Regardless if you are new to commodities (or forex) or if you have traded them in the past without much success and want to make a fresh start with either a commodity trading advisor or even a mechanical trading system … examine this preparation list to really determine if you are truly ready to begin trading commodities ( or forex).

1.Determine how much you can truly lose. Too many traders think they will make money from day one. When one invests in a trend following approach in commodities ( forex) it is truly a marathon. One trade…100 trades do not mean anything…One year does not mean anything. When investing in commodities one needs to make themselves available for oppurtunitys… however this does not mean the oppurtunities come when we want them to come. In other words..again…one must be patient and disciplined.

2. Just do it… Open a brokerage account and fund it. Also bear in mind one of the safest places to leave your excess margin is Treasury Direct.. Even though FCMs maintain segregated accounts for your money…Your money is safer at the FED. If you are not trading yourself…then after careful diligence both quantitatively and qualitatively allocate to groups of commodity trading advisors that understand risk. Do not allocate more than 5% of your portfolio to any commodity trading advisor.

3. Determine a diversified portfolio of markets..Something to consider is to trade tactically. In other words..Determine your universe of tradeable liquid markets based on strength and weakness. If you are not trading yourself you can allocate to a commodity trading advisor that does.

4.Make sure you have TOTAL confidence in your trading strategy and that every aspect has been PREPLANNED. As well if you allocate to a commodity trading advisor…again.. Make sure you understand exactly the strategy…and risk management.Realize that you should be investing with that commodity trading advisor for at least the next 3-5 years at a minimum. Exiting after a draw down is the surest way to lose money.

5.Truly realize and expect sometime in the future you will encounter at least a 25% draw down ( as well as your greatest draw down is always ahead of you).

6. Make sure your trading is based on basic ideas that are tradeable and realistic on all markets and time frames. The same should be expected from a commodity trading advisor that you would invest with.

7.Make sure you are trading only liquid markets.

8.Can not emphasize enough that either your trading…your mechanical trading system… or your commodity trading advisor has strong built in risk controls and money management. Make sure you have immediate stops in the markets to protect you and avoid big losses.

9.If you are using a mechanical trading system, walk it forward..test it… more so… walk it backwards…break it down into smaller historical periods and look at the results.

Most of all…After all of these..( and probably some others that I did not think of)… have the patience and discipline to let the numbers work overtime. This is not a get rich quick idea. This is compound your money over time and grudge through all the periods that nothing happens… grudge through the periods of ugly sickening ( if you let it) draw downs. If you have the fortitude to do this… you will have put yourself in a position to compound your way to wealth. You will have earned every penny. . Andrew Abraham

A.Abraham@AngusJackson.com

www.AJpartnersinc.com

www.myinvestorsplace.com

Futures trading involves risk. People can and do lose money

Benchmark Lending Rates Climb

Reuters anounced the other day that the Nigeria’s central bank unexpectedly increased its benchmark lending rate by 25 basis points on Tuesday. This caught most of the analysts off guard as Nigeria directed its interest from building growth to battling inflation.

Central bank governor Lamido Sanusi has tended to emphasize economic progress in Africa’s biggest oil producer ahead of maintaining a lid on price rises, specifically following a near collapse of the banking system last year.

Nevertheless, Sanusi said reforms launched since he bailed out nine banking institutions a year ago meant there was now flexibility for monetary tightening up, raising the benchmark lending interest rate to 6.25 percent from 6.0 percent in the first increase in more than a year.

“The committee is completely satisfied that ample improvement has been made in banking sector reforms to mitigate the risk of monetary tightening to financial institutions,” he shared with a news conference in the capital, Abuja.

He also narrowed the interest rate lending and deposit corridor for commercial banks that sits either side of the bank’s benchmark level by lifting the deposit rate to 3 percent below the benchmark from 5 percent up until now.

Analysts stated the two moves — essentially a raising of official deposit and lending rates to 3.25 and 8.25 percent respectively — proved resolve to tame rising prices that quickened to 13.7 percent year-on-year in August from 13.0 percent the previous month.

This comes after the State Bank Of India increased their benchmark lending rates by 0.5% in August and Canada increased their benchmark lending rates in June – both seemingly bothered about inflation on the back of strong growth.

Conversely the Federal Bank reiterated that it is going to retain the benchmark lending rate in a range of zero to 0.25 percent “for an prolonged timeframe.”

Benchmark Lending Rates Climb

Reuters anounced the other day that the Nigeria’s central bank unexpectedly increased its benchmark lending rate by 25 basis points on Tuesday. This caught most of the analysts off guard as Nigeria directed its interest from building growth to battling inflation.

Central bank governor Lamido Sanusi has tended to emphasize economic progress in Africa’s biggest oil producer ahead of maintaining a lid on price rises, specifically following a near collapse of the banking system last year.

Nevertheless, Sanusi said reforms launched since he bailed out nine banking institutions a year ago meant there was now flexibility for monetary tightening up, raising the benchmark lending interest rate to 6.25 percent from 6.0 percent in the first increase in more than a year.

“The committee is completely satisfied that ample improvement has been made in banking sector reforms to mitigate the risk of monetary tightening to financial institutions,” he shared with a news conference in the capital, Abuja.

He also narrowed the interest rate lending and deposit corridor for commercial banks that sits either side of the bank’s benchmark level by lifting the deposit rate to 3 percent below the benchmark from 5 percent up until now.

Analysts stated the two moves — essentially a raising of official deposit and lending rates to 3.25 and 8.25 percent respectively — proved resolve to tame rising prices that quickened to 13.7 percent year-on-year in August from 13.0 percent the previous month.

This comes after the State Bank Of India increased their benchmark lending rates by 0.5% in August and Canada increased their benchmark lending rates in June – both seemingly bothered about inflation on the back of strong growth.

Conversely the Federal Bank reiterated that it is going to retain the benchmark lending rate in a range of zero to 0.25 percent “for an prolonged timeframe.”