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Trading Systems for Commodity Trading

InvestorEducation / Trading Systems Oct 29, 2009 - 04:27 AM

There are countless criteria used by commodity, stock and forex traders. A discretionary commodity trader might seek out markets that in his or her mind that look like they are starting to move ( trend). A SP trader might short the SP 500 when the moon is full or some astrological incident ( Yes I have heard things like this). A systematic trader might look for a break out …or a a moving average crossover depending on their time frame.

The fact is there are more ways to enter a trade then there are markets or even commodity traders. It is truly countless and is a personality issue. The difference however is the true difference in long term success. In order to achieve success, a trading plan with formalized rules in place, risk and money management in place…and a great deal of discipline to follow the plan and patience.
One of the ways that I know how to succeed over the long run is to use a systematic approach or another words devise a trading system… More so… multiple trading systems because the reality there is no holy grail… no magic bullet..and in the real word many trading systems experience issues not encountered during testing. What it has been with us…is that our trading systems have evolved. We have learned to combine systems… time frames.

One of the benefits of a trading system is that it can be programmed into a computer and tested.One can see if this method actually made any money. Another mistake that many make if a trading system does not make money…some commodity traders attempt to optimize the trading system. This is one sure way of a loss. Trading systems should be dynamic that they can be traded across the board and across all markets and time frames.

Bottom line… my point do not think one can just go out and buy a trading system. There has to tests and due diligence preformed and even after that …in futures trading there are unknowns. Do your homework…or associate yourself with someone who has. Have a realistic expectations. Have a realistic reason to believe that your trading system will continue to generate long term profits. Be sure you have the discipline to follow every signal offered. Be patient and realize this is a numbers game and your money will be made over a long series of trades.

If you have commodity related questions please, feel free to contact me. I will be happy to answer your questions to the best of my ability.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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