Advices and Tips on Commodity Trading

It’s pretty difficult to survive for long in the commodity market. The price fluctuations are completely unpredictable; and it is also very difficult to identify any trend which could be said to possess a statistical edge in the market when compared to the numerous other trends. However, don’t lose hope or get discouraged as of yet; because there are still a large variety of ways in which one can find their way around the pitfalls and master the art of trading.

The very first thing that a lot of traders do is to head for the libraries and read up voraciously on everything related to trading commodity futures. That’s a commendable thing to do by all measures; however, there’s a bit of problem with that. The theories that are generally mentioned in books and internet blogs/e-books are of quite little use in the practical world out there. A lot of famous and well-respected authors of such books are known to put forward theories and practices which might result in losses for the trader (when he/she puts the theory to test in the market). Therefore, a lot of those theories may look good, but are actually quite impracticable when it comes to dealing with the real market.

A few people would seek out experienced traders and hire their advice, maybe in exchange for a fee. But like expert tips, this method is not very likely to work out either. This is because, the trader who’s looking for advice, would be a completely different person from the advisor that they would seek out to guide them in the subject of trading. May be the beginner does not have an equal amount of capital to invest and is completely inexperienced. And last but not the least; their thinking pattern may not be identical to that of the veteran trader’s. In the light of all these, the question which inevitably comes to mind is: Is there at all a ‘way’ to get successful in the field of commodity trading? There’s no certain answer to that. While it is definitely possible to list out a number of generic advice points and cautionary notes which generally prove to be beneficial for traders the majority of the time, there is no absolute rule-book for success. But let’s hear those advices anyway:

• One should resist the temptation to over-trade. Putting a large sum of money on any single trade would mean kick-starting a cycle of losses. This is especially true if the commodity being traded is very expensive; such as platinum, crude oil or precious stones. In case the person happens to suffer a loss, the hurt will be multiplied manifold if the invested amount was a big one. And the spreads should be kept as short as possible.

• In order to be safe, traders should trade within short spreads till the time they’ve gained enough experience to be able to differentiate between genuine and false upside breaks.

• A lot of times it’s seen that most traders do not invest enough time and hard work when it comes to trading. Instead, they use it as a hobby which can provide profitable returns from time to time.

sandysr posted:
The very first thing that a lot of traders do is to head for the libraries and read up voraciously on everything related to trading commodity futures. That’s a commendable thing to do by all measures;

I think this I can help you in providing a good library of good write ups about commodity, you can check this link: https://itrader-commodities.com/ if you want :)

I would recommend having equity CFD trading experience first, and at least a theoretical knowledge of Options (Put and Call [Plain Vanilla]) before attempting leveraged commodities.

By staying in the same direction of the trend, we allow other traders in the market to push forward trade, and help you to reap more profits. This is perhaps one of the most basic and fundamental ways to make money in the currency markets. Unfortunately, investors now do not pay much attention to the trend. Do not let this common mistake influence you in your decision to invest in forex.

For someone who has decided to start commodity trading, all different terminology can be a bit overwhelming. There are many product terms that are adopted from other markets such as equity, leverage and stop losses, but there is a whole list of terms that apply to this particular market, so we decided to name and explain some of them to you.

Where can we find the terminology with the explanations? Thanks in advance!

Hello,
More or less, there are not too much difference between FX and Commodity trading. On Commodity trading some difference could be related with determine life of the markets (futures contracts) and some season influence over soft commodities (wheat, sugar etc.),
Ah and another point - bigger accounts are needed here :)

Commodity trading offers huge profit potential but for anyone willing to trade in commodities, I would recommend them to do complete homework as commodity market involves high leverage instruments thereby increased degree of risk. Other than the theoretical know how also focus on price analysis and news events.

ema123 posted:
Commodity trading offers huge profit potential but for anyone willing to trade in commodities, I would recommend them to do complete homework as commodity market involves high leverage instruments thereby increased degree of risk. Other than the theoretical know how also focus on price analysis and news events.

As I think, new traders should start their trading process through the major FX pairs than the exotics; after words the commodities.

Commodities are great for long term speculation but not so much for short term. The spreads are too high. I also find that technicals are less important on commodities. Fundamental analysis if more important.

i certainly agree commodity trading needs time invested in understanding the markets, for example how AUD/NZD/USD forex markets can effect metals & how CAD,USD move with Oil. there can be trends in commodities looks at WTI or Brent down trend Oct-Dec 2018 as an example, what a great move lots of opportunities to stack trades on the way down.

Commodites are better traded over the long term. The spreads are quite high so short term trading is not very easy. But there are good long term trends so trading long term can be very successfull (if you know what you are doing!!!)

GoldAbu posted:
Commodites are better traded over the long term. The spreads are quite high so short term trading is not very easy. But there are good long term trends so trading long term can be very successfull (if you know what you are doing!!!)

Yes; trading spread is not suitable for the short-term trading styles! But what about the volatility of commodities?

Learning is the foremost ways to keep survive in this volatile trading place in a proper way. But sorry to say maximum traders who are particularly newcomers try to make money from here without learning. As a result they become loser when trading practically. It would be great if we choose the broker which always ensures best trading environment for learning this trading place by providing exclusive educational facilities.

Commodites are better exchanged over the long haul. The spreads are very high so transient exchanging isn't simple. Be that as it may, there are great long haul inclines so exchanging long haul can be very successfull (in the event that you realize what you are doing!!!)

To put it very simply, the factors to consider when choosing the best commodities to trade are market liquidity as well as fundamental trends.
...
Crude Mini: 950% in 3 years.
Precious Metals( Gold, Silver)
Base Metals( Copper, Aluminium, Zinc, etc)
Energy( Natural Gas, Crude Oil)

Alexsajed posted:
To put it very simply, the factors to consider when choosing the best commodities to trade are market liquidity as well as fundamental trends.
...
Crude Mini: 950% in 3 years.
Precious Metals( Gold, Silver)
Base Metals( Copper, Aluminium, Zinc, etc)
Energy( Natural Gas, Crude Oil)

Well; how do you handle the issue of high trading spread on commodities trading?

With commodities it is all about the long term trend. Don't try to trade intra day just find the trend then wait for pull backs and enter in the direction of trend

ElDoradoGold posted:
With commodities it is all about the long term trend. Don't try to trade intra day just find the trend then wait for pull backs and enter in the direction of trend

Till now I can remember during the 2013-14 oil trading was much exciting; I know many traders made a huge amount of money!