CHAPTER 21

Risks, Regulation and Behaviour

What can go wrong and how to avoid it

Opening question

“Why have so many individual traders lost money in commodity futures?”

In this chapter

Why leverage and margin calls are the first cause of losses
Limit moves, gaps and why stop orders do not always work
Basis, roll and liquidity risks
Extreme events: squeezes, suspensions and negative prices
Counterparty risk, product structure and fraud
Behavioural traps and how to recognise them
Position sizing and a simple risk budget
How regulators protect investors, and what to check in Vietnam and elsewhere

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 21 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Commodity Investing: From Theory to Practice (Volume 2, NXW Investment Library).

Read Chapter 1 free Get the full book — contact@nxw.vn

Sections of this chapter

21.1 Why so many traders lose money

21.2 Leverage and margin

21.3 Limit moves, gaps and stop orders

21.4 Basis, roll and liquidity risk

21.5 Extreme events: what history teaches

21.6 Counterparty, structure and fraud

21.7 Behavioural traps

21.8 Position sizing and a simple risk budget

21.9 Rules and investor protection

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