Historically, the commodity trading market has received the highest fortunes worldwide. It can originate centuries before, even as before the stock trading markets came into existence, albeit bought and sold them in a dissimilar manner, than as seen now a days on electronic exchanges. I have commonly quoted that, “If buying & selling in the tentative markets, then the Stocks and Equities is for the boys, but Commodities and Forex is for men” (No any gender bias intended). The wealth creation is not an issue of chance. It is a route that needs sharp analysis, research & a lot of the work time. Plan your play & then play your plan.
The similarity in the Stocks and Commodities as like to begin & ends at the point, that they are together speculative deal markets, but there are many differences in together these markets. Unlike the stock markets, where even a better valued stock could finally see all its commercial importance being eroded due to many reasons, the values of the commodities may look corrections on a big supply, but eventually will simply increase again with the time, as the inbuilt imbalance in the demand & supply ratio would forever favor demand more than the supply due to several influencing factors like rising economies, growing populations and improved lifestyles to name a few. All adverse situations like climatic imbalances, geopolitical tensions, catastrophes, wars and other man-made disasters, etc. Which pull the share markets downward side generally push the commodities upward side (especially Agriculture-Commodities & secure haven instruments like Gold, silver), Essentially, due to the some differentiating factor, that these commodities usually are also daily base necessities to average life and not merely investment instruments. Most of Commodities are traded worldwide & the price rigging in these is next to not possible, unlike, as seen in lots of equity instruments, where manipulation is a lot simpler, easier & occurrences of the traders getting duped are the rampant.
The massive wealth formation is possible through the Commodity Trading & Investments, if done the correct way & with lots of strict discipline, rules & regulation. But if done the incorrect way, which is usually the most followed way, there will be huge losses also. You can initiate off equity market trading or investment with the smaller sums of the money, but would necessitate deeper pockets to be capable to do a few modest trading in the Commodity Market Exchanges & also to maintain the “Mark to Market” volatility in the Commodity Trading Markets. The gains and losses in both also, become proportionately small or big eventually. I would now like to point out some basic for the most frequently seen behaviors & maybe unknowingly committed errors, which I have pointed in most of the traders & had to address to a phone number of times as a Share Market Analyst & a Commodity Market Adviser, that can provided share market tips and Commodity Tips.
Top Tips for Trading and Investment Success:
The list below pointed the most important tips or stages that all successful investor or trader needs to go through this. I came up with this record after several years of the failure and the varying degrees of the success in the share markets. The record is also, in a good way, a distillation of the lots of discussions & conversations; I have with fellow traders & market clients over the years.
1. STUDY THE MARKETS:
Firstly, assure you know what you are performing, BEFORE entering the commodity markets. Start from the fundamental analysis. Ask yourself queries like: Why does this the particular market exists? What is its main purpose? Who are the good key market participants in this trading market? Etc. By asking him this basic query, you will achieve a deep understanding of, why the markets behave the top way they do. A good grasp/understanding of this fundamental knowledge and better Option Tips is required earlier than moving to the next stage.
2. CREATE YOUR OWN “THEORIES”:
You need to choose, whether you wish for to primarily be an investor or trader. By “primarily”, I mean, whether the best part of your transaction will be confidential as ‘trades’ (usually held for a very few seconds to a week), or whether they will be held for a lot longer duration. Even though the terms ‘trader’ & ‘investor’ are used interchangeably, traders & investors manage within dissimilar investment horizons, and accordingly the stimuli that activate their market operations are diverse. Perhaps unsurprisingly consequently, their research techniques also tend to be quite very different. You need to choose quite early on, whether you are an investor or a trader. How to determine, whether you are logically a trader or investor would be the subject substance for a whole article in itself.
If you want to be a successful trader or investor, build on the essential knowledge in step1, and add your possess observations about rate movements & behavior. If on the further hand, you wish for to be an investor, create on the basic information in the step1 and the learn how to examine (and interpret) company, whole industry reports and forms a share market opinion based on your research.
Utilize whatever analysis tools, you deem essential, to carry out your trading/investment research and analysis – be they exist tools, or your own (proprietary) methodology.
3. PAPER TRADE;
This is where you obtain to experiment the “theories” you made in step/stage 2. The paper trading is a bit, as like shadow boxing. It surely makes you fit & strong, but it doesn’t get you ready for the adrenaline rush of somebody standing in the very opposite corner of the ring, to come “punch your lights out”. The Most important paper trading has, its several uses, but it is simply the first step beside the path in suitable a successful investor trader. You must only move to the next level if you have controlled to paper trade very successfully. Under no circumstances must you enter the trading markets with a good trading strategy and better MCX Tips that is not gainful (after transaction costs).
4. START SMALL:
Once you have the managed to get a superior system going – (steps 1,2 & 3). You require opening a brokerage account. You would typically need a few thousand rupees (or local currency equivalent) to run a brokerage account. The spread betting may be the method to go (if lawful in your country of the residence), but there are other risks associated with the spread betting, that I won’t leave into here.
Commodity trading brokerage accounts can usually be opened with a much lesser capital, then, I indicated on top of. However, there is a rather big element of the leverage included, and there is the petite (but non-zero), the probability of the unlimited losses – if the marketplace gaps through your ends for example. So usually, leveraged accounts are the best avoided, when you are simply just initial out.
5. LEARN AND ADJUST:
Always learn from your mistakes, continually see what is tasking and what is not tasking, and manage your strategies or trading mentality/psychology and follow your Stock Tips accordingly. Nobody EVER is going afar this stage. Even the most talented traders and investors are at these levels (and will remain at this level for the rest of their whole lives).
This is because of the emotional /psychological aspects of the commodity trading. Becoming a really successful trader has an almost religious or “Zen” likes side to it, as it includes overcoming oneself, and studying to manage fear and greed without getting excessively attached to a meticulous outcome.
There is forever room for the improvement – and the marketplace WILL “put on observe” – anyone, who select to neglect this rule and regulation. As the aged saying goes, there are courageous new traders and there are elderly traders, but there are not old bold traders!