There are about 5 golden rules for trading commodities the right way. Get ready. It is time to unwrap the candy bar to find the golden tickets.

1) Do not overtrade, ever. This goes for everyone. Overtrading means something different to each person. The point is to find that meaning and stick with it. Say someone invests $100,00o in one day. This person’s loss should not be more than 2% of the initial trade investment. In other words, $2,000 should be the limit for that loss.

2) There is a saying that short-term thinking is a trader’s best friend. This will not work in stock trading. This will work with commodities. Traders need to be thinking short-term for much of their investing. This is the one place will a trend will work.

A trend is when a commodity hits a 20-day high or low. Does the market value look to be heading towards a consolidation? Stay away from it. Pick something that is trending upwards more. Traders need to stay with their 2% maximum loss during this time. It is easier to recoup on a loss that is this low. It is not so easy when it gets higher.

3) Do not add to the losing table Too many investors and traders do this in an abusive way. Adding to a losing table will only suffer more losses to come. Any trader who gets hit with one loss needs to stop. Traders who add to their losses will suffer more than a 2% loss at the end of the day. Think about it.

4) Never answer to a margin call. This gets tempting for some traders to do. This will result in overtrading and be extending the limit. Traders need this margin to pad any possible loss that may result. Traders who mess with this will only suffer more losses later on.

5) Always have a game plan in mind. Some like to chance it by 5-10% when they know they have a loss to recoup. This is not going to work. Some like to test an unproven system. Why would a trader do this? This is only going to add insult to injury.
Players should not chance anything, whether it be for a win or loss. Stick with what is working and take it from there.

Hope these 5 golden tickets have helped. Willy Wonka has left the building. The rest is up to you!

Fees in online trading are typically referred to as commissions. A generally accepted principle is that the amount paid will be reflective of the service and benefit provided. When you see a free option, it’s typically only for an introductory period, or for a certain number of trades. For example, brokerage firm “A” will allow you six free trades and default to a regular commission structure after the orders are fulfilled. Another example is when brokerage firm “B” gives you one month of free trades. Again, a typical commission structure will resume after the stated “month” expires. The benefit to these schemes is that you’re getting something for free. The downside is that once the investor is established with the firm, they’ll find it more of an effort to move to another firm. Joining a firm is always easy, leaving one is often a challenge.

Continuing along the lines of commissions, the normal process is for a broker or platform to charge per trade pricing. The adage “what you pay for is what you get” tends to hold universally true here. Low-cost services will typically allow investors to trade between five to ten dollars per trade, however, don’t expect any service aside from the trade that’s been requested. In other words, if the investor made a mistake they are stuck with the results of the error. Mid-priced service is a little better, but also more expensive. The commissions are typically between ten to fifty dollars a trade. The benefit is that if customer support is needed, it’s included in that pricing. This can also open up other optional services not available at the lower rates. These types of services, of course, vary from firm to firm.

Full-service brokerage firms are another animal. They sometimes will charge up to $150 per trade. The benefit to these firms is that they provide full customer support, and often times a dedicated account representative. They have research and information available that typically wouldn’t be disclosed on a discount trade. In other words, the investors have access to human beings and even advice should they need it. These firms also offer other options for placing orders other than online. Sometimes, an investor may deem it beneficial to have the luxury of a consultant at their demand. The downside to this is that no matter what firm the investor chooses, they make their money on trades, not the value of the portfolio.

Another common event associated with online trading firms are additional fees. This holds especially true with discounted brokerages. It’s not uncommon to be assessed a fee for allowing your account to remain dormant or monthly maintenance. Some will charge you a fee if you need the assistance of a broker or even customer service. These are often times referred to as “junk” fees and are in the fine print. If the investor is just starting out, has limited funds or just casually trading, these fees can add up quickly and reduce the bottom line.

The remaining question is how much is too much? There’s not one simple answer to this question, unfortunately. The best way to figure this out is for the investor to look at their unique situation and determine what they consider “reasonable.” Should they need more support and trade often, it might be worth it to pay a little more per trade, but save on consulting and junk fees. Should the investor just be starting out or has a very tight budget, a discounted firm may be the way to go. This gives the investor a chance to earn a small amount and experience growing pains and the learning curve prior to signing on for a more substantial account. Whatever the investor chooses, it should remain consistent and realistic to their goals and game plan. Investing is meant to be a long-term endeavor and should be treated as such for the greatest success.