Commodities outpaced any other asset class in 2010

A short review from Part 1 of this article shows that each Futures contract has its own unique specifications. In these specifications is the size of the contract and from that we can determine, how much the entire contract is worth.

When we speak of a Futures Contract, we are referring to a standardized contract being created between two parties to either buy or sell a specific asset (Corn, Live Cattle, Oil, etc) having standardized quantity and a graded quality at a specified future date at the price agreed upon today.

One of my favorite styles of trading the Futures markets is the Intra-Commodity Spread. For this trade, we are going to be simultaneously buying and selling contracts of the same Commodity in different months.

Many of us are already using support/resistance levels to locate possible turning points in the markets. We can identify these by looking at multiple time frame charts.

Many times I hear traders say they just want to make a certain amount of money per day trading, perhaps they are happy with $200, $500 etc. For most of them, I find out they are coming into trading from a career where they received a regular paycheck for some pre-set amount.

All Futures contracts have expiration days where the contract literally stops trading. The Exchanges where the contracts trade are responsible for assigning positions to be delivered against for the commercial traders. Therefore, they would prefer to have as many speculators out of that contract before it expires as possible

Having been around the trading arena for many years, I have seen many changes to the world of trading. One of them has been how many new technical indicators and chart patterns have been introduced.

Just like in trading, there is very little involved with getting a motorcycle and then driving it on the roads. Without any mandatory training, you can purchase a bike with little money down, get your license and buy a helmet. For a trader to start out, he just needs to open a trading account for as little as $5,000 (controlling as much as $100K with leverage) and have an internet connection and he can start trading. Both of these events are missing key elements ? training and experience.

I believe that trading is 85% psychological, 10% risk management and 5% strategy. If you are just starting out in trading, keep this in mind. Too many times people are so busy looking for the Holy Grail trading strategy that they forget to work on the most important part of trading ? themselves.