Articles
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Online Commodities Trading Versus Gambling
By about.com
If you have ever traded commodities online, it is easy to understand how some people can turn this type of venture into pure gambling.
Online commodity trading allows an investor / trader to buy and sell a highly leveraged futures contract with the mere click of a mouse. This can be a very dangerous combination in the hands of an undisciplined person.I’m not afraid to admit that I fell into this trap shortly after I first started trading commodities online for my personal account. Sure, I started off very slowly by taking only the best setups and preciously guarding my trading capital. Unfortunately, it wasn’t easy to sit and watch the screen all day and only take two trades that last all of about 15 minutes.
Needless to say, I decided to fill the time by taking some extra trades where I would just grab a few ticks profit and exit. Sounds simple – right? Let me tell you, this is a sure fire way to get yourself into trouble. I would eventually get whipsawed like crazy or hold positions too long and end up taking a loss that was many times greater than my profit objective.
Those were the early days and I’m glad I got the gambling out of my system. Many people will get lured into this trap, as it is very difficult to resist. However, you have little chance of being successful at trading commodities online if you cannot control your urges to gamble.
I don’t believe there is a wilder casino in the world than an online commodities account. You normally have at least 10-1 leverage on your money and all it takes is a click of the buy or sell buttons to make a bet. The decision you have to make is whether you are going to be a gambler or a disciplined trader.
To become and remain a disciplined online trader, you need to have a trading plan. The trading plan will outline the specific trade setups you are looking for, along with a basis for profit objectives and stop losses. Do not take any trades that aren’t included in your plan. It doesn’t matter how attractive they look.
There is no doubt you will get bored if you sit and watch futures quotes and charts all day and hardly take any trades. This is actually good. Many of the best traders actually find trading boring. It is the habitual losers who are always seeking excitement when trading commodities. Would you rather make money and have the feeling of accomplishment and some boredom, or would you rather have the excitement, stress and anger while eventually and blowing out your trading account?
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