Commodity Trading Strategies
A commodity is a transferable marketable item produced to suit wants or needs. Economic commodities comprise of goods and services. Soft commodities absorb agricultural products like wheat, cocoa, etc. and hard commodities include gold, crude oil, etc. A commodity market trades in the primary economic sector rather than in manufactured products. The strategies mentioned below would serve as a guide to commence your trading in commodity market.
Some of successful strategies for commodity trading that really work.
1. Moving Averages for Trading Commodities:
One of the trendiest strategies which are technical in commodities and stock market is the moving average. The most frequently used method involves moving averages in order to find out the trend of the market as well as in finding support and resistance levels.
2. Trading Futures with Options
The blend of future and options enables any strategy to be appropriate and will work in the market. Making use of options with futures does make the trade more traditional but it givesgreat outcome.
3. Trading Commodity Spreads:
A spread usually engages buying a commodity and selling of the same or a similar commodity along with it. It slashes down the risk of buying a straight commodity position very heavily.
4. Specializing in Trading Single Commodity :
It gets very difficult to keep up with all the commodities as there are about 30 commodities which are actively traded. Therefore, specializing in trading just one sort of commodity and making money from it is a wise decision.
For instance: Gold is one of the best commodities to trade. It is always in the use and the prices move every single day. This gives the best of the trading prospects whether you’re a day trader, a long term trader or an investor.
5. Trading Breakouts in Commodities
Trading Breakouts is one of the best strategies for trading in trending markets. In this commodity strategy, the market has to break out of something in order to build a new trend. The approach is a bit complex to get the hold of as not every trend might work in the long run.
Commodity trading is one of the riskiest but the most profitable kinds of trading in the stock marketing. The Indian blend provides one a lot of commodities to trade into. One can be a day trader, a long term trader and an investor and make a good profit.