How to design optimum trading plan while trading in commodity market?

As commodities are of highly price volatile nature it is essential to have a trading plan before you start to trade in commodities. Having a sound trading plan helps in managing risk and return in a better way. For earning desired returns traders can rely on usage of experts mcx tips as well. Good returns can be earned from commodity market but not without an optimum plan. Traders with vague knowledge and poor trading plan often tend to loose their money in market. When a beginner began to trade in market then his experience, knowledge about market and different trading strategies is basic but with time it gets improved.Designing a trading plan is not a difficult task but it is time consuming. It is not required to design a complicated plan to succeed as even most of the successful traders rely on basic approach to market.

Below are some tips which can be used to design optimum trading plan in commodity market :

1. Decide the number of commodities to trade

Traders may trade in market on long term basis or short term basis. If a trader is active trader and is going to square of his position in market in short period of time then he should try to trade in not more than three commodities. However long term trader may look for more diversification and good opportunities in more number of commodities.

2. Account size

Many traders believes that they must start with some minimum balance in their account. However it is not true as account size is not responsible for losses in market. Traders should learn about their risk bearing capability and accordingly trade in market. With less capital also good returns can be earned by following disciplined trading practices.

3. Trading strategy

The reason why commodity traders fail to earn good returns for themselves is they do not use wise trading strategy. Merely watching market news and learning updates timely is not going to help. Traders need to study different strategies technically and fundamentally and should also test the results of strategy using past data.

4. Study risk factor

Before entering in market to trade a trader should know about his risk bearing capability. Trading should be done as per individuals risk bearing capability by using proper level of stop loss.Traders should always try to keep their looses small. This will help them in becoming a successful trader in short period of time.

5. Maintain trading records

Every time you enter or exit a trade you must make a note of it along with the reason to do so. These notes are very helpful in designing optimum trading strategy in future which is most likely to give favorable results. Also you can make notes of profit/loss you earned with each trade.

A wise trading plan serves as a blueprint to trader and indicates how trader should approach in market in-order to achieve his trading goals. Without a good trading plan chances are that a trader finds it really difficult to accomplish his trading goals.

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