a special note from a trader to you...
First of all, thanks for taking the time to visit our web site.
Learn Investing will be your school if you choose to take the course. But even if we never meet,
we would like to talk to you about a few things concerning commodities and trading.
"... I have been sitting here in the office today upset. Upset because I just heard on a CNBC news brief that a commodities brokerage local to my area was just brought up on charges of defrauding their customers. They misrepresented the potential risks and profits of commodities to unsuspecting "traders". ("traders" because these people probably did not have any sort of education on how to trade.) I'm upset because the report said that 109 of 120 accounts lost money.. money I'm sure these people could not afford to lose. They were lured into trading too often and unnecessarily..."
This brokerage is not alone in using the deceptive tactic of enticing their customers into over-trading.
We often warn new and fellow traders that some brokerages feel it is more important to stick their clients with as many commissions as they possibly can rather than allowing traders to act according to their own methods and risk tolerances.
So are we trying to talk you out of trading commodities? Of
course not! We love to trade - it's what we do! But let us make this clear those "traders" lost their money because they did not make their own trading decisions! They had no trading plan. This is why
we want to stress how important it is that we -- as traders -- learn to rely on our own trading decisions and trade within our own risk tolerances.
Trading -- of any kind -- involves risk. And while we can give you the over-used line about the
"...tons of money that is being made by people in this business day in and day out and how you can be one of them"... right now
we'd like to take this time to tell you about the other side of the business of trading. This is the side of the trading that most of the books, courses, videos, and gurus DON'T talk about. It's not glamorous and
we are quite sure it doesn't help sell a bunch of books and courses...
All of us were beginners once. And all the books and courses and brokers and systems made us dizzy at one time or other. But we must be highly motivated to trade successfully none-the-less. There will certainly be a learning curve early on. And yet year after year our goal is to safely profit from trading commodities. HOW? We must learn from our mistakes
LESSON #1 Educate yourself and NEVER stop learning! The more you know, the less others can take advantage of you. Your trading is a business. Treat it like one. This means writing a trading plan: your own trading map or blueprint.
LESSON #2 There are some brilliant marketers out there with courses to sell. Don't believe the hype! Trading is very rewarding, but you must learn to manage the risk that comes along with it.
(NOTE: In the popular book "Market
Wizards" many highly successful traders were interviewed and were asked what the most important aspect of their trading success was. Each trader said their risk management was more important than even their trading method or system!
Learn from this.)
LESSON #3 This one especially applies to those of you that trade already. You don't have to trade every move! Believe me, being flat (not being in the market) is a position. It clears the cobwebs and gives you a clear perspective. Remember: active trading DOES NOT EQUAL profitable trading.
LESSON #4 Brokers. There are good and honest brokers out there and there are some that are not. Find one that YOU are comfortable with! A broker should take the time to talk with you (not at you) and understand your trading instructions. Take the time to find a good broker and always do your homework.
LESSON #5 Trade according to YOUR comfort level. Trade from YOUR decisions. Don't get caught up in trading with the crowd. You MUST have a good and researched reason to enter a market and an even better and more researched reason to get out! Don't let anyone talk you into trading something you don't want to or that you don't completely understand.
Wishing you great trades!
Learn Investing Staff