Of all the important skills in trading, survival is number one. For unless we make it through the inevitable bad times, we won't be around to capitalize on the good. I've laid out some trading account guidelines that specify the account size required to conduct various commodity futures and option trading activities. Stick within these guidelines and you will have an edge on most of the commodity trading public.
$100,000 ACCOUNT and HIGHER Risk no more than 2.5% - 5% max ($2500 - $5,000 per idea for $100K)
Now we’re talking. Ask most professionals and they will often tell you this is the minimum commodity amount to make a modest living from IF you are a good trader. Think about it. A really good trader can make 30% a year. Some make much more. This equates to about $30,000 a year. Many of us can barely survive on $30,000 a year.
As you can see, if you want to take this commodity trading business seriously, you need a good size account, approaching $50,000 - $100,000++. As a commodity pro, you don’t have the luxury of wiping the account out or else you are on the street. That’s the way to trade any account of any size. Think like a pro and you may have a better chance of doing well. If you don’t, and trade recklessly, it is almost 100% probability you will eventually give all your money to these commodity market pros.
By the way, the biggest way to reduce your fear of the markets is to reduce the size of your trading. You must get to the point of trusting yourself to do the right thing when the going gets tough. By having this structured money management plan and sticking with it, you will be on the road to trusting yourself. And remember, the only reason you will break this plan is because of greed – wanting to get there faster. Think about it.
These conservative guidelines will give you the best money management probability for success that I can think of. Gunslingers may laugh and feel they need to risk much more a trade. But ask any professional that has been profitable for years and he will probably agree with these guidelines. He might suggest to make them even more conservative!
I encourage you to commit to these money management principles. It is a big step towards developing your own personal trading discipline.
Good Trading!
There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.
Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete, free 44+ lesson, "Thomas Commodity Trading Course".
http://www.thomascapitalmanagement.com/commodity/welcome.htm
Main site: http://www.ThomasCapitalManagement.com
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