How to Create a Commodity Trading Plan?
Why is it Necessary to have a Commodity Trading Plan?
Just as you would not send your football team out onto the field without having discussed a game plan beforehand, it is extremely unwise to venture out into the world of commodity trading without having a plan in place for yourself. You are surely entering into the world of commodity trading in order to generate money for yourself, so why would you skip anything that can significantly help you improve your chances of making that money? A commodity trading plan will serve as your game plan for the long term and will contain the rules that you set for yourself and will adhere to strictly.
How to Create a Commodity Trading Plan?
Commodity trading is usually something that we get into for the long term, so without knowing where we want to be in 5, 10, 15, 20 years into the future, we can not possibly plan our route to getting there. Therefore we need to begin by thinking about our aims and aspirations and then work backwards to plan your journey. Creating a good plan can be done in as much as a day, but some people will take much longer than that. You can find a lot of information online about commodity trading plans, but most of that originates from the USA. For the Indian commodity market you need a proper Indian commodity trading plan. The best suggestion for someone who is inexperienced in making a plan is to take assistance from an expert. This help can most likely be found from a friendly and caring broker such as GWC INDIA. You can use our commodity brokerage calculator to check out the charges.
Important choices to make will include deciding which commodities you wish to trade. How many commodities you will trade must depend on how active you plan to be. If you think you will be an active trader then perhaps limit yourself to no more than three commodities. If you think you will be a long-term traders then maybe you wish to diversify more, possibly casting out your net over all of the different commodities.
How much to Invest?
Another big question is how much capital you will invest in the first instance. This doesn’t just mean how much money you will feed into your trading account, but how much of that initial money you will invest into each of your chosen commodities. Remember that money fed into your trading account does not all (and should not all) be invested. Never forget the importance of maintaining a healthy balance of liquid cash in the account as it will save you from being wiped out if you get yourself into a mess.
When to Buy in and When to get out?
You must carefully consider your tolerance for risk and set yourself strict rules to maximize profit and limit loss. Deciding beforehand when you should ‘get out’ will ensure that you do not act on the temptation to hold on in there, praying for prices to rise again. A strategy always pays off in the long run, when compared to random decisions made on the spur of the moment.
Record Everything you Do
The trading plan itself must be a written document that can be referred to on a daily basis. Every trade you make should be logged by you so that you can go back over them all and analyze what you did, why you did it, and whether it worked for you or not. Remember that although the trading plan is a concrete framework that you must adhere to strictly, the plan itself should be revisited periodically and revised if necessary. If by analyzing your previous trades it becomes evident that your current plan is not working well for you, you must take another look and edit the plan. After all, a football coach would not stick to the same game plan if it was clearly failing. He would call in his team and change the strategy for the rest of the match.
If any of this sounds daunting to you, you need not be afraid. Help is always on hand from GWC INDIA. Call today on +91 80122 78000 and discover why GWC INDIA are the top online broker when it comes to value. They have helpful and knowledgeable members of staff who are best placed to work with you on creating the perfect Indian commodity trading plan, and discuss commodity trading strategies with you. Don’t forget to ask about their extra-low brokerage charges and bonus special features which come as standard to every GWC INDIA customer.