26 Juni 2013

How To Trade Mini Futures Contracts Successfully

Can a person with limited funds; say a couple of thousand dollars, trade commodities? In a word, yes.

You don't need $20,000, or even $5,000, to be a successful commodity trader. The mini-futures contracts were designed to fill the gap that exist between the high roller large accounts and those that only have a couple of thousand dollars to invest.

New traders are told to stay away from mini-futures because there is not enough contracts traded and you can lose all your money. That statement is true, and applies to trading standard commodity contract as well, if you plunge right in without first learning your craft.

Mini futures provide excellent trading opportunities for the small trading accounts.

It does not take a trading genius to make money trading mini commodities, just a little common sense and patience. There is nothing mystical about trading commodities nor are there any great secrets to trading.

Standard and mini futures contract charts look all most identical.

The major difference is the volume of contracts traded is much less that that of a standard futures contract. It should be noted that standard size contract charts can be used to find trades for the Mini Futures market simply because the mini-futures, for all practical purposes, mirror the standard size contracts.

Currently there are four groups of futures contracts that trade the mini contracts.

A Agriculture. Long term trading

1. Wheat

2. Corn

3. Soybeans

B Currencies. Extremely risky

1. Euro FX mini

2. Japanese Yen mini

C Precious metals. Extremely risky

1. NY gold mini

2. NY Silver mini

D Indexes. Extremely risky

1. Nasdaq 100

2. Russell 2000 emini

3. S&P 500 emini

A new trader should stick to the first category to learn the proper way to trade commodities. There is still a risk in the corn, wheat, and soybean markets but it is reduced a great deal with the mini contracts. The other three categories do have mini contracts. However, they can be extremely volatile and wipe out a trading account in a heart beat.

Trading mini futures contracts can give new traders a chance to gain experience while building confidence and cash in on the fabulous profits being made in the futures markets. It does not take a small fortune to learn how to trade commodities.

Current margin (performance bond) required for a mini wheat contract is $400. One point (Cent) on a mini soybean contract = $10. With proper money management a new trader can slowly build their trading account and at the same time learn the craft of futures trading.

There are fortunes being made by commodity traders (speculators) every year. The best part about being a commodity trader is it does not matter if the markets are going up or down. You can make money even if the economy is in a recession.

Over night fortunes are very rare to non-existent in commodity trading.

However, you must understand perfect trades do not happen every day and it will take some experience to spot them. Mr. Larry Williams, a recognized trading professionals, made the statement "You don't have to take every trade; just the winning ones." Patience is one of the key ingredients of successful trading.

It's tough sitting on your hands and not jumping on every trade but it pays off in the long run.

Always remember. Commodity trading is an extremely risky business. The first rule of a successful commodity trader is Plan Your Trade! Trade Your Plan!

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