Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

Contact Details

If you are interested in contacting for speaking engagements. Please email me at Andrabr9@gmail.com or call 954 903 0638.

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Risk Warning

Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.

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Margin to Equity in Commodity Trading.

One of the major issues to long term success in commodity trading or forex trading is to know what is the right amount of capital for ones portfolio. The issues are if do not trade aggressively enough you will not obtain results and vice versa if you trade too aggressively you will stand the chance of blowing up. So what is the happy medium?

There is a simple method for commodity traders to find that optimal degree of leverage… it is called Margin to Equity ratio. Simply the margin to equity ratio in commodity trading is the sum of all the initial margin requirements for all of your positions divided by your account size. There are different opinions but my preference when investing in other commodity trading advisors is a margin to equity ratio of less than 20% max. This gives me some what of a comfort level that the commodity trading advisor is not being to aggressive and should be able to grind out profits over the long run. The lower the margin to equity…the lower the expected potential volatility.

All of this is all well and said…but there are instances in which the exchanges raise margin requirements due to volatility. More so…the more positions the more margin you will be need to put up…thus you have a higher margin to equity…and more potential volatility…

What it all boils down to is …How much exposure at any time…this is important to realize if you are trading your own methodology or if you are interviewing a commodity trading advisor that you are considering investing with. The key is to maximize your profitability with preferably a lower margin to equity… To give an example..you have two commodity trading advisors… one trades with a 10% margin to equity and returns 15% …and the other commodity trading advisor trades with a 25% margin to equity and returns 15%..who is the more efficient trader?
Clearly the one who is trading with a 10% margin to equity…
Bottom line…there is no exact number for margin to equity for commodity trading…the good news is you decide your comfort level… I know my comfort level…I have seen many commodity trading advisors, forex traders and commodity traders blow up because they were not aware of their margin to equity.
If you want to succeed in commodity trading…think about your margin to equity..or when you interview a commodity trading advisor…make sure this is one of the questions you ask.

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Andrew Abraham
A.Abraham@AngusJackson.com
www.AJpartnersinc.com
www.myinvestorsplace.com

Futures trading involves risk. People can and do lose money


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