Commodity Trading Systems – This Ones Free and Makes Big Gains!
Today many traders buy commodity trading systems and spent money on expensive software when really all they need is to do a bit of research on the net and build their own.
Here we will show you how to build your own commodity trading system that will help you pile up big gains, even if you have never traded before.
First things first!
Let’s look at the logic the commodity trading system is based on:
1. Catching the big long term trends and these only come a few times a year. These are the ones to focus on – not short term moves or day trading, this system is geared for profit not low odds trades in short term market noise.
2. This commodity trading system does not predict, it only acts on confirmation of the tend.
3. The system is simple. Traders think that the more complicated a system the better it is likely to perform, the exact opposite is however true.
4. This system uses the same trading methodology for ALL markets and is based on a psychological flaw most traders have and lose.
5. As this system is based on long term trends it should take no more than 30 minutes a day and will work off the closing price ONLY.
Putting it together
This commodity trading system is technically based, so let’s look at what we Need the package to contain. All we want is weekly and daily charts and two basic indictors Bollinger bands and stochastics.
A good package on the web is available at futuresource.com, but there are many others, don’t buy one! You don’t need to.
Trading rules are simple:
1. Look for important valid (several tests over long time span) resistance and support on the weekly chart and note the trend, then look for the same pattern on the daily charts.
2. Once you have found a market that fits the above criteria look for breaks of support or resistance. Don’try and predict wait for the move to get underway i.e you have confirmation (via the stochastic indicator) this is when the odds of the trend continuing are highest.
3. Check the stochastic indicator supports the move this VERY important.
4. Enter with at the money or in the money. Do not buy out eh money options and remember keep time on your side.
5. Don’t move stops to soon, get stop in below breakout point and move immediately to entry if the position moves your way. Wait for larger profits and cover the position with covered write position.
That’s it; If you are not familiar with all the terms check our other articles.
Why will this commodity system work?
It’s based on sound logic, breakouts are easy to understand and trade, most traders wait for market pullbacks and miss the major moves. This system gets you in on ALL the major moves and confirms strength before buying, to get the odds on your side.
Keep this fact in mind – Most major trends develop from market highs, that means you have to trade breakouts.
Most traders get stopped out by volatility, but this system assumes the trend will continue rather than reverse as it’s already in motion, so stops are kept wide. When the profit becomes big you can put in an insurance policy, in the form of a covered write option strategy.
Finally, options can be used but unlike the losing majority you won’t buy out the money options with little chance of success. You will keep time on your side and buy in at or near the money.
The other advantage of this system is it costs nothing and is easy to understand.
This means when you practice it, you will have confidence and be able to trade with Discipline, which is a key to trading success with a commodity trading system.
Don’t listen to traders who try and tell you trading commodity systems needs to be complicated, it does not. A simple commodity trading system like the above, traded with discipline is all you need.