To become successful in trade commodities, traders should spend look at historical data by analyzing graphs and charts.
For most new traders, succeeding in the futures market is still one of the hardest hills to climb. While it’s much like the stocks and currencies markets, commodities are arguably much harder to become profitable. It requires major expertise and proper analysis to make it in this highly volatile landscape.
Proven ways to succeed in trading commodities
New traders can venture into trade commodities and become successful. With the right strategies and trading plans, anyone can easily hit the jackpot with commodities.
Niche up – Specialize in one commodity!
The commodities market is quite expansive. Traders can trade different commodities from gold to oil, wheat, silver, grains, etc. However, Gold and Oil are the most traded in the future market.
However, this versatility has become the downfall of many commodity traders in Singapore and around the world, with most of them being ‘Jacks of all trades and masters of none.’
If you want to succeed in trading commodities, you have to choose your market and specialize in it. Focusing on one commodity, say oil, will help you quickly understand the ins and outs of oil. You’ll understand the factors that affect its prices, how past trends affect the oil market, and what future events might influence the oil prices.
This way, your analysis will be more accurate and hence increasing the probability of making successful trades. As a rule, always have your niche commodity, and if you have to diversify, trade commodities in the same sector, e.g., wheat and soy.
Have a working strategy
While trading a specific commodity is paramount when trading commodities, your success ultimately lies in your strategy. There are millions of trading strategies out there, and so, it’s hard to find one that works for you.
So, instead of working with different strategies every day, choose one with a proven success rate, and master it. This could be a scalping strategy, trading resistance, and support, trading breakouts, or trading supply and demand.
You can also work with indicators like stochastics and the RSI to identify Oversold and overbought areas. This could help you find the perfect entry and exit points.
Nonetheless, regardless of the strategy, you need to be aware of what’s happening in the commodities market. Watch out for the news, and keep up with any political events. Additionally, remember that there’s never a 100% loss-proof strategy.
Work with a reliable platform
Commodities trading platforms facilitate all your trading processes. They give you access to the market and provide you with the analysis tools you need to evaluate your strategies. As such, they need to be reliable and effective.
Owing to a large number of trading platforms in Singapore, you need to evaluate your options carefully. Find a platform that’s easy to use, cuts reasonable fees, and offers the tools you need for your trading strategies. We recommend the Saxo Bank for Singapore commodity traders.
Master patience and timing
As with every investment, the secret to tapping into those money-making moves is investing at the right time. This applies to commodities trading as well. Being that commodity prices highly depend on the natural, economic, and political factors, spotting the perfect entry points isn’t hard.
However, it demands patience from traders as they wait for the commodities to reach overbought/oversold levels. Additionally, the market prices may hover at a certain level for a long time, then make huge breakouts in a short time.
Only patient traders can catch these moves and make good profits while at it. You also need to understand the seasonality of different commodities before trading them. If you know when a product’s demand increases or decreases, it becomes easier to place profitable trades.
Final Thoughts
Commodities trading may be highly volatile, but that’s common with every other market. The key to succeeding lies in having a specialized market, a working strategy, and working with a good platform.
And even if you don’t master these, your patience and timing are the deal-breaker when trading commodities.
