Are you planning to trade copper? Well, copper is regarded as one of the highly tradeable commodities that is known for having comprehensible chart patterns. It is worth to note that this investment commodity is priced in the United States dollar; hence the price of copper is largely determined by the current dollar status. Just like crude oil, gold, silver, and national gas trading, copper trading strategies involve fundamental and technical analysis. The prices of copper are high when the economy performs well since the demand for the copper mostly generates from construction. Let’s have a quick look at the reasons why people should consider investing in copper and what is the right way to trade this commodity.
One of the major benefits of copper trading is its easy accessibility. As copper is a highly tradeable commodity, you can trade it through a wide range of platforms such as options, futures, and even on a spread betting platform. The malleability and softness are two of the major properties that make copper trading just like gold and silver trading. The commodity generates a majority of its demand from electronic products, building, equipment, transportation, and construction. Besides accessibility and malleability, copper is known for its high heat-resistance properties. Being a good conductor of electricity, this commodity has a huge demand in industrial and commercial applications.
The price of copper is mainly affected by its demand in the developing sectors such as India and China. The commodity’s price tends to go up when the emerging market demand for copper increases. On the contrary, the price of copper declines during the economic recession period since its demand falls. Traders should stay updated about the demand for copper in the emerging markets to predict the future price of the same. Just like in other trading commodities, traders prefer to use fundamental and technical analysis in order to figure whether the price of copper will go up or decline in the future. Once you have made the predictions, you can decide whether copper trading can benefit you or not. This way, creating the right copper trading strategy can be helpful for users in trade risk management.
Traders who rely on fundamental and technical analysis for copper trading may have a diverse trading strategy based on the changing market condition. In the simplest terms, the market condition can be found by determining whether the current market is trending or in a depression period. The people who use technical analysis will always put the market condition first before forming a strategy or making a decision.
It is not rocket science to know that the price of copper rises in the trending market because of its increased demand in the construction, electrical, and industrial fields. The traders should aim at forming the trading strategies that involve the use of oscillators and trend lines that help you get the right to buy and sell signals. In addition to trend lines and oscillators, there are other copper trading signals that traders following technical analysis can use. This includes slow stochastic, MACD (moving average convergence divergence), and moving averages.
The consolidating market usually calls for a different copper trading strategy. In consolidating the market, the individual will either want to buy copper at a previous low or sell the commodity at the previous high. Consolidation period isn’t exactly the depression period, but it usually ends up to the downside.
- Before applying the specific copper trading strategy, a trader should consider the current market condition. It is worth to note that your trading strategy may vary in consolidation and trending markets.
- As copper is priced in the US currency, the changes in the rates of dollars have a major impact on prices of copper.
- Another major factor that affects the copper price is its demand in developing economies such as Brazil, China, and India. The demand for the commodity in emerging sectors can impact copper rates in the long run. Therefore, the trader must be familiar with the growth factors of such markets to make a sound decision.
- The better you manage your copper trading risk, the higher the chances of profitable trading. It is highly recommended to risk not more than 5% of your capital on all open copper commodities.
So, what are you waiting for? This malleable and accessible metal can make an ideal commodity for trading. If you are planning to invest your savings in copper trading, read on this post again and follow the strategies to get better results. Don’t forget to use trend lines, oscillators, and other technical analysis strategies to get accurate buy and sell signals. Good Luck!