7 Secret Tips for Free Commodity Trading
Buying and selling of commodities have been the means of survival since old age. Coming back to the roots, it is the best way to reconnect with our primeval selves. It all started with barter exchange and now we are operating trade digitally.
Commodities have become an attractive investment alternative for investors, as it helps in building a well-balanced investment portfolio. While commodity trading is a relatively new concept in the country, it provides investors with an alternative avenue to generate short-term gains. Furthermore, depending
on the experience of traders, there are different ways to invest in commodities, with commodity futures contracts being the most popular method.
For investors, commodities can be an important way to diversify their portfolio beyond traditional securities. Because the prices of commodities tend to move in opposition to stocks, some investors also rely on commodities during periods of market volatility.
What is commodity trading and why is it growing so immensely? What are the commodities that can be sold? There must be ample questions boggling your mind and hence the following sentences would satiate your queries.
Basically, commodity trading is the exchange of physical substances for investment purposes. It is mostly done through the hedging process. It is where the contracts are made on future dates and on fixed rates so that the traders can save themselves from the market risks. Commodities carry a risk factor as their
trading depends on the market factors like supply and demand. To control the fluctuations of the market, the process of hedging is adopted.
A commodities exchange refers both to a physical location where the trading of commodities takes place and to legal entities that have to look for the trading of standardized commodity contracts and related investment products.
In general, commodities are classified into four types:
1. Metals – Silver, Gold, Platinum, and Copper
2. Energy – Crude oil, Natural gas, Gasoline, and Heating oil
3. Agriculture – Corn, Beans, Rice, Wheat, etc.,
4. Livestock and Meat – Eggs, Pork, Cattle, etc.,
These are commodities that are mostly entertained in this trading.
But, even though it is gaining popularity due to the rising commodity demands and the profitability of the whole prospect. There are some risks involved due to the aspect of commodities in the trade.
And, to backlash those risks, there are 7 tips for free commodity trading:
1. Learn the basics before entering commodity trading: Commodity trading differs from normal trading. The tips or tricks that apply to stock market are not applicable in this. You need to understand the basics of commodity trading and then have your try at it. The factors on which stock market depends and the factors on which commodities depends are not at all identical.
2. Diversify capitals in different commodities: Risks and rewards are bound to happen in these markets. The best way to keep yourself safe is to diversify your capitals. If you keep your capitals in one basket then you may lose hard time.
3. Understanding the logistics: Entering any market without being fully informed about its mechanics is not wise. You should know every nook and corner of the market before making any decision.
4. Know the different between cyclic and non-cyclic commodities: One of the important aspects of commodity trading is to know the difference cyclic and non-cyclic products. The former is economically dependent and for them when the supply goes down, the price goes up. Whereas for the latter when the demand goes up, the price goes up. It is industrially dependent.
5. Make use of volatility of the market: The commodity market is known for its volatility and it can either burn all the profits or ensure more of it. To make use of it, the trader must decide the lot sizes and take positions based on volatility of the commodity and not based on the margin requirements. Bigger the volatility, smaller the position and vice-versa.
6. Commodity specific tips: Follow tips and tricks specific to commodities. Every commodity is unique. Each has its own features and hence should be extracted based on its features. Make use of it.
7. Follow basic trading rules: The trader must follow the basic trading rules that is justified for every trade. Just like a trader must not overtrade. You should trade the amount you are willing to lose or gain.
These are a couple of free commodity trading tips that can ensure of ample profits in the future.