Commodity trading can be rewarding but one has to understand the risk involved Anyone who wants to start trading should have proper knowledge and understanding of the market before taking the plunge.
Anyone who wants to start should have starting capital so that they can give margins for trading.Trading can be risky and one should be prepared to incur losses on trading.Markets are dependent on many factors and events which can be very volatile and unpredictable.People should never be over leveraged and should keep at least 20% of the total margins for unforeseen events.
One should require some basic level of understanding of commodity futures markets.One should be familiar with market concepts like spreads, backwardion contango etc for a proper understanding of the market movements. For daily trading one should be aware of political, financial and economic news News can greatly influence the prices of the commodity.
If someone wants to start trading than the person should have a fair degree of knowledge about historic price movements and a basic level of understanding of reading the charts .Historic price movements can be informative and can give you a market overview .For start up it is advisable to trade in simulation so that one can be doubly sure before starting real time trades.It also helps in getting familiar with your chosen trading products.
If someone wants to start trading than one should not get carried away while trading, as newcomers tend to react emotionally We should always think with logic and trade according to a well formulated plan.One should not get biased and should be mentally strong through market volatility.Sometimes lack of experience can prove very costly and it is better advisable to sit besides an experienced trader when you start your trading career.
One should not be product specific and should always trade in multiple products.Putting your eggs in one basket can be dangerous.Beginners have the tendency to be product specific.Multiple trading products can guard you against huge losses and at the same time give you multiple opportunities One should be flexible and always remember that yesterday’s idea may not work in today’s trade.One should remember that change is the only constant factor in active commodity trading.