and read about trading strategies and supply demand fundamentals.
Commodity markets are open to everyone, even if most of the physical trading is controlled by the large trading houses.