1. Follow the trend. There are different methods for discovering the
trend. The most popular is using a moving average. Select a moving average
length that coincides with your trading style.
2. Cut your losses short. This us easier said than done. Many people do
not like to admit when they are wrong. Think defensively and focus on protecting
your equity rather than trying to make money. When a loss occurs, make sure it
does not wipe you out.
3. Use money management. This can be more important than when to buy or
sell. Before entering any trade know exactly how much you plan to risk if the
market goes against you.
4. Let your profits run. Do not close out profitable positions too early
just because there are profits to take. However, waiting too long for more
profits can lead to losses. Before entering a trade have definite exit points in
the event of either a profit or a loss. Use trailing stops to let your profits
5. Trade with a plan or system and stick to it. Have a disciplined,
detailed trading plan for each trade. Know entry price, stop loss price, and
price objective. A trading plan that includes these will eliminate impulse or
6. Do not trade with emotions. Having a plan or system can desensitize
your emotions so you can base trading decisions on sound ideas.
8. Trade thick markets. Liquid markets can create slippage problems when
entering and exiting markets. Liquid markets are less susceptible to limit up
and down moves.
9. Trade the most active months. These have the most liquidity.
11. Know yourself and why you are trading. Many traders lose money because
they trade for shear excitement and the adrenaline rush. These are not good
reasons for being in the markets. Trade to make money, not to relive
12. Watch for both fundamental and technical data. Both fundamental and
technical traders can affect the market, so observe what they are
13. Use money you can afford to lose. If you are speculating in
commodities with funds you need to live off of only, you are doomed to failure
because you won't have the mental freedom to make sound trading
14. Start small. Beginning traders should learn the mechanics of trading
before committing more money and before graduating to more volatile
15. Unless you are a daytrader do not form new opinions
during trading hours. Decide upon a basic course of action and do not let the
ups and downs during the day affect your game plan. Decisions made during the
trading day are often a result of emotions.
17. When you are not sure, stand aside. Do not feel that you have to trade
everyday. Standing on the side lines is a position.
18. Isolate your trading from your desire for profit. This can eliminate
trading on emotions.
19. Trade divergence's between related commodities. Watch the families,
like the metals, grains or meats. When you spot a wide divergence in a group, it
could signal a trading opportunity. For example, if the meats except live cattle
were moving higher, look for an opportunity to sell live cattle as soon as the
meats in general appear to be weakening.
21. Keep it simple. Avoid techniques you do not understand.
22. Survive to hang around for the big moves.
24. Don't liquidate a winner to keep a loser
25. Remember there are six reasons people lose money
26. Finally, Beleive in yourself!