Stock Market, Options, Forex and Commodity Futures Winners & Losers & Considerably Big Difference Between Traders Who Make it or Don't
Today is a good date to start learning as much as possible about how you can trade the-markets expecting to achieve "considerably" better bottom-line P&L results. "Considerably.com" is on a mission to help stock market, crypto, futures and all traders achieve "Considerably More" trading profits on their trades combined with "Considerably Less" trading losses.
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This type of trading method of course would be a perfect formula for considerably improved success at trading the markets for regular and considerable profits, combined with a considerably lower-risk trading style.
Below are other factors which tend to separate the winners vs losers in the financial markets. This is valid when trading or investing in stocks, futures, options and crypto currencies (such as bitcoins and ethereum). We wish you "considerably" better profit by trading the markets.
Unfortunately, "considerably" lower risk trading and investing is not that compatable with "considerably" more profits as higher profit potential often brings more risk of loss.
When a Stock or Commodity Futures Trading winner makes a mistake he/she says, "I was wrong."
When a Stocks or Commodity Futures Trading loser makes a mistake the trader may say, "It wasn't my fault."
A Stock or Commodity Futures Trading winner goes through a problem. A loser goes around and never gets past it.
A Stock or Commodity Futures Trading winner says, "I'm good, and I can be better." A loser says, "I'm not as bad as a lot of people."
A Stock or Commodity Futures Trading winner says, "I'll be glad to do it." A loser says, "That's not my job."
A Stock or Commodity Futures Trading winner listens. A Stock or Commodity Futures Trading loser just waits for his/her time to talk.
A Stock or Commodity Futures Trading winner takes responsibility for his/her actions. A loser blames others for his/her trading problems.
Trading Success is by Trading the System Right, Not Necessarily Being Mostly Right
Commodity futures trading can be at best difficult or troubling. That is, the markets will do anything and everything they can to force you out through disillusionment, boredom, and of course, trader losses. It's only through discipline and cold hard adherence to system you're trading, do you even have a chance to succeed.
There can be and probably will be periods as long as several weeks or even months when any trading-system can work "considerably" less or no better than break-even or be in the red.
Psychological studies have shown that such periods of negative or neutral performance will cause most people involved in speculative ventures such as commodity trading to become negative, disillusioned, disgusted or bored.
That may cause them to quit trading the markets though they have not lost what they originally intended to risk and usually are right before a huge winning streak. All of this has happened to me, and it's only after this kind of "hands on" experience we can relate it to your trading better.
In summary, hang in there. Don't feel that you have to win every day or win every time. Nobody does. The key is trading the system correctly, not being right every time. It is the end result that counts, and we intend to win.
5-Ways to Make Money with Spread Trading vs
Only 2-Ways with Open Position Trades
Commodity futures spread trading is fast becoming a lost art among average traders. It's because spread trades are somewhat complex for the typical trader to fully grasp and the trader may need time consuming hand-holding too. Plus, the would-be spread traders commodity broker aka 'account executive' may seem to be unable to comprehend or want to be bothered with spread trades, as open position trades normally generate commissions faster.
With an eye on the Mercedes in the parking lot (perhaps watching for the repo-man), and another eye on the upcoming alimony payment to his ex-wife, the last thing the average commission salesman wants is a very slow spread trade vs more typical fast closing regular Futures Markets trades.
However, much can be said for trading spreads. Let us compare spreading advantages with open position trading. In a normal long trade, the market has only one way to go to make money and that is up. In a short position, to make money, the market must go down. Any other movement means a loss, even a "break-even" trade, because brokerage commissions will still need to be paid.
In an average spread, with one side long and the other side short, the market can produce a profit under the following conditions:
One side can move up and the other stay unchanged.
One side can move down and the other stay unchanged.
Both sides move up, but one side moves up more than the other.
Both sides move down, but one side moves down more than the other.
One side moves up and the other side moves down at the same time.
Most of the time, the margin requirements for spreads are much less than the margin requirements for outright long or short positions, and sometimes, because of the nature of the spread and the seasonal factors involved, certain spreads are marked-to-the-market, which means that margin is only required to makeup paper losses if they occur in the spread.
Spreads are a blessing when markets go locked-limit up or down in that you are able to exit if you wish. Naked longs cannot escape a lock-limit down market, as there are no bids. Naked shorts cannot exit a lock-limit up market since there are no offers. The relationship between the legs of the spread is the only factor considered by the floor when you're entering and exiting during lock-limit days, so the trade, though not necessarily the best fill in the world, can be done over wailing and grinding teeth of those caught in the trap.
When it's not easy to determine whether a particular market is changing trend, comparing the back month's price action with front month price action may be a good indicator of whether the market is a bull or bear market. Chances are if the back months are performing better than the front months, you are in a bear market. The reverse could indicate a bull market environment. Spreading action may be justified in such cases to the trader's benefit. It's amazing how few traders pay attention to this rather obvious and readily activity.
The basic knowledge of seasonal trends can give the spreader immense advantage at times. We know that Wheat is harvested in June and July. Corn is harvested in the Fall. Isn't it possible to determine with the help of charts to go long the last month of old crop Corn and Short the first month of new crop Wheat sometime in the spring to take advantage of this natural process? Of course, other factors may enter the picture, such as planting intentions, supply/demand, etc but simple knowledge of this spread trade possibility should be profitable each year.
Wouldn't it be a good idea to also look at the relationship between different months in same crop to weigh carrying charge premiums? Much profit has been made in spreads that were at full carry by buying the front month and shorting a back month where carry is unusually wide.
The relationship between different currencies, bonds and notes, gold and silver, heating oil and unleaded gas, hogs and cattle, and many other commodity futures contracts is a fascinating study! It's much more interesting and much more profitable in relation to trade risk at times vs. open position trading. As a trader gets involved in spreads and becomes familiar with order placement and fundamental seasonal factors, he may also see his open position trading improve. He is more aware of fundamentals and charts have more meaning.
His thought process is now expanded past the simplicity of deciding whether to go long or short. His trade timing, because of his new knowledge of seasonal spread factors is more precise. His ability to determine trends is enhanced, and best of all; his bottom line performance in terms of net profits in all his trading activities should show marked improvement to your trading profits.
We have covered only a few considerations in the preceding paragraphs. There are many more, such as the consideration of the "personalities" of the various trading pits, delivery points for different commodities and their impact on prices, differences between contract sizes in inter-market spreading, and whether a market is cash settled or subject to delivery. All these factors influence spread trading.
Learn as much as you can about spread trading. Trading spreads can be a key part of longevity as a commodity futures trader. We wish you "considerably" improved trading results.