Trading commodities for a living is a dream of many aspiring traders, but only a small number of people can make this a reality. Although it is a difficult process, there are several things you can and must do in order to make this a profitable and lasting venture. Do you have enough commodites to trade for a living? It is certainly possible, but highly unlikely. To trade for a living, you should have enough money saved that you can live on for at least a year. You will also need to have a commodity account funded with enough money that you are able to generate enough profits every year. Many new commodity traders think they can easily make percent every year, but that is being unrealistic. You can certainly make those returns in a year trading commodities, but you are probably taking on too much risk and putting yourself in jeopardy of losing your trading job. Think traxing this as a business and not a trip to Las Vegas. Always live to trade another day. It is a must to have a sound trading plan in place if you expect to make a living from trading commodities.
Commodities trade just like anything else
Show less Making money in commodities is not easy. About ninety percent of commodities traders lose money rather than make it. One reason commodities trading is difficult is that there is no right time to enter or exit the market. It is essential for you to understand the market. You must also learn how economics can affect commodity prices. There are many ways to invest in commodities, including the futures market, buying options on futures contracts, the actual commodities gold and silver are examples of easy-to-store commodities , Commodity ETFs exchange-traded funds , and buying the stock of companies whose business model involves commodities. This article will highlight the commodities futures market. You must decide what futures contracts you want to buy, study the charts and develop your trading strategy.
Become a better trader
To make money in commodities, start by buying or selling physical commodities, like agricultural products and precious gemstones, through reputable markets and storing your commodities in secure locations. Alternatively, to trade commodity futures, like bushels of wheat or barrels of crude oil, learn about price changes in the market and the consequences of leverage in commodities futures. In order to test your trading strategies, create a trading system with practice paper trades that you can compare with the market. To learn how to trade commodity-related stocks, keep reading! This article was co-authored by Michael R. Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. Categories: Investments and Trading. Log in Facebook Loading Google Loading Civic Loading No account yet? Create an account.
The US dollar
Commodities is a term that refers to raw materials, such as gold, silver, copper, or crops such as grains and corn. You just need to understand the market and what these different ways are. This article will outline and discuss the primary ways that you can make money with commodities, such as buying and selling physical commodities or the stocks of commodity companies. Here are the top four ways you can make money with commodities :.
The US dollar
While writing a futures options can be more profitable than buying an option, the writer also assumes the greater risk that the option might be exercised, requiring the writer to deliver the futures contract. Learn from our profesional team of traders today for free! Assume the risks of illiquidity. Since Forex is such a technically driven marketplace, it gives you a bit of a head start when it comes to trading other markets. Oct 13,
Commodities trade just like anything else
Unfortunately for most Forex traders, they tend to overlook an entire world of potential profit. Keep in mind that one of the biggest drivers of commodities is the value of the US dollar. This is because most commodities are traded in that currency.
For example, if you are trying to commmodities barrels of crude oil, you are going to have to pay for them in US dollars. So if you think about it this way, if the US dollar is very strong in theory it should take less of those US dollars to buy that oil.
With that being the case, it can give you an idea as to where you could trade crude oil. You could see the same thing about corn, sugar, coffee, and any other commodity that is traded in US dollars.
While there are some markets that allow other currencies to be used to pay for a commodity, you would be hard-pressed to find. Commodities trade very similar to other markets. For example, support and resistance is the same, as well as technical moeny. Since Forex is such a technically driven marketplace, it gives you a bit of a head start when it comes to trading other markets. Forex traders are well known for being some of the commoditiess technical in the world, so it makes sense that it translates quite nicely.
Each commodity has a little bit of its own unique personality, but in the end the similarities far outweigh the differences. If you take a chart out, and put lines at those increments, you will see what I mean. Keep in mind that there are a lot of different brokerages that you can use to trade commodities.
There are futures brokerages, which of course are highly regulated but they are also very expensive for some traders, as futures markets tend to take much more margin than what you may be used. However, you can commoities contract for difference markets, which are quite often offered by Forex brokers. The main difference is your account size. Yes, futures markets are very open and transparent, but you also have trouble trading very small positions like you do in the CFD market.
It comes down to what you believe fits your personality and more importantly your trading capital when it comes to trading these markets. Make sure that you r brokerage firm is regulated, which most of them will be.
There are some brokerages that offer futures and Forex, which again, if you have enough money available, then you can take advantage of this situation. Ultimately this is maks market that you should be paying attention to, because you already have a head start compared to most new traders. Your first move of course is to open a demo account. Keep in mind that futures brokerages tend to offer limited demos, so you may have to try.
With that in mind, it does limit the ability to demo. Most CFD brokerage firms offer longer trials. By taking the time to demo tradeyou can eliminate a lot of the pain associated with the learning curve. You will find that some are more technical than others, for example gold and oil.
At the end of the day, there are a lot of opportunities out there for traders to profit, and by entering the commodities sector, you are adding yet another tool to your tool box when it comes to investing. Commoodities Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy. Share 0 Tweet 0 Pin it 0. The US dollar Keep in mind that one of the biggest drivers of commodities is the value of the US dollar.
Commodities trade just like anything else Commodities trade very similar to other markets. Various brokerages Keep in mind that there are a lot of different brokerages that you can use to trade commodities. Your first move Your first move of course is to open a demo account.
Christopher Lewis Christopher Lewis has been trading Forex for several years. Contact this commpdities.
That’s generally a good idea, because more sophisticated asset classes can be difficult to understand fully when you’re just starting. As you gain experience, though, it makes sense to start looking at other asset classes. However, identifying the best way to invest in commodities isn’t tradingg as straightforward as it is for stock investors to buy shares of their favorite companies. In this guide, you’ll learn more about commodities and what you need to know in order to invest in them successfully. Commodities are goods that are more or less uniform in quality and utility regardless of their source.
Find out about this asset class and how to invest in it.
For instance, when shoppers buy an ear of corn or a bag of wheat flour at a supermarket, most don’t pay much attention to where they were grown or milled. Commodity goods are interchangeable, and by that broad definition, a whole host of products for which people don’t care about buying a certain brand could potentially qualify as commodities. Investors tend to take a more specific view, most often referring to a select commodtiies of basic goods that are in demand across the globe.
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