Strategies for Commodity Trading
Commodity trading is a way to increase your investment portfolio by providing exposure to the price of commodities. With verified trading platforms like Metatrader in Australia seeing a 30% influx of new traders, the trend of trading in Australia is on the rise. As with any other type of trading, there are many ways in which you can profit from this market. However, success in the economic field is no small feat. Worry not because this guide covers a few easy tricks to maximise your trading profits
To begin, you will need to understand the basics of trading commodities and some advanced trading strategies and tips.
Commodity trading is a long-term investment strategy that allows investors to take advantage of price fluctuations in the commodity markets. The investor does not have to buy or sell physical goods but contracts for future delivery at an agreed-upon price. This method can provide profits during times when prices go up and losses if prices drop below what was paid for them at the time of purchase.
Australian commodity trading carries reasonable risk, and interacting with experienced traders who understand how it works can help you avoid disastrous investments.
Australian markets are very dynamic and relatively volatile, so you need to know what to expect both in terms of price action, and how to trade the trends.
The best time of day to trade each market (there are different times when a certain market is more active)
The best time of the week for each market (again, there is a period where one market is more active than others)
You’ll need this information when choosing which commodities or indexes to trade on at any given moment.
General Commodity Trading Principles
Before you begin any trading, you need to understand the market. This includes the commodities market as a whole. This is where you can trade in the futures market or even just options contracts.
The next thing that will help you become successful at commodity trading is understanding the fundamentals of a commodity and its supply and demand factors. You will also want to know about trends in supply and demand for certain commodities so that you can identify when there might be an increase in price due to increased demand or decreased supply. Sometimes it can also be beneficial if you know how much support there is for certain commodities (in terms of how many people are buying them) because this gives us an idea as to whether or not they may rise again after falling in value recently. Platforms like Metatrader in Australia provide traders with analytical tools that can help traders identify trends.
Be able to recognise and trade market trends.
Achieving a successful trading strategy requires recognising and trading market trends. For example, if you see that a particular commodity has been trending higher for over a month, then it is likely that this trend will continue shortly.
However, it’s not enough simply to identify trends – you must also understand why they are occurring. Fundamental analysis provides this insight by analysing macroeconomic factors such as interest rates and inflation figures. This allows you to determine whether the trend has been driven by fundamental or technical factors (such as price volatility).
Apart from recognising whether a movement is fundamental or technical, it’s crucial that you take into account risk when trading commodities such as oil and gold due to their volatility levels. These markets tend towards wide swings up or down, which could result in significant losses if your stop loss settings are too tight. To help mitigate this risk, use limit orders rather than market orders (which execute immediately without any delay).