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The Power of the Wave Principle

Profiting in a Falling Commodity Market

Commodities / Commodities Trading Dec 16, 2009 - 04:01 AM GMT

By: Andrew_Abraham

Commodities

Anything can happen in commodity trading. As much as inflation can come about there can be deflation and result in a declining market. Most people do not think it is possible to profit in a declining market. This could not be further than the truth. As long as there exist trends profits can be made on the upside or on the downside. However on the upside there is no limit how high it can go…so there is statistically more profits on the upside.


So many are afraid of bear markets but there are successful trend following commodity trading advisors that know how to make profits in commodity bear markets. Many commodity trading advisors like bear markets because there is less involvement of both the public and institutions. The common knowledge that the public is always wrong. More so, the public has a stigma about going short.

To me as a trend following commodity trader…it is as easy going short as going long. I really do not even think about it. I let price dictate my actions with my model monitoring the situation.

I have seen in my career that Bear markets go far below their true economic value. One example of this was last years Crude trade. It completely fell out of bed and has almost doubled from it’s bear market lows.

If you want to be a successful commodity trader. Make yourself available to which ever direction any market wants to go. This is the one of the keys to be a successful commodity trader.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading advisor 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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Catching a Falling Financial Knife