What are the common mistakes that can be avoided while trading in commodities?
There is no uncertainty that commodity trading is challenged with risks, but there are good profits to be made too.
This is one region where limited capital can lead to major returns. At the same time here are many ways in which basic and skilled traders can both end up losing major portion of money.
Here are a few mistakes that can be avoided:
Be deficient in diversification
Most of themremain unsuccessful to make certain sufficient diversification in their portfolios when it comes to commodity trading.
Investing too much money in a single position is a procedure for disaster.
If small part is given to a few different positions, then in the occasionof these fares badly, you will still have the others to dropon and even recover some of your losses.
Too much of trading
It’s not the volumes of trades passed out that matters. You will have to pay a commission on every trade and the greater the number of trades, the greater will be the amount you end giving out as commission. Even trades on MCX online draw a commission.
Failure to maintain stop loss
By placing a stop loss order, you can make sure that the losses are reduced to a great extent.
In stop loss, the broker is told to buy or sell once the specific price is arrived at.
Failure to put in a stop loss can lead to increasing losses even in the occurrence of commodity control.
Not taking it when simple
Take the profits when you get a hold of them. Do not hold on to your positions in the hope of making a big catch each time.
Being insatiable can turn the tables if commodity tips do not pan out. In the meanwhile, timing is imperative and cashing out too early can cause qualms later on. Also, hold on to trailing positions for a while without rushing to relieve of them.
You never know when the surge might turn.
Lack of patience and planning
Intolerance has never been beneficial to anyone. It is significant to tolerantly track your positions chiefly unpredictable ones like bullion and study them before making any decisions.
Having these in mind while placing commodity trades can help moderate losses and boost profits.