Drawdowns in Commodity Futures Trading

commodity future online trading

As Ed Seyokta ( one of the legends of commodities futures trading) would say Drawdowns are like breathing out. If you would like to earn money in commodities futures trading you’ll have drawdowns. Drawdowns are a normal part of commodities futures trading. A drawdown is any losing period of a commodity trading counsellor or in any commodity trading methodology.

The precise definition is looked at as a p.c. retrenchement from an equity high or top to an equity low. The issue with Drawdowns are not simply the retrenchement from the equity highs but the period of recovery to the equity highs. Depending on the commodity trading counsel or commodity trading method there may be periods that may surpass years.

Patience and Discipline

The truth is if a stockholder has the right attitude they stand the opportunity to compound their way to wealth with commodities futures trading. There are no way around drawdowns and volatility. They’re a natural point of commodities futures trading.

There’s a difference between risk and volatility. In any successful commodity trading counsellor or commodity trading methodology there are risk administration systems ready. These don’t avoid drawdowns but try to make them controllable. This is one of the main renters in Trend Following. That’s why many times you hear commodity trading bosses debate risk per trade.

The lower the danger per trade, the lower the return. Other issues like risk per sector and open trade equity risk are other variables which effect drawdowns. One can look at a commodity trading counsellors record and even their worst drawdown but the fascinating point is the worst drawdown is always in front of you.

Leave a Reply