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Go ahead – please read this Report from start to finish and you’ll already know more
about real, profitable trading than 90% of the population.
Then, if you’re ready to go to the next level, I encourage you to register to attend our
next live weekly webinar, THIS Tuesday evening at 8pm. On the webinar we’ll go into
more detail, dissecting live trades and taking full advantage of the interactive format.
http://www.elitetraders.com.au/free-online-workshops.html
Andrew Baxter
CEO
Elite Traders
He has over 16 years’ professional investment market experience, six of which was
obtained on the London Stock Exchange with two of the UK’s leading investment
houses, covering local and international markets.
He has spoken on behalf of the Australian Stock Exchange, the Australian Financial
Review, the Australian Investors’ Association, Robbins Research International and
Robert Kiyosaki.
One of his key passions is investor education. Through Elite Traders, Andrew has
educated more than 15,000 people on success strategies for winning in the
marketplace.
There are a large number of globally traded commodities. Many will be very familiar to
you. For Example:
• Wheat
• Soybeans
• Coffee
• Iron Ore
• Gold
• Crude Oil
• Coal
• Etc.
So what drives commodity prices? Supply and Demand. Supply and demand can shift
from day to day (or hour to hour) – and there are also large, seismic shifts in supply
and demand that create mega-trends that run for many years.
Let’s look at some of the factors that we believe are driving the next commodities
boom.
In February 2009, The Economist announced that for the first time, over half of the
world’s population now belongs to the middle class.
The Economist’s article also pointed out that in many emerging countries, the middle
class has not grown gradually, but explosively. The article also predicted that the
global middle class will continue to grow explosively between now and 2030, driven
particularly by India.
And what do middle class people tend to want? They want new homes, motor
vehicles, mobile phones, electrical appliances, clothes and better quality food. These
things all require a plentiful supply of raw materials.
As a result, demand for commodities such as metals, steel, oil and food products is
set to rise strongly over the coming years.
However, commodity demand has not disappeared. It is simply lying dormant, waiting
for credit. When that credit starts to flow again, dormant commodity demand will
awaken and prices will be subject to these 4 conditions:
1. Availability of credit
2. Steadily rising demand
3. Low inventories
4. Little spare production capacity
The big bull market in commodities has been interrupted by the global financial crisis,
but the underlying drivers are still there and when it awakens, watch out!
Now you know the fundamental drivers that will power the next commodities boom.
And as you can appreciate, none of these factors are minor, nor temporary factors that
will disappear after a couple of years.
These are all significant, prolonged trends that are going to power the next mega-cycle
in commodities.
This is your chance to get in at the start of a major upswing, not the end. So the
question then becomes – what do you need to do to ensure you’re equipped to trade
commodities successfully?
The good news is – these principles of successful trading CAN be learnt, and that’s
exactly what we’ll look at in the final section of this Report….
In my experience, many people want to start for the excitement or “buzz” they may
get from trading. This can be very dangerous because inherently, there is an emotional
attachment to trading.
For example:
• You want your kids to go to a better school where they have more opportunity
• You want to cut your working week back by a number of hours to spend more
time with friends and loved ones
• You want to go on a trip that requires a chunk of cash to fund it
• You wish to be able to provide aged care for your parents
• Your present car doesn’t work anymore and isn’t safe, so you need a newer car
• You want to buy another investment property or move to a larger home
• You cannot afford to retire when you want to
• You have a large amount of debt that you need to pay off
Successful trading is much easier to achieve when there is less emotional interference
or feeling toward the activity.
This may sounds easier said than done but one of the biggest tips I can offer anyone
starting out is: don’t treat your trading results as money but merely a scorecard.
Take the amount of one thousand dollars. For some, that’s a large amount of money –
for others, it is not.
More specifically, remaining objective enables you to take each and every trade as a
new trade, without the euphoria or disappointment of the previous trade clouding
your judgment, analysis or decision making.
I cannot stress how important objectivity is – and the fact that anybody can apply that
process and be objective.
Treating your profit and losses as a scorecard, rather than dollars will certainly assist
you by desensitising you from winners and losers, keeping your focus on the process.
Many people talk about ‘paper trading’ (i.e trading hypothetically without investing
any money). Really, that’s not experience. It is just an excuse.
You will never learn anything from pretend trading. So my advice to anyone starting
in the market is get experience as quickly as you can. And that means starting as
quickly as you can.
Of course, there are some things you need to know before you start, and we will run
through those shortly, but paper trading is just simply a stalling tactic. It doesn’t give
you the real experience of the emotion that you go through having money running in
the market.
To accelerate your experience, leveraging off the knowledge and experience of others
is a key strategy for getting up and running far more quickly. Always work with people
who have experience doing what you want to do and getting the results you want to
get.
Having said that, you do NOT need to risk a lot of money getting experience. It is
better to start small and build on that as you gain confidence along the journey.
Over my 16+ year career as a professional trader, I have traded every single instrument
available in the marketplace including foreign exchange, futures, bonds, equities, CFDs
and options.
I recommend that you are very focused and decide why you want to trade a particular
instrument. Every financial instrument has its own specific advantages, but it also has
its own set of specific disadvantages.
It is possible to participate in the commodities markets via any of these three vehicles.
That being said, you need to understand specifically the characteristics of the
instrument that you want to trade.
Many of the instruments available offer you great leverage. In other words, you only
need a relatively small amount of money to begin.
Leverage can be very useful, but you need to be aware that it is a double-sided sword.
If the trade goes wrong, your losses are also potentially amplified.
Know what it is you want to trade and why. Be aware of their limitation. Be aware of
the nuances and how susceptible the instruments are to news flow.
This may mean you’re not in front of your trading screen and are unable to manage
your positions. By trading commodities in the manner we do via our unique SMS trade
service, you have the advantage of being contactable and in a position where you can
make a decision to either to take profit or use your stop loss to exit without incurring a
serious loss.
A further appeal of commodity futures is that we believe the current global economic
conditions are conspiring to create a major bull market that will present some
extraordinary trades in the coming months and years.
When you trade or invest, your objective is obviously to make money. In doing that,
you need to assess the level of risk you are prepared to take, but also how much time
you need to put into your particular investment.
For example, some strategies are exceptionally time-consuming. Day trading would
be the ultimate example of that because it is a very active strategy that requires you to
constantly sit in front of the market during trading hours.
For someone who works and is intending to develop a second income, day trading
would not be an ideal approach, simply because you have to invest a significant
amount of time on an ongoing basis.
Others may be content to follow the market as more of a hobby. I hate to use the word
‘hobby’ to describe trading or investing because hobbies cost money, whereas a
business makes you money.
Finding a balance and deciding how much time you want to dedicate to trading is very
important. In my experience over the last decade, most people are not interested in
Therefore, finding instruments that don’t require constant monitoring appeal to many
people. And note that putting more time won’t necessarily make you more money. It
is possible to become a “busy fool”.
You need to find a balance between the two that suits your particular lifestyle and
situation perfectly. This is crucial, because if this is inconsistent with your objectives,
you’ll probably end up giving up trading because the time involved is incompatible
with your lifestyle.
Having strong, transparent and simple risk management is extremely important. Even
if you have a trading system that is only right 30% or 40% of the time, if you have
good risk management you have the potential to be far more profitable than a trader
that is right 80% of the time but has weak or no risk management.
One of the clichés in the marketplace is, “all big losses used to be small losses”. For
example, holdings in some blue chip companies prior to the GFC were decimated when
stocks like ABC Learning fell from $6 to zero, and Babcock & Brown, which went from
$34 to effectively $0.
You must, and need to have a process to tell you when to get out when things don’t go
well. Part of the reason we like futures trading, is that your risk is defined prior to
placing any trade in the marketplace so you always go in with your eyes open.
You do not need to ad-lib or think outside the box. Instead, you simply need to follow
the process within your trading strategy. Check to see what the results of that
particular strategy have been over a sustained period of time, not just simply 1 or 2
trades, weeks or months. It is also important to check the performance of the strategy
in a variety of market conditions.
We advocate the use of multiple different strategies. The reason for the many
different strategies is to ensure you have a strategy to suit all market conditions.
Trading is often described as like playing a golf course. The course has the potential to
offer a variety of different hazards or tricks that can hamper your progress. Markets
can do the same thing. Having a number of strategies that enable you to profit from
those different circumstances is absolutely key.
If you rely on a single strategy, as is the case with shares, where you only make money
if the share price increases, you are limited when the market falls or moves sideways.
Almost every other instrument, be it futures, CFDs, or foreign exchange, enables you
to profit no matter which direction the market moves.
Part of the reason why we prefer trading futures is simply because they enable you to
make money in a rising market, in a falling market or in an extremely volatile market.
That flexibility puts you at a massive competitive advantage over other people in the
marketplace that rely on directional moves in order to make profit.
Does it change the outcome of making your food hot? Absolutely not! In the same
way, when it comes to trading we are simply looking to understand and be familiar
with the areas that have the ability to help us to make money.
We have an approach that I suggest you follow: only have between 1 and 3 positions
running at any one time. Your risk management strategy should ensure you can cut
your losses if trades go wrong. Equally as important is having the skills to let your
profits run.
One of the worst things you can do is a trader is take a trade that was profitable and
mismanage the trade and turn it into a losing trade. As a result, you need to focus on
quality opportunities, but also have a defined exit strategy to either get out for profit
or a small loss if necessary. Focus on your plan and always stick to it.
This is because experience is such a great teacher, and leveraging off other peoples’
experience can enable you to gain a stronger level of confidence and experience far
more quickly than if you were going it alone.
The expression that “nobody needs a friend when they are making money” is so true in
markets. It may be true when things are going well; however, when things go wrong
you definitely need to have the ability to talk to someone who can assist you in getting
back on track.
Having a coach or a mentoring program is a way of fast tracking years of study, and
getting you to a higher level of success and therefore profitability in markets. Having a
mentor or a coach who has done and does what you are looking to do, not someone
who has simply read a few books, is also paramount.
If what I’ve said so far makes sense to you, I’d like to invite you to join one of our
professional traders for a Live Online Workshop. The advantage of this format is that it
is live and interactive, allowing you to learn specific examples of successful trading
strategies and see for yourself how profitable trading commodities can be.
The next webinar is scheduled for THIS Tuesday evening at 8pm (AEST) sharp. To
register, simply click below and you’ll receive the log in details prior to the webinar
start. Register now:
http://www.elitetraders.com.au/free-online-workshops.html
Andrew Baxter Level 23, 520 Oxford Street Bondi Junction NSW 2022
CEO Tel: 1300 882 893
Elite Traders Fax: +61 (2) 8088 4732
Email: info@elitetraders.com.au
Web: www.elitetraders.com.au