You hear it all the time..A successful commodity futures trader or a forex trader does not over trade. However in reality …what does it really mean over trading? In my definition, over trading can be two fold.

Firstly the frequency of commodity trading ( forex) or the leverage of commodity trading (forex).

Anything done in excess is bad…however as I have seen over the years..easier said then done. Day trader after day trader have blown up do to slippage or even exhaustion. As well I have seen a commodity trader or forex trader have a belief….they are right..the market is wrong …and they take a big bet ( too much leverage)… You can guess who was right ( the market is always right and opinions do not mean anything).

I have seen traders lose everything in over trading and then make a comeback…only to lose once again. The key is to trade with a plan with out over trading. A trading plan where all is thought out.

When I have discussed this with newer commodity or forex traders…I have heard this is boring and not fun. I trade commodities to compound my money. I am not looking for adventure or fun ( My wife would kill me).

The reality is for a successful commodity or forex trader they must have capital, a plan and the discipline to follow that plan. Simple way to think about over trading. A good general never risks all of his troops at the front line at one time, there are always reserves. Think of your capital that way…Do you want to win the battle or win the war?

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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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