Commodity trading strategies that will make you a pro trader.
Trading is for investors with bulky wallets and experience of years in commodity trading. False! False! False! It is for anyone who knows even the basics of commodity trading strategies. For beginners it is risky to invest your money into something you have no knowledge about, but don’t worry. This brief guide will help you understand what is commodity trading, why you need commodity strategies and the three of the best strategies!
What are Commodities Trading?
Commodities in trading from the point of view of a financial market are tangible physical assets that carry a physical worth. The four main types of commodities that can be traded include natural resources like metals, agriculture, meat and livestock, and energy. Well, humans use these resources to sustain, they use metal for construction of buildings or infrastructures and other agricultural products to feed themselves. For example, the common commodities people trade in are crude oil, natural gas, silver, gold, sugar, corn, coal, coffee etc.
Who are the commodity investors?
Normal people like you are commodity investors. However, the financial market has distinguished the market participants into three main categories, namely:
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Hedgers
Commercial hedgers are also called commercial traders. These professionals perform ‘hedging’ – a process of protection against possible losses because of commodity price fluctuations. Their primary role is to manage spot market risks in the commodity niche.
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Speculators
Speculators work with the goal of profit by speculating the direction of future prices. Mainly, there are two types of speculators, one, large speculators who are also called as non-commercial traders such as banks and large financial money managers. Two, non-reportable traders such as retail traders.
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Arbitrage
The last category is Arbitrage, they are the traders who buy and sell commodities to earn profits from the price differential across markets.
Commodity Trading Strategies
There are many benefits of commodity trading and to get them all, you need to work with some concrete commodity strategies. These strategies will help the investor to:
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Diversify portfolio and include real assets in wealth-building.
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Trade easily as commodity assets are easy to understand as you only need to analyze the supply and demand equation.
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Incur no or less loss even when the economy is in a recession, prices of commodities will increase.
Commodity strategies that you can use to begin as a commodity trader too are:
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Finding the niche first
There are many commodities you can trade. Most of the people trade in a single commodity such as gold, cotton, wheat or oil. As each of the markets is unique, you’ll have to select one to get familiarized with, know the ins and outs to later become a confident trading expert. This way you can understand the chosen niche market, deal accurately and set correct pricing actions to achieve beneficial results.
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Trend-Following Strategy
Out of all the commodity strategies, trend-following strategy works exceptionally. As the chances to earn higher is better backed when you have the trend on your side. Following the trend is the golden rule of a commodity market. So, as a professional or a beginner commodity trader examining and following the trends can offer you extreme profits.
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Commodity Intraday Trading Strategy
Day trading commodity futures offer strong opportunities to earn. Learn how to day trade in commodities with Commodities University. Here, you’ll have to understand and keep a closer look at the commodity channel index.
Final words
Learning commodity trading strategies from the professionals can help you navigate through the ups and downs of the commodity market. To become a skilled trader, there is no shortcut other than learning, understanding and practicing these commodity strategies. Seek the advantages of commodity trading with Commodities University – the best platform to master the arts of trading commodities.
Source URL: https://www.commoditiesuniversity.com/advanced-strategies