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Friday, 18 May 2012

What Are the Different Types of Commodity Trading Strategies?


In India basically we can trade in two markets. One is stock market or second is commodity market. In stock market we used to trade in stocks of any particular company which is known as shares, oi the other side in commodity market we trade in commodities like natural gas, heating oil, gold, silver, copper, crude oil etc.  In commodity market here is one rule that is "High risk tense to high profit". If you want to earn maximum profit then the Indian Commodity market is best for you because it involves high investment and high risk and gives the high profit to their investors. It is risky but profitable. before the trading in Indian commodity market you should be aware about the trading tips for commodity market, Like the commodity on which you are investing is good for trading or not.
When markets are powerfully trending, traders may prefer the trading breakout strategy. A breakout trader will focus on entering a market in the early stages of a trend. When the market for the commodity is up-trending, or approaching new highs, a breakout trader will tend to buy the commodity. When the market for the commodity is low-trending, or approaching new lows, a breakout trader will tend to sell the commodity. The difficulty with such a strategy is differentiating between short-term fluctuations and a genuine long-term market trend; a second difficulty is anticipating when a trend will change or end.
Fundamental trading is a rather different animal; instead of monitoring price and market fluctuations, a fundamental trader examines factors that cause such fluctuations by affecting supply and demand. For example, he may take note of unfavorable meteorological reports regarding the climate in rice-producing provinces of China and India. Anticipating a poor harvest, he would then tend to buy rice now so he could sell it later when supply falls and price rises. Such a strategy is not recommended for novices, since the speculation can be affected by many factors.

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