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Commodity Investing -
Targeting 30- 50% Annual Profits.
There are plenty of people who will manage a commodity investment for
you, but you need to choose carefully as most lose!
This article is all
about picking a manager or doing it yourself via a software program and
targeting the big gains that make commodity investing so lucrative.
Risk & Reward.
Commodity investing by its very nature is
risky, however with risk goes reward. The real key is management of risk and
this is what separates out the great performers from the losers.
Reducing risk and increasing returns.
Commodity investing is
popular as you are investing in a non correlated investment to stocks.
Within the commodity or futures markets you have great diversification
and fantastic profit potential.
There are managers who target and make
30 – 50% gains per annum in commodity investing, so let’s find out
how we target them.
Let’s look first at managers to avoid:
1. A broker
On the desk of commodity firm “who will
help you” trade to make money. Keep in mind, he is a broker not a money
manager and chances are he won’t make you money.
If brokers could
make money they wouldn’t be brokers.
2. Managers with
hypothetical track records.
These managers simply launch a performance
graph that looks great in hindsight (lets face it we can all make money in
hindsight) and then very often collapses in real time trading. Forget this
group.
3. Managers claiming real time track record but no audit
.
Not only do you want the track record verified, you want a statement
that the account you are investing in is representative of all funds under
management.
4. Drawdown.
Watch out for highly volatile
performance the bigger the drawdown the bigger the risk of ruin.
Generally, look for manager who has smooth equity curve. Many managers
have drawdowns of 50% or more avoid them.
Look for drawdowns of around
30% max.
5. Conflict of interest.
Check your manager does not
earn a proportion of the dealing fees, as this sets up a conflict of interest.
They may deal for commission, rather than profits.
Try and get managers
who have confidence to be paid on performance only.
Keeping the above
in mind you need to look for managers that are professional, or buy a software
program follow the signals and do it yourself.
This latter option is a
great way, you are your own manager and of course don’t pay fees!
Discretionary managers.
Real time performance, audited
figures and responsible money management, as mentioned above. You may also like
to check the following:
Find out about how much money they have under
management, their methodology and how long their track record is 3 – 5
years is enough. Beware of short track records as they could have been lucky!
Make sure your comfortable with them, their investment approach and
money management.
Like all managers they will have losses, you should
stick with them through these periods and confidence in them to get it right
will help.
Software - be your own manager.
Most commodities
trend and there are a lot of good software programs you can buy that, can
target 30 – 50% in annual gains.
This means you don’t have to
pay a manager and have control over your investment.
With the internet
and the power of computers and the recent developments in software, more and
more investors are taking this route.
You need a simple system; you can
understand, can apply with confidence, with real time track record and your all
set.
Note: You may want to read our other article futures trading
software for in depth way to pick a system to invest in commodities for big
gains.
Commodity investing Which way is best?
Commodity
investing in this way if you have the right trading system, can be very
lucrative. You have the potential to out perform the bulk of managers and keep
all the profits yourself.
You can give it to a broker to execute it for
you, or place the signals yourself.
Read our other article on Futures
trading software for more information.
Learn More about a Legendary
Trader
Why not attend one of our FREE Seminars held in London and
cheshire. click here to book on-line or
telephone 0161 285 4488.
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