Commodity trading is one of
the most complex tasks in the investment business. The price of the commodity
is very sensitive and you can expect a sudden change in the trend. That’s why
the majority of the elite traders in Singapore, never suggest the novice
traders trade the commodity market. You might be thinking that commodity
trading is only for experienced traders. If you think so, you are right.
However, if you follow some basic rules, you can also trade the commodity
market and make a decent profit within a short time.
Learn about the price movement
The first thing you need to
do is learning
the basics. Without learning about the
basics of the commodity market, you will never learn to take the trades in a
standard way. Unlike the currency pairs price movement, the price of commodity
greatly fluctuates. If you do the data analysis, you will notice the price of
the commodity loves to move in favor of the long-term trend. All these factors
will become easier once you demo trade the market for few months. There is no
reason to trade with real money when you can learn things by using the demo
trading account. Keep on practicing in the demo account till you feel
comfortable with your trading performance.
Learn about the brokers
Many novice traders think
that they don’t have to find the best broker to trade the commodity market. But
if you have a look at the professional trader, you will notice all of them are
using the best commodity broker. Choosing a good broker is very important to your
trading performance since it determines your trading environment. Some of you
might think you can cut down your trading cost by choosing low-end brokers. But
this will never happen. If you chose to trade with the low-end brokers, you are
going to lose money most of the time. To be on the safe side of trading, you
should always take the trades systematically and find the most reliable broker
like Saxo.
Accept the losing trades
To succeed in the retail
trading industry, you must learn to accept the losing trades. Without having
losing trades no one can trade in the market. If you want to survive in the
retail trading industry, make sure you trade with low risk. The moment you will
start taking the trades with low risk, you will learn many amazing techniques
which will eventually improve
your trading skills.
Never think you know everything about this market. Be prepared to deal with the
worst-case scenarios and only then you can trade with low risk.
Aim for high risk to reward ratio
You must learn to take the
trades with a high risk to reward ratio. If you trade with a high risk to
reward ratio, you should be able to recover the losses. But those who trade
with a negative risk to reward ratio faces a tough time dealing with their
losses. They quit trading after losing a major portion of their trading
account. Try to stick to the existing trend and use the major chart pattern. If
possible, seek help from professional traders since they can give you the
proper guideline regarding the art of commodity trading.
Analyze the news data
You should always analyze the news data before taking the trades in the commodity market. Many novice traders think that they don’t have to analyze the news data to make a regular profit from this market. They start taking aggressive steps and loses a big portion of their capital. But if you want to protect your capital, you must learn to trade the market based on the fundamental analysis. Try to merge fundamental and technical data so that you can take the trades in a standard way. And make sure you never risk a big portion of your trading capital just because you know fundamental analysis.