Commodity Trading Training

With your interest in trading commodities, this page focuses on commodity trading training themes which you may find useful from time to time.

The aim is to look a little closer at some commodity futures trading basics and at the use of various trading techniques applied to charts used on the online trading platforms.

We look at the mechanics of how you can set up an account with a commodity trading broker and the need to provide capital to cover your trading.

Now learn about new trading techniques or share your ideas and tips, click here!

In the case of commodities they are sometimes referred to as ETC’s, exchange traded commodities.

Commodity trading training basics

When you are ready to trade futures you will need to understand the importance of commodity futures margin and how it can lead to a call for you to top-up your account.

Depending on how you plan to trade on the markets there are different ways for you to place your orders, and here we take a closer look at commodity future orders.

It is often said that trading in commodities involves significant risk to your capital.

This is certainly true and while you can make big profits, it is equally possible to make correspondingly significant losses.

The reason for this is due to the technique of leveraging, which exaggerates the potential gains and losses to your account for a relatively small movement in the price action of the commodity being traded.

While some people trade commodities for speculation (or profits), many of those in the market are producers, such as copper producers and consumers, such as a chocolate factory.

In this example, both the copper producer and chocolate factory owner will want to protect their trading positions from wild price fluctuations in copper and cocoa respectively.

They use commodity futures to act as a hedging vehicle, a form of protection or defence.

As part of your trading plan you will want to carry out some research and analysis, looking at both the trends in the various commodity markets in terms of demand and supply, that is the production and consumption of these natural resources.

This is referred to as fundamental analysis, and while some commodity traders use this, others use it in combination with technical analysis.

During your commodity trading education you will find what balance suits your approach.

Charts and trading techniques and tools

Most if not all of the many trading software packages used on electronic trading platforms come with functions designed to help traders make sense of price changes in the commodity they trade or hedge.

The following are useful tools:

• Relative strength index (RSI)
• Fibonacci Levels
• Support and Resistance
• Japanese Candlesticks
• Simple Moving Averages
• Directional Movement Index

Systems and Psychology

There are a number of commodity trading systems available to enthusiastic traders but it is important to have a proper trading plan and to show trading discipline.

This will come from having the right trading psychology and it is important to keep affirming your values and system approach as part of this approach.

Consider these theories or approaches to trading commodities:

• W D Gann
• The Gann Time Factor
• Elliott Wave Theory
• “Trade Triangle” System

The above basics, charts and techniques and systems should provide you with an outline of the commodity trading training coverage you will find on this site, though it is not intended to be exhaustive.

Do you have a good trading strategies, techniques or ideas? Share them here!

Click below to see contributions from other visitors to this page...

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