Best Commodities to Trade

Best Commodities to Trade

By
www.CandlestickForums.com

The best commodities to trade will
depend upon a variety of circumstances,
always including market timing.


Commodity groups include energy, food
and fiber, grains, interest rates, meats,
metals, and stock indices.


In all of these commodities markets
there are factors that determine
whether commodity prices will rise or
fall when trading commodity futures.


For traders with a great deal of expertise
in a given commodity the best
commodities to trade may be the most
variable as these will be where the most
profit potential lies.


For the new comer to commodity
trading the best commodities to trade
may be those with less market volatility
and, therefore, less risk of substantial
loss.


As with all trading it is wise to learn the
basics first.


Commodity and futures training is a
good place to start.


Learning the use of Candlestick charting
techniques will help the beginning, and
seasoned, trader to profit by anticipating
price movement in commodities.


Often times commodity trading is trend
trading.


In the arena of traders there are
followers of long term trends and short
term trends.


The longer the trend the more
important it is to do fundamental
analysis of the commodity involved.


The shorter the trend the more
important it is to do technical analysis.


In all commodities trading fundamental
and technical analysis have their places.


For example, a trader who is expecting a
long term rise in prices of corn futures
will still want use tools such as
Candlestick pattern formations


to watch daily futures price movement
in order to get the best purchase price
even though he or she may be holding
futures contracts for months or years.


In trading commodities it is essential to
know when large price movements
usually occur.


In trading agricultural commodities, such
as live cattle commodity trading, a
severe winter on the North American
Great Plains may result in the deaths of
many cattle.


This will drive the price of beef up.


An astute trader may see a weather map
of a severe storm passing over Nebraska
and Iowa and anticipate a drop in June
live cattle futures.


Just as there is reason for diversifying a
stock portfolio there can be reasons to
diversify when trading futures on
commodities.


Although the possible return on
investment in just trading interest rates
or gold futures may be inviting, hedging
in the form of trading a balanced
portfolio of commodities may be safer
and more profitable in the long run.


Factors to consider when choosing the
best commodities to trade are market
liquidity as well as fundamental trends.


For interest rates and currencies the
trader will need insight into economics
and politics as well as the banking
systems of the countries involved.


Trading oil futures, energy credits,
natural gas futures and the like also
require a sense of the economy as a
recession can decrease demand
substantially.


Trading precious metals futures also has
a lot to do with the economy and
monetary policy.


Many who trade in gold believe that the
US and other nations will not be able to
avoid inflation over time and, as such,
habitually trade gold futures in the belief
that the precious metal can only go up
over time.


A view of history will show that this is
not the case as when gold prices
plummeted in the 1980’s.


In the end the best commodities to
trade are the ones the trader knows the
most about and is willing to follow
closely enough to anticipate the market.


Best Commodities to Trade

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