TroyMccully324

It's frustrating when we perfectly forecast a move but barely make a profit due to a string of problems and errors. Lets say the E-mini futures contract hits a brick wall at 1300 and you expect it to decline to 1296. This is a potential short sale of four points, and let?s say it does just that. We enter and exit ?at the market? making our spread cost one half point. We pay a round turn commission costing one-eighth to one-quarter point. We give up a half point of market slippage by the time we push the mouse button.

The move looks so good we overstay our welcome by a few minutes as it rallies back a full point in commodity future option. We panic out giving up this full point. For even a good trader, this is sometimes a normal train of events. We gave up 2 1/4 points of a four-point move, thus, we pulled out roughly 45% of the total move.

Commodity future option pros do not have the luxury of blowing out their accounts like someone who has a day job and trades for a hobby. It's like playing poker and having the advantage of the most chips at the table. Probability smiles on those who can hang in there the longest to let the odds swing their way. Those who are under-capitalized, thus in for a short spell, (risk a lot on each trade) have to be "lucky" to catch a run before their chips disappear. That's why we need to have a method that attempts to identify, "high probability, low risk" trades. Remember this phrase: "high probability, low risk trades" you have less commodity account money to trade with than you desire, you can also gain this "deep pockets" edge by reducing your trading size. Most commodity futures and options traders could easily reduce their normal position size by one-half and instantly become better traders. Reduced pressure and survivability are only two of many reasons to trade smaller.

As future is essentially a bet between a buyer and seller about what the future market value of the commodity will be. Some futures may be settled in cash with no physical delivery but this is not always the case. With futures there is always the very real concern that a hapless speculator unable to find a buyer may actually have to take delivery of 15000 frozen pork bellies and 2000 barrels of North Sea crude.

Your job is to watch yourself trade and identify the money drains. Pretend you are an efficiency expert watching a factory production line. You need to identify and then work out the reasons why you are not getting at least 50% of the best moves. If you can eventually do this better than MOST commodity futures traders, you?ve succeeded and the market will pay you accordingly!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

I focus much on loss strategy because if you can greatly reduce them, then the profits will take care of themselves. Realize that losses are part of the commodity futures and options game and no perfect trading system exists. Demanding trading perfection of yourself is futile and a sure road to failure. To make money, you don't have to be the best trader in the world - just better than most!