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There is no mystery to trading commodities

January 11th, 2009

There is a general misconception abroad in the land – that there is something dark and mysterious about trading commodities.  In fact, is is as open and transparent as the mind could imagine.  Whether transacted by open outcry in the pits or over the electronic wire, everything is revealed to the trader.  It is most helpful in developing trades if the trader already has knowledge of Candlesticks, which so beautifully reveal the underlying psychiology of the market at any given time.

One major pitfall which is often associated with commodities trading is that the risk cannot be controlled, and the trader could lose everything in a flash.  That can be true if he tries to sell something which he does not already own.  Doesn’t that follow other aspects of life, too?  What one must do is to place his own money on the table at the beginning of the trade in a way that his risk is limited to the amount that he has invested.  The best and surest way to do that is to buy, not sell, Options; for with Options, your risk is limited to the amount you have invested.

I have found that the Japanese Candlesticks method of price presentation is most helpful in the development of my trading approach.

Entry Filed under: Business