The best way to learn how to trade in the commodity markets is to take lessons directly from a successful trader. However, even if you found the right persons, and they taught you all they know, this in itself does not guarantee that you will make money the way they do. For this, you need to keep a good trading strategy yourself, if you are to succeed in doing commodity futures trading.

Trade Correctly Or Not At All

A lot of people don’t realize it, but they end up learning through trial and error. However, you are unlikely to become a good trader if you use this method. The first thing you need to do to trade the right way is to read as much as possible about commodity trading. This may not give you the best trading plan, but it will definitely prepare you for the trades you might want to take in the future. You will gain more knowledge about the risks you are about to take, and how to limit them. You will also have the benefit of learning from the mistakes made by these experts, rather than having to go through them yourself.

Essentials Of A Sound Trading Strategy

The first decision you need to take while formulating a trading strategy is to decide how much capital you want to invest, as this will greatly determine how much you will end up making as profit. The more you invest, the better your chances of making money. It provides for more lasting power in the market if you have more ‘risk capital’. Risk Capital is the amount of money you are willing to lose without it affecting your way of life. The next step is to decide what your average trade investment will be – as in the value of each trade taken.

The four essentials of any good trading strategy are as follows. Firstly, always remember to trade in the direction of the market trend. Remember, the market trend is your only friend. Secondly, always keep stops in place. They will determine how much capital you will lose. Thirdly, let your profits run as deep as you can. Don’t be in a hurry to exit a trade if you are making only a little money. This sounds like it is easy to do, but is perhaps the most difficult of all the four principals. Lastly, manage your risk wisely and carefully. Make sure that the risk reward ratio is always leaning in your favor when you are taking a trade.

Use Of Technical Analysis

Most traders use technical analysis as part of their trading strategy. Technical analysis provides many vital tools that allow you to be more informed about the trades you are taking, and help to decide which ones to ignore. Among other things, indicators used in technical analysis allow you to determine trends, entry points, stops, target prices, supports, resistances, possible breakouts and breakdowns. It would be wise to use these indicators when you are formulating a strategy to trade in the commodity markets.

Remember, it is wise to always trade a commodity that you are knowledgeable about. Try to master one commodity and know the factors that affect its movements. Know what you are trading, and you will find your self on the winning side more often.

By: David Rivera

About the Author:

Yvanfm asked:


List of top energy and commodities trading companies globaly.

Glencore
Phibro…

guavasofts asked:

Get excellent tips on commodity. 85% accurate commodity predictions to make your profits grow.

peterboston asked:

www.tradingfives.com We believe that the core principles underlying the Square of Nine are the historical foundation for all Gann’s work and that without understanding that framework WD Gann is forever an enigma.

Not all conventional commodity trading folklore is correct. Some is and some isn’t. Much is anecdotal. Most of it is designed to make you feel comfortable in a trade. Feeling “comfortable” is the fastest way to the poorhouse in commodity trading. We are paid to provide liquidity and take on risk. Read on to see if you adhere to this basic and important market law.

More S&P 500 and E-Mini Futures Contract Observations: PART 2

“The one minute e-mini futures chart will sometimes magically touch or spike the outer band channel.”

When you set up a pair of moving upper and lower price bands to contain e-mini price action, set them so the price breaks out of the band only on climax tops or bottoms. It’s amazing how well this signal works. It appears that when an e-mini climax takes place, all the cycles are in synchronization and burn themselves out at the same time. This united power spikes out of the normal band boundaries. Since most of the cycles are rolling over after the climax, this backing off can be quick for a few bars and leaves the spike area isolated like an island top.

Next, the e-mini futures market may erode slowly down like a normal bull correction, fooling the majority. This is a situation when a quiet decline is NOT bullish, but bearish. Know the difference. Price may anemically try for the top again, but usually fails. This is where the real decline starts. As usual, selling the first and exact high is a mistake. Wait for the secondary try while you are looking at other indications of failure.

This is one of the few times the e-mini futures market is kind. It actually rewards you for getting in later than the traders who have the nerve to sell the first panic high. But if you are a big gun, the first panic gives you the liquidity needed to put on a big line. The contract volume at these spikes can sometimes be tremendous.

Observation:

“If trading against the A-D line, have good reasons and always take quick profits. This will usually occur on the downside, only.”

Over time, e-mini futures trades against the A-D line are losers when viewed with long-term probability eyes. The time it works is when the e-mini market makes a daily reversal. These reversals occur maybe every 3-5 days. So, if you are always looking for them, you will make only about one out of twenty trades with the trend.

These are poor odds, for sure. Even if you catch a big reversal, the chances that you will hold on for the big move are slim. This is because big e-mini moves require lots of time to put in a top or bottom, sometimes even spiking the first panic pivot point a few times. The market doesn’t pin medals on the heroes who catch the exact top.

I’m not sure why so many of us get lured into selling a day that is a one-way up market and buying big bear days. I think we want to outsmart the market and be proud if we catch a “major” top. But, to be more humble and simply buy dips and sell rallies with the main trend is the way to make money over the long haul. It appears that if you MUST trade against the A-D line, then do it on the short side because of the fast corrective declines in a normal e-mini bull market.

Buying when anticipating a bear rally can be quick affair too. But when the market turns back down, the move is usually fast and it’s easy to give back what little profit you made scalping.

Part Three of Five Parts – Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

By: Thomas Cathey

About the Author:

ljcms asked:


I’m in need of someone who creates software for FOREX commodity and stock trading, are they called programmers?

Oli-NYC asked:


How does commodities tradings work? Stock trading, fox example, is done through a brokerage via online…So I was wondering if I wanted to buy and sell commodities, how would I do that?

ljcms asked:


I’m in need of someone who creates software for FOREX commodity and stock trading, are they called programmers?

Sean asked:


The banks have been betting big on stocks, bonds, commodities and other assets. Trade gains will only last so long.

PeterSchiffChannel asked:

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