16 Mar

Isn’t trading commodities just pure gambling?

Every time I hear someone compare commodities to gambling, I think of Matt Damon’s character from the movie Rounders, in which he is talking about playing poker. At a high point in the film he says angrily to his girlfriend:

Why does this still seem like gambling to you? Why do you think the same five guys make it to the final table at the World Series of Poker every single year? What, are they the luckiest guys in Las Vegas?

It’s my favorite part of the movie. The character is finally confronted with having to tell his girlfriend the truth that he’s been playing poker again. It’s revealing in a couple of interesting ways. And they both line up to trading commodities.

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  1. Matt Damon’s character is right. “Big name players…have made millions of dollars over the courses of their careers. They show up time and time again at the final table of major events.” And there are a ton of other reasons to suggest that poker is not gambling as well. (Check out this article which explain more about the above quote and explains many other reasons.)

    The same is true of commodities. If it was just pure gambling, people wouldn’t be able to consistently make money trading commodities and “win at the game”. But people do it all the time! They work hard, look for the signs, and make money in trading commodities. People literally make a career out of this! A career they can spend at home or abroad!

  2. You can make a gamble of anything. How many times in our lives do we just put the money down without doing research and hope things turn out ok? Matt Damon’s character did this. He got lost and started gambling rather than sticking to his plan (hence the conflict with his girlfriend). Is it possible to throw money at the commodities market and just gamble? Absolutely. That’s how most people do it, in fact. But we think there’s a better way.

At papertrademe.com, we’re looking to take the gamble out of trading commodities. Go in with a proven plan, execute it, and win more times than not. Then, watch your account balance go up. Honestly, that’s the whole point of what we do! You can take your hard-earned money and throw it at a broker and hope everything turns out ok (talk about a gamble!), or you can paper trade, save your money, and practice until you get it right! Then, when you’re ready to make that first real trade with a broker, it won’t be a gamble, it will be a proven plan that will win over the long term.

Is there risk in trading commodities. Absolutely! But those risks can be mitigated.
Just look at your own life today:

  • Are there risks in driving a car? Absolutely! Wear a seatbelt.
  • Are there risks in your job stability? Absolutely! Learn new skills.
  • Are there risks to your health? Absolutely! Don’t drink too much. Eat right.

There are risks in commodities. But those risks can be lowered by planning.

So, is trading commodities pure and simple gambling? No, it’s not. And just like anything else in life, there is a smart way to do things and a foolish way. We want to help you do the smart thing.

Join papertrademe.com today! Sign up here: http://papertrademe.com/signup/

24 Feb

What is the difference between a commodities Speculator and a Hedger?

Am I a speculator or a hedger?

Futures contract

There are two types of traders in commodities – Speculators and Hedgers.

You, more than likely, are a speculator. Speculators are the vast majority of people who are buying and selling contracts in order to profit from predictions in the way the market moves. A speculator is not involved with the actual production of the commodity or in the selling of the physical good; usually they do not want to take delivery of the huge amounts of the commodity. They are only interested in holding contracts of the commodity to later sell at a better price.

Who are these people that are speculators? It’s people like you and me! Teachers, engineers, salespeople, secretaries, mechanics, lawyers, stay-at-home moms and dads. It can be anybody!

A hedger, on the other hand, usually has his hand in another side of the business. Perhaps he is a farmer, or a dealer of the commodity being sold. To “hedge” is to protect oneself from an adverse move against the business.

For example, the corn farmer wants the price of corn to go up so he can make more money on the product he grew. However, in the chance that it goes down, the farmer can purchase contracts of future corn betting that it will go down. This way, regardless of the actual move in the price of corn, the farmer can be in a win-win situation.

In other arenas, such as sports, this would be highly frowned upon. In fact as a player, putting money on the line to make any sort of prediction will get you banned – just ask Pete Rose. But in the commodities world, this is a perfectly legitimate way to let farmers protect themselves. Unlike sports, there’s no conflict of interest in the outcome. The farmer is going to produce as much as he can regardless of which direction the market moves.

13 Feb

Why we Created Papertrademe.com

ScreenShot PaperTradeMe

We want to be able to control our own money.

If you look online for places to invest your money, there’s no shortage of people who will gladly take it and invest it as they please. They’re the experts, right? If you’re like us, we’re a bit skeptical of investors. Once they have your money and the freedom to trade as they please, there’s no real incentive to be profitable…at least not to the extent that you have to invest your own money.

Brokers don’t really want to help you.

Have you looked online for sites that will help you trade commodities? Sure, you can practice…for about 2 weeks, and then the brokers want you to invest lots of money.

The reason they only give you 2 weeks is because they don’t make any money unless you’re trading. But 2 weeks just isn’t wise. We’re talking about trading potentially huge amounts of commodities? No way. We need time to figure this stuff out.

Blindfolded business man with bag of money is about to walk off the edge of a building representing financial risk, management, planning, investments, savings and retirement, and many other financial concepts.

We need to practice.

Each of has hobbies. From learning Chinese to gardening to DIY improving our homes our hobbies run the gamut. Well, guess what? They take practice. And we continue to practice each of these hobbies on a regular basis. We can use each of these skills in real life, but in order to get better, we have to continue to practice.

We’re learn-by-doing kind of people.

We don’t know about you, but learning the theory of any subject gets old fast. It’s so much more rewarding to actually apply your knowledge in real life. That’s exactly what papertrademe.com does. It allows us to practice trading commodities as if it were real! If we had actually made the trades, we would see the same results!

We like to experiment.

What if there’s a better way? What if that “expert trader” on the TV actually knows what he’s talking about? What about that new way of technical trading? Well…let’s test it out. We’re not going to waste our hard earned money without first giving it a shot in practice.

At the end of the day, we really want to take our futures into our own hands. We can study this stuff all day, everyday, but until we’re actually doing this for ourselves, it’s not worth anything. With papertrademe.com, we’re practicing in real life conditions because we know that “Practice makes Profitable“.

21 Aug

What is Papertrademe.com?

The Idea

Create a platform to allow people interested in trading commodities to practice risk free.

With our platform, users will be able to mock trade commodities using real, live conditions, such that if it were a real trade the user would have made (or lost) the money if it had been invested in the commodities market. Having experience in trading commodities ourselves, one of the most essential aspects of trading commodities is what is referred to as “paper trading”. Paper trading is simply pretending you’re in the market and tracking your progress based on real market conditions. What we wanted  to create was a better way to track these paper trades – an automated way that allow us to focus on the actual trading rather than trying to keep up with the daily calculations needed to paper trade.

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Thus was born papertrademe.com! Papertrademe.com will allow aspiring and professional commodity traders alike a place to practice and test out trading ideas and theories all at no risk to losing real money! We’re really excited about this and know that it will be a well-received platform.

Interested?

Good. Here’s what you can do to keep up with the development of this project.

So, with many thanks and much appreciation, thank you for your support! Please stay in touch and share, share share!

The Bushel Boys

11 Aug

Should You Paper Trade Commodities?

pretending

Paper trading, also known as virtual trading or mock trading, enables you to mock-trade commodities, commodities or other investment instruments as if you were trading them for real money. Now, what is the point of such trading?, you might ask. Why waste time “pretending” to trade for real, when you can actually trade for real? That is the question many aspiring traders ask. If you too have doubts about paper trading, read on to know why it’s vital to the success of trading in the real market.

Education

If you are new to the world of commodity trading, then paper trading is the first wise step you should take. When you are still in the process of learning, it is not a good idea to trade in real money. If you do, the chances of you losing a lot of money are very high. Paper trading is a form of simulation training that allows you to get a feel of real money trading in the commodity market, without the risk of losing any money.

Right Track

Paper trading not only introduces you to the world of commodity trading, but also helps you develop your own strategies that can be tested and tried without any risk. These strategies, if successful, can be used in real money trading once you are ready. Even experienced traders who are having a hard time in the market may resort back to paper trading to identify their errors and get back on track to making profit.

It’s Fun

As there is no risk of losing money, you will absolutely enjoy the process of trading on simulated markets. This means that you will actually have fun learning about trading! The joys of paper trading can even be addictive!

If you’re interested in learning more about papertrading, be sure to joinpapertrademe.com and learn the tools and tips of the trade! #punintended

20 Jul

What is Paper Trading?

What is Paper Trading?

If you have finally decided to invest in futures, there is no better way to test your intuitions and strategies than to get in there and start trading! This method, while being an invaluable teacher, will also put you at some serious monetary risks. The market will not spare inexperienced traders or untested strategies. There are ways to assess your plans and sharpen your skills on the trading floor without actually losing or making any money. This is called paper trading.

What is paper trading?

Paper trading is trading that happens only on paper. Trading on paper allows you to trade in real time conditions using real market indicators and prices. The only difference is there is no money or actual futures contracts involved, so there is no risk of losing money. It is merely a trading exercise that will let you have ongoing practice to test out your strategies.

How to start paper trading?

When you start paper trading you should have a strategy mapped out. You should have an idea of how much money you would like start with, what kind of commodities you are looking for, the margin and maintenance costs, what price they are trading at and what your stop loss level is. You should be clear about entry and exit. Most important of all, you have to be honest and serious; do it like your money is really at stake. So aversion to risk and return objectives should also be set.

  • Step 1: In a dedicated notebook, write down the total amount of money you would like to start with. This starting balance is only paper, so you can make it whatever you want. Start off with a good amount and keep it round for simplicity of calculation.
  • Step 2: On a sheet of the notebook write down the name of the commodities you would like to invest in and the current market prices next to them. Do not go about rounding off, stick to the exact values.
  • Step 3: Track your investment every day. See your results in each and every day! Of course, don’t forget to calculate taxes and broker fees. In a separate blog post, we’ll share on how you can calculate profit and loss.

This process, though vital to success in the futures market can be a bit tedious. Papertrademe.com is an online paper trading simulator where you can or mock trade exactly like explained above. It will track all the data and runs the numbers for you automatically! We do all the hard work. All you have to do is make the trades! This makes the whole experience much more current, realistic, and realtime. Check out papertradme.com today!