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Commodity Futures and Options Trading-Money Management, Trading and Risk Logic, Part 4

  • Posted on March 25, 2010 at 7:15 pm

Perhaps the most important aspect of the right of the thesis is survival. Is the number one. Survive without the bad times we went without hope. Money and risk management subjects may seem boring, but read on to see how it can be exciting when you learn the concrete and the rationale for their use. You can act the same way again!

There are commodity futures and option for dealers to make multi-million a year. Some are known to earn a few hundredmillion per year. They always make a good life, to say the least. And there are also a provider that is lost forever. Trade is a space as big as the stock market.

I used to ask why the CFTC has not come down hard on companies of raw materials and intermediaries who have always lost money for clients. I thought that if it was a different kind of society that does not protect consumers or public authorities that have them?

Then it will wind on me. This is a zero sum game! It isactually a play on the sum of the negative after commissions and so-called "operation, etc. 'fees are added for each kg of traders long as there is someone who is short. For every winner uptick to a dealer, c' is an uptick of losing a second.

So that means that half the money lost by a person more than half of his winnings. OR 95% of the money lost by traders of raw materials, which gave 5% of wealthy than others. With a zero-sum game, there will be many losers and few big losersif there are big winners. If the CFTC does not have control of a commodity broker, we can hope to achieve and brokerage accounts with customers who are abusive. Brokerage commissions and profits can be won by the best, must come from somewhere.

This is normal, and the way the futures markets (and equity markets to an extent), has worked in more than a century. As long as everything was done legally and ethically, there are problems with the loss of customers. There is always aWinner and loser of raw materials. Same thing with Las Vegas. Vegas is also a negative sum game, since the probability of the house. Home Casino is equal to the best raw material published. (and stockbrokers, of course)

It is interesting to note that, in theory, the exception is the stock market. You can get a 100% success rate if everyone did a long time, and all the ordinary shares were. Although the Commission can not be met. But is not the case in the real world. Probably there is no differenceStatistics of losses for the stock of goods or speculators. It's a strange scene this thesis. Just remember that it's you against the competition. And there are sharp made out there. Pure capitalism. You have to be as difficult as possible for them to take account of the goods by money.

Conclusion: When your shopping trade its accuracy is low in the design, you must let your profits run bigger losses and limit the losses to be profitable to survivelong term. You also need to risk more than 5% to 7.5% is never in any trade. When the business is very precisely through the motions, it must win to loss ratio closer to 1:1, gains and losses faster, slower, and 10% of commercial risk. Remember that your goal is ultimately to reduce the risk of 5% or less of a profession, like many professionals do.

Five of the five parties – Avanti!

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