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U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Doing the Hard Thing In Commodity Trading!

InvestorEducation / Learn to Trade Nov 04, 2009 - 03:32 AM GMT

By: Andrew_Abraham


Too many books and blogs seem to make commodity trading and forex trading seem so easy… The truth can not be further from this…Successful trading is so hard… It is a truly a mental battle..There is no easy money in commodity trading….. You earn it..( that is if you truly want it ). There is only one person that can control your success… that is you.. Regardless if you trade yourself…or if you allocate to a commodity trading advisor. The end of the day..You are responsible!

Too many people think the commodity markets and currency markets are exciting and fun. They forget that these markets can be cruel and ruthless to a trader that does not have a well thought out plan. Again…what I have stated over and over again is that most forex and commodity traders fail. Probably over 90%. You have a choice.

Look at these examples below and if you have been trading without a plan…you will see the mental anguish that one could go through!

1.Your trend following mechanical trading system gets a signal to go short corn. However you read in the papers that Jim Rogers has just announced that he has bought the mother load of corn and expects it to go through the roof. What do you do?

1.Sell anyway
2.You buy instead
3. Do not take the signal and wait for the next

2.Your trend following mechanical trading system gets a signal to go short the SP 500 but it gaps down the limit.

What do you do?
1.Sell anyway
2.You buy instead
3. Do not take the signal and wait for the next

3.You are short Gold ( yes short gold) and the market reaches your exit stop. You are using a mental stop btw. You read on your charts

that the market is overbought and you think for sure the gold market will turn. What do you do?
1. Follow your trading plan and cover
2. Wait because you think the market will turn.

4. You invest with a commodity trading advisor who has a 4 year record of 20% + per year with draw downs of 15% max. This year is a

rough year for virtually all trend following commodity trading advisors. You see your monthly NAV and see your commodity trading advisor is down 19%. What do you do?
1.Stick with him as you know the greatest draw down is always ahead of him.
2. You sell and run for the hills.

The above are common stories that I have seen repeatedly in real time..and in real commodity trading.

What is the right thing to do?
The right thing to do is realize all of these situations ahead of time. They will surely occur. Have a plan..Follow your plan..Believe in your plan. Test your plan..and most of all have the discipline and patience to compound your way to wealth. The wealth you will earn…you will have worked for. Commodity trading is HARD. You will have earned this money.

Andrew Abraham

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 ( Contact: (

© 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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