Getting Started in Commodities

Chapter 14

Putting It All Together

This book explores both the tremendous rewards and the risks associated with the trading of commodities. The commodity markets are one of the last places that someone who takes the time to learn how these markets work can take a small trading account and achieve incredible financial gains. Yes, there are significant risks and anyone interested in trading the commodity markets needs to be fully aware of these associated financial risks. However, by being aware of these risks, commodity traders can use caution and risk management techniques to successfully trade these exciting markets. Let's face it, we encounter all kinds of risks every day without even recognizing most of them; however, by identifying specific risks, we can endeavor to manage some of them to our benefit.

A number of professional money managers have for many years beat the markets by trading in commodities. While many might think it is pure luck, statistics show that when someone can beat the markets year after year, it's more than luck. The successful money managers have created a systematic approach to beating the markets; a haphazard method could never be that consistent. Hence, in the long run, those who enter the commodity markets in a random manner just dreaming of the financial rewards are more likely to end up on the losing end of the markets. If you take the time to read The Market Wizards (by Jack Schwager), you'll see that those very successful traders all felt that ...