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Learning to profit by trading commodity contracts is a discipline that requires intensive sacrifice, commitment, and talent. A commodities trader must know how to walk the fine line between greed and fear. The main objective is to cut losing positions short and let winning positions ride. Very few traders find it easy to exit a losing position and take a loss, but it is the most important thing to remember for staying in the game. Whether a 'trader' uses his/her own account or other-peoples-money (OPM), fortunes can be made or lost in moments.
Successful trading demands the time and dedication that is necessary to train for any profession, such as law or medicine. It also requires the unique aptitude of a professional gambler; a gambler who can instinctively equate and correlate risk management with probability analysis. Commodities trading, even when hedging, is a bet, nothing more, nothing less. However, with the experience acquired only through adequate instruction and extensive simulated trading, it is possible to get better 'odds' speculating in commodities than with casino 'gaming'.
Hedging or speculating in commodities or derivatives includes identifying 'coincidental' and 'leading' indicators that involves developing a methodology based on fundamental analysis, and/or it includes identifying intraday, daily, weekly 'trends' and 'support/resistance' parameters that involves developing a trading system based on technical analysis. Both strategies attempt to predetermine theoretical outcomes to get the 'house odds' of a casino.
However, betting on the direction of a stock, bond, derivative, or financial market index is always an uncertainty, no matter when a position is taken. Some traders mistakenly keep waiting before entering a position hoping to 'confirm' market direction. When this occurs, the price of the security, contract, or instrument gets too high and the favorable 'house odds' progressively diminish the longer the delay. To get the most advantageous price, the trade must be entered during the period of maximum uncertainty and before market direction is obvious.
Acquiring experience and developing commodities trading skills before using real money accounts can be very expensive and prohibitive. There are thousands of trading courses, tapes, and seminars available and most are very expensive. Finding the best ones are very difficult. Also, there is still no guarantee a new trader can recover the initial investment through real money trading later. This scenario is analogous to spending money on music lessons or on basketball training camps. The question is, what is the percentage of music students and/or basketball students that have the talent to go on to become net income earning professionals? Of course the answer is not many, relatively speaking.
For short term trading, a complete assortment of real time financial quotes are mandatory, and the expense of real time financial quotes is considerable. The lowest rates for a minimum list of real time quotes runs over $150 per month from commercial data vendors. Using trial and error, on average it takes at least 2 years for new traders to learn how to just 'break even' on their accounts, not figuring the overhead that keeps increasing.
Novice traders, some having the latent undeveloped talent to become successful, are discouraged from entering the commodities trading profession because they think the risk/reward factor does not justify the initial costs of instruction or services. Unfortunately, many do not realize the importance of setting up hypothetical accounts before trading real money and making simulated trades over an extended period of time, and those that do pay for instruction and services make the decision to trade real money prematurely, in a futile effort to recover these start up costs. The result is margin calls, under capitalization, and the insolvent traders are forced to close their accounts before their true trading potential is realized.
ONLINE COMMODITIES INSTITUTE [OCI] was originally conceived as a free resource center for sophisticated financial market watchers and players. The objective was to provide a forum where traders can go to read specialized essays and condensed financial news, engage in voice chat sessions, and find a select comprehensive list of hyper links to sites that provide intraday news, quotes, and charts that could be accessed from a remote location. By visiting the OCI Quotes and Charts page, a trader, whose 'in house' quote system is down, can get updated on most of the financial markets in real time.
OCI also offers access to free real time quotes, live charts, and other internet resources that are adequate for simulated trading purposes.
To visit this site, agree to the following waiver:
All site activities are intended to be used for evaluation and analytical purposes only, and are not intended to be considered as financial advice for trading real money accounts. The site moderator is not registered as a Commodities Trading Advisor with the CFTC or NFA, and no responsibility is accepted for financial losses sustained by site users.
Futures speculation represents substantial risk. Investors can and do lose more than original equity. Past performance is not indicative of future results.
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