Years of dealing with retail traders from all walks of life, experience levels, and amounts of risk capital, prompted me to compile the answers to the most pressing questions asked by commodity newcomers into a single source. As an industry insider, I feel as though I have developed a keen understanding of the risks and rewards of commodity tradingand the goal of A Trader's First Book on Commodities was to deliver a candid, yet optimistic and entertaining, account of the realities involved.
A front-row seat to the trading world has provided me with a perspective that, I believe, is unique relative to many authors on the subject. Accordingly, in writing this book I was able to inject a behind-the-scenes look at many of the aspects that are not covered in much of the previously-published material aimed at educating beginning commodity traders.
Where Many go Wrong
Unfortunately, beginning commodity traders often focus on market and strategy analysis, but devote little time to choosing an appropriate brokerage firm, service level, or efficient means of market access. Similarly, inexperienced traders must become familiar with calculating profit, loss and risk before putting their hard earned money on the line.
The premise of this book is to provide readers with all of the information needed to make the critical decisions that lead up to the actual buying or selling of commodities. Despite the lack of coverage in similarly targeted literature, I believe that many of the preliminary decisions discussed in A Trader's First Book on Commodities are just as critical in becming a successful trader as market speculation.
What to Expect from A Trader's First Book on Commodities
To attempt prediction of where the commodity markets might be going, it is imperative to know where they have been, and how they might have gotten there. Consequently, the book starts out with a thought-provoking, and perhaps even controversial, theory in regards to the catalyst and eventual demise of the record-breaking 2007/2008 commodity rally.
A Trader's First Book on Commodities begins by facilitating an understanding of why the futures markets were created, and the overall contribution of such markets to society and asset pricing. From there, readers will learn about logistics of trade execution and how they can utilize the available alternatives to their advantage. They will also become aware of market characteristics that are exclusive to the futures and options trading arena.
This book is unique in that it outlines the process of choosing an appropriate broker, brokerage firm and finding a price data source. In doing so, I attempted to paint a realistic picture of what the results of various choices might yield.
I couldn't leave out a few of the topics covered in nearly every beginning trading book, such as order types and calculating profit and loss. However, I believe the material to be covered in a practical, easy-to-understand and opinionated way.
The book concludes with an original look at trading plans, coping with margin calls, and the power of maintaining emotional stability. Furthermore, a conventional glossary of industry terms has been replaced with a chapter titled "Futures Market Slang" in which readers are warned of the various possibilities of terms, and uses of terms, that they might be exposed to in communications regarding their commodity trading. Commodity traders have developed a unique style of communication, and for those not familiar with insider "slang," it can be confusing and potentially costly. It is imperative that a trader's communication with his brokerage firm is clearly understood by both parties, and this book attempts to close the gap between broker and trader.
In addition to offering an alternative and candid view of getting started in futures trading, A Trader's First Book on Commodities was intended to offer readers some entertainment value, and an insider's perspective on the practicality of trading. For example, for the sake of keeping the reader "wanting more," several financial quips and interesting facts are located throughout the book. Additionally, proximity to the markets provides me the opportunity to share many ideas that strictly "academic" books might overlook.
Turmoil in the equity, real estate, and bond markets have created an increased interest in alternative assets and commodities have been, and will continue to be, a beneficiary of capital re-allocation. A Trader's First Book in Commodities was written for those interested in making the transition but starving for simply written, comprehensive, practical, and useful information on futures trading.
Whether you are looking for answers on how commodities are quoted and calculated, or simply want to uncover the mysteries of a margin call, I feel that this book delivers the answers with a side of insider insight that you might not find anywhere else.