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FAQ's #7

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What are some basic rules and strategies for trading the commodity markets?

1. Commodity positions are meant to be traded in and out. Buy and hold does not work, especially with options

2. Take Losses and Regroup (TLR).

3. Take Profits and Relax (TPR).

4. The market will determine if you are RIGHT or WRONG. If you are right the market will reflect it very quickly. If you are wrong the market will reflect it very quickly, so GET OUT, reposition, or use longer term option positions to limit losses.

5. If you are not confident about a market’s short term direction, but are comfortable with the market’s long term direction USE OPTIONS.

6. Cover some future trades with options to reduce risk.

7. Exit all losing futures positions at end of day or sooner. NEVER EVER hold over a long weekend!

8. Never place a futures trade without first considering the worst case scenario, and determining that you can handle it. WHAT CAN GO WRONG MIGHT!

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

© 2011 Van Commodities, Inc. All Rights Reserved