Traders Success and a Positive Mental Attitude

Successful futures traders have a positive mental attitude, and maintain that positive attitude every single day they trade. It takes confidence in your abilities, confidence in your decisions, confidence in your charts and confidence in your system to succeed as a futures trader. Confidence hinges on your mental attitude.

If you think you can do it, you will.

"Your actions affect your attitude and your attitude drives your actions. It can indeed be powerful to get your actions and your attitude working consistently in the same direction."
I find these words from the Daily Motivator* of particular import to my life as a futures trader. More than anything else, your daily attitude affects your ability to perform successfully as a futures trader. If you stay positively focused, you will be able to assess your position with confidence and pull the trigger at the precise moment to ensure maximum profitability. If you allow negativity or self-doubt to eat away at your confidence, you will fail.

The Negativity Factor

Once negative thoughts creep into your thinking patterns, you start to second-guess your abilities, your decisions and your system. Pretty soon, you're making bad trades, you can't pull the trigger and things start crumbling around you. Without a positive attitude you cannot succeed as a futures trader. You will crash and burn before you complete the first lap.
Everyone has the occasional bad day. But whether it's a trading loss or a crisis in your personal life, you can't let feelings of negativity engulf you. You have to "shake it off," "get back on the horse, "get back in the game." Hackneyed though the sayings may be, they carry a large truth.
The only way to succeed is to refuse to allow yourself to be beaten down. You have to maintain faith in yourself and confidence in your ability to succeed. You have to stay positive.
Successful futures traders succeed because they have a positive mental attitude and believe in themselves and their system. It's not the other way around. We're not happy because we succeed. We succeed because we're happy. A positive attitude gets positive results.

Cultivating Success Through Attitude

There are many ways to renew your positive energy each day. I enjoy a brisk walk or run in the early morning. The exercise recharges my physical batteries and participating in the beginning of a fresh, new day revitalizes my spirit. Exercise, daily motivations and personal affirmations are all ways to recharge your positive energy before you tackle a new trading day.
Because different approaches work better than others, you'll need to experiment with and discover those activities that keep you positively motivated, and then make them a daily part of your life. The more positive energy you can maintain in your life, the better trader you'll be.

Why is a Positive Mental Attitude Essential?

Success as a futures trader is 90% attitude. Develop a positive mental attitude and your success will increase as your skills grow. A positive mental attitude will allow you to:
1. Focus on making profitable trades. Even if you have a losing streak, positive focus will allow you to turn things around and snap back into the profit zone.
2. Focus on profit-making goals. A positive focus will give you the strength and courage to persevere if the going gets tough.

In his Daily Motivator of December 22, 2007, Ralph Marston says:
"Whether it's through your actions or through your attitude, there's always a way to introduce a more affirmative perspective into your life. Stay focused on the positive possibilities and life will continue to grow more richly rewarding."

These are words to succeed by.

An Overview Of Commodities Trading

Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. The impact of commodity markets throughout history is still not fully known, but it has been suggested that rice futures may have been traded in China as long ago as 6,000 years. Shortages on critical commodities have sparked wars throughout history (such as in World War II, when Japan ventured into foreign lands to secure oil and rubber), while oversupply can have a devastating impact on a region by devaluing the prices of core commodities.

Energy commodities such as crude are closely watched by countries, corporations and consumers alike. The average Western consumer can become significantly impacted by high crude prices. Alternatively, oil-producing countries in the Middle East (that are largely dependent on petrodollars as their source of income) can become adversely affected by low crude prices. Unusual disruptions caused by weather or natural disasters can not only be an impetus for price volatility, but can also cause regional food shortages. Read on to find out about the role that various commodities play in the global economy and how investors can turn economic events into opportunities.

Commodities 101

The four categories of trading commodities include:

Energy (including crude oil, heating oil, natural gas and gasoline)

Metals (including gold, silver, platinum and copper)

Livestock and Meat (including lean hogs, pork bellies, live cattle and feeder cattle)

Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar)

Ancient civilizations traded a wide array of commodities, including livestock, seashells, spices and gold. Although the quality of product, date of delivery and transportation methods were often unreliable, commodity trading was an essential business. The might of empires can be viewed as somewhat proportionate to their ability to create and manage complex trading systems and facilitate commodity trades, as these served as the wheels of commerce, economic development and taxation for the kingdom's treasuries. Reputation and reliability were critical underpinnings to secure the trust of ancient investors, traders and suppliers.

Investment Characteristics

Commodity trading in the exchanges can require agreed-upon standards so that trades can be executed (without visual inspection). You don't want to buy 100 units of cattle only to find out that the cattle are sick, or discover that the sugar purchased is of inferior or unacceptable quality.

There are other ways in which trading and investing in commodities can be very different from investing in traditional securities such as stocks and bonds. Global economic development, technological advances and market demands for commodities influence the prices of staples such as oil, aluminum, copper, sugar and corn. For instance, the emergence of China and India as significant economic players has contributed to the declining availability of industrial metals, such as steel, for the rest of the world.

Basic economic principles typically follow the commodities markets: lower supply equals higher prices. For instance, investors can follow livestock patterns and statistics. Major disruptions in supply, such as widespread health scares and diseases, can lead to investing plays, given that the long-term demand for livestock is generally stable and predictable.

The Gold Standard

There is some call for caution, as investing directly in specific commodities can be a risky proposition, if not downright speculative without the requisite diligence and rationale involved. Some plays are more popular and sensible in nature. Volatile or bearish markets typically find scared investors scrambling to transfer money to precious metals such as gold, which has historically been viewed as a reliable, dependable metal with conveyable value. Investors losing money in the stock market can create nice returns by tradingprecious metals. Precious metals can also be used as a hedge against high inflation or periods of currency devaluation.

Energizing the Market

Energy plays are also common for commodities. Global economic developments and reduced oil outputs from wells around the world can lead to upward surges in oil prices, as investors weigh and assess limited oil supplies with ever-increasing energy demands. However, optimistic outlooks regarding the price of oil should be tempered with certain considerations. Economic downturns, production changes by the Organization of the Petroleum Exporting Countries (OPEC) and emerging technological advances (such as wind, solar and biofuel) that aim to supplant (or complement) crude oil as an energy purveyor should also be considered.

Risky Business

Commodities can quickly become risky investment propositions because they can be affected by eventualities that are difficult, if not impossible, to predict. These include unusual weather patterns, natural disasters, epidemics and man-made disasters. For example, grains have a very active trading market and can be volatile during summer months or periods of weather transitions. Therefore, it may be a good idea to not allocate more than 10% of a portfolio to commodities (unless genuine insights indicate specific trends or events).

Exchanges

With commodities playing a major and critical role in the global economic markets and affecting the lives of most people on the planet, there are multitudes of commodity and futures exchanges around the world. Each exchange carries a few commodities or specializes in a single commodity. For instance, the U.S. Futures Exchange is an important exchange that only carries energy commodities.

The most popular exchanges include the CME Group, which resulted after the Chicago Mercantile Exchange and Chicago Board of Trade merged in 2006, Intercontinental Exchange, Kansas City Board of Trade and the London Metal Exchange.

Futures and Hedging

Futures, forward contracts and hedging are a prevalent practice with commodities. The airline sector is an example of a large industry that must secure massive amounts of fuel at stable prices for planning purposes. Because of this need, airline companies engage in hedging and purchase fuel at fixed rates (for a period of time) to avoid the market volatility of crude and gasoline, which would make their financial statements more volatile and riskier for investors. Farming cooperatives also utilize this mechanism. Without futures and hedging, volatility in commodities could cause bankruptcies for businesses that require predictability in managing their expenses. Thus, commodity exchanges are used by manufacturers and service providers as part of their budgeting process – and the ability to normalize expenses through the use of forward contracts reduces a lot of cash flow-related headaches.

The Bottom Line

Investing in commodities can quickly degenerate into gambling or speculation when a trader makes uninformed decisions. However, by using commodity futures or hedging, investors and business planners can secure insurance against volatile prices. Population growth, combined with limited agricultural supply, can provide opportunities to ride agricultural price increases. Demands for industrial metals can also lead to opportunities to make money by betting on future price increases. When markets are unusually volatile or bearish, commodities can also increase in price and become a (temporary) place to park cash.

Commodity Bull Cycles & Bear Cycles

Although any individual commodity can experience different rates of growth, taken as a whole commodities can also be described as experiencing bull cycles and bear cycles. These cycles are brought about not only by the market forces of supply and demand, but also certain policy decisions by major governments, especially when it comes to tangible specie standards in relation to national currency fluctuations and valuations.

Because so many governments base the value of their currency against the value of the currency of other nations, as opposed to a tangible specie standard, both gold and silver do not play the same kind of pivotal role in international economics that they did forty years ago. Despite this, the fluctuating value of some major commodities, like gold and silver, can influence how other investors perceive the overall commodities market. If gold has an exceptionally high price per ounce in a given year, the commodities market can be said to be flourishing, whereas if the price drops for several years in a row, financial analysts can sometimes use this to point to the emergence of a bear market.

The difficulty with describing the performance of so many different commodities as experiencing an overall growth or retraction is that there are always exceptions to the rule. The best predictor of a predominantly bull or bear commodity cycle tends to be the size of the population relative to the amount of production. The period of the 1980’s to roughly 2000 has been described as a bear market for commodities because demand growth was not very high.

Starting in about 1999/2000, several nations that previously had virtually no measurable interest in metals began aggressive manufacturing operations, dramatically increasing the demand for previously unremarkably valued metals such as zinc and copper. This sudden interest in metals correspondingly drove up the demand for gold and silver, as investors interpreted the demand for zinc and copper as the beginning of a bull commodities market. Additionally, as the manufacturing operations continued to expand, the increased economic prosperity brought about a new group of consumers, who began to buy other commodities like eggs in much greater numbers. The increased investment activity, combined with actual tangible demand by new populations, subsequently resulted in an actual bull commodities market.

Therefore, the quantity of certain commodities is frequently a predictor, or at least an indicator, of these bull and bear cycles. Oil, for example, can frequently swing the commodities market one way or the other based on how much of it is produced, simply because so many other industries depend on the energy that oil inadvertently produces. As an example, a steep drop in oil production which results in higher gasoline prices can affect the transportation of agricultural commodities. This produces artificial constraints in supply and demand, and can impact the overall prices of other commodities. However, because oil frequently experiences fluctuations in its supply, many experienced commodities investors and traders anticipate certain seasonal fluctuations, and may build these anticipated supply / demand shifts in to their investments. These secondary effects are therefore a somewhat predictable part of the overall market.

However, it should be noted that since many commodities indexes make their money based on expectations of performance, an extreme shift in the production of the amount of oil or another high profile commodity can correspondingly cause the futures market to either perform up to or below expectations. A completely unexpected rigorous drop in the production of oil may trigger a bullish market, whereas oversupply tends to saturate the marketplace, creating a bear market. However, although certain high profile commodities can influence these cycles, the commodities market is varied enough so that only truly major global events can significantly impact demand. Even in the case of a major global event, such as a tsunami, one sector of the commodities market may fall, while another may rise.

Some economists have argued that the economy itself generates these cycles, based not only on major global events and supply and demand, but the very nature of investing itself. Certain economic theories, such as the theory of Kondratieff cycles, have attempted to describe the complex nature of the global economy as experiencing longer-form cycles that can be interpreted as a series of booms and busts, triggered by certain behaviors.

Triple Forex Gains

1. Trade Less

One of the major problems that traders have is they equate trading a lot with getting more profits and they simply trade too much. 

There is NO correlation between how often you trade and how much you are going to make - so the first point is cut your trading back to high odds trades only.

This means hitting the long term trends and turning points that yield the really big profits. The big trades only occur a few times each month in a currency so focus on these.

Forget day trading and scalping - the odds are not in your favour and you are guaranteed to lose so don't try - Hit the big trends and milk them for all you can. 

2. Risk More 

If your trading a small account don't diversify ( this is another word for diluting potential gains ) so risk more per trade. 

If the odds are in your favour you need to increase your bet size. 

You will hear a lot of traders saying you should risk 2% per trade! Well if you don't risk much you won't gain much - risk 10 - 20% per trade and more if you have a total conviction the odds are in your favour.

The enemy of successful forex trading is volatility and you need to have your stop far enough back that you are NOT clipped out by it and trail your stop slowly. 

With reward goes risk and that's a fact. 

Most traders are so afraid of risk they create it, by having stops to close and losing. 

They think they have a low risk but they may as well have not bothered trading in the first place!

3. Use Momentum 

The biggest error traders make is trying to predict - If you do you will lose. 

Why? 

If you predict you are hoping a level will hold and the market is not going to reward you for hope. 

You need to make sure that whenever you trade price momentum is on your side. 
This means missing a bit of the move - but as you can't predict it's the best you can do and it will still mean you can make a lot of money as: 

You are trading the reality and always trading with the trend. 

If you get 70% of the major trends you will make a lot of money. 

Trading The Odds For Bigger Gains 

If you like the action and the buzz of trading the above is not for you but if you are interested in increasing profits from your forex trading strategy then you will find the above is logical common sense. 

You will be trading the best odds trades, risking amounts that can give you big rewards and timing your entries for maximum profit to lowest risk and this over time means big profits.