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.
Making Money in Commodities
For the last rolling 24 months it has been tough in the commodity trend following community. A lot of hot money flowed in after the average returns of 20% of 2007 and 2008. This hot money has left and many commodity trading advisors have seen assets under management plunge. Gold cooled until recently…and crude oil has been choppy as many other markets. Really nothing has happened. No trends…they just start and end.The trending markets have been the grains…interest rates and cocoa. For commodity trading advisors that are trend followers the goal is to tred water when there is not oppurtunities and be patient. Most investors are not patient and thus lose money. Commodity trading advisors know that their year can be made in just one market however.
Currently ( and this can change very quickly) the grains are becoming interesting. There has been extreme dry weather not just in Russia and Europe but there has been flooding in Canada and the world’s supply of wheat is way down. Couple this with Wheat restrictions from Russia and that producers of food products will still buy almost at any price there could be a nice run for the grains. Who knows.. My crystal ball has never worked!
When thinking about commodities versus stock investing, people must eat and they attach a lot of emotions to food. We saw food riots in the past. These riots were terrible for the people that suffered however trend following commodity trading advisors made profits in 2007-2008 due to these issues.
Making money in commodity trading is not easy and is fraught with risk. You need to have a well thought out plan that covers all ideas that can go wrong ( because there will be many things that can go wrong). Even with a plan there will be hard times like these last rolling 24 months were commodity trading advisors did the exact same work as in 2007 and 2008 and made no money & even experienced losses. This is what commodity trading is…It is to be expected that there will be drawn out periods that nothing happens. Nothing has to happen and then all of a sudden you have big moves. One profits because they had a plan and most of they had the determination to follow this plan even in the face of a long draw down or a long period of non profits.
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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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