Commodity Futures Trading

Written by BK Shaw
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I love commodity futures trading. It's fun and exciting; you never really know what can happen in the commodity markets. Live cattle can hit all time high prices and it can all end in a second with a news report stating that a case of mad cow disease has been discovered at an American farm. If you were on the wrong side of that trade, you just lost a bunch of money.

The markets are highly leveraged meaning you can make or lose a lot of money with very small fluctuations in price. Very often less than a 10 percent movement in price within a specific time frame can double someone's money in these markets. If you're familiar with trading stocks, you'll appreciate the small movement in price. Commodity futures trading as a trading vehicle is not for everybody though; you will need to have a fat wallet and a strong stomach.

Many people are not capable of trading their own commodity futures trading accounts. If you are the type to form an emotional connection with either the market or your money, get a broker. Sometimes that emotional distance can make all the difference. Let someone else make those tough decisions about whether to cut the losses short or let the profits ride.

Knowing if Commodity Futures Trading is for You

You should only ever trade any financial market with money you can afford to lose. These markets are no exception, and even if the lure of big profits might give you a false sense of security, keep in mind most trades lose. I recommend someone trade with no more than 10 percent of their life savings in these markets.

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