The commodity market is a finely broadened market and institutions, individuals as well as corporate invest here. Two most important exchanges are MCX and NCDEX. Most aggressively dealt commodities on MCX are gold, silver plus crude oil and on NCDEX is mentha oil, crude palm oil in addition to cotton etc.
Traders ought to always begin with the commodities where they have some kind of industry knowledge. Then, they can pick commodities that fall within their risk constraints.
Your commodity industry knowledge
In case you are experienced with commodities via the work you do, then focus on those commodities where you already have some kind of fundamental understanding. It is significant to understand that not all commodities have the same risk. The margin on futures contract essentially influences the measure of risk with each commodity, so be certain that the amount of risk is apt for you when you choose a commodity to trade.
Unpredictability of commodities
Next, be sure to see that any commodities you pick to trade fall into your risk constraints. Some commodities make minute average moves every day while others make broad swings every day. To catch the unpredictability of every commodity, you should verify the futures margin of the commodity. The margin is influenced by an assortment of factors, but it generally has to do with the everyday price changes of futures contracts. The exchanges also alter these values when market situations vary.
How to pick commodities for intraday trading?
Some pro traders like to focus on one or maybe a few commodities to trade. The best logic behind this approach is that you can closely comprehend all the little oddities of a commodity that a lot of traders fail to spot. Try to trade on a multiplicity of commodities and futures, even though you may have a couple of preferred markets.
Overall, trade in liquid commodities by looking for certain trade arranges. Markets, as well as the conditions of trade, continuously change, so some commodities may extend good trading chances one year but not the next and so on.
Monitor and trade on all the on the go commodities as that affords you enhanced overall trading chances. With picked commodities, you merely have to research or even scan charts on almost 30 markets. That is much safer than researching for all the commodities.
Also, base your decisions of choosing commodities to trade on the four significant factors as mentioned below:
1) Technical and basic aspects
To choose the most excellent commodity from trading viewpoint research correctly the technical as well as basic factors. This will assist in interpreting whether to trade in it or not.
2) Comfort degree
Never pick a commodity in which you are not at ease while trading. Also if you have not heard or do not have adequate knowledge then shun trading on such commodity. Always pick those commodities with which you are familiar.
3) Recognize the right type
The commodity market is mostly divided into bullion, energy, base metals and agricultural commodities. First, choose the class which best conforms to your requisites. After choosing a wider head you should yet again split up the products in that class and conduct further research on it. Be very cautious while making the ultimate option as the wrong alternative may lead to monetary losses.
4) Risk plus volatility
While selecting a category to be vigilant as some categories have high unpredictability. Conversely, some commodities are predictable. Calculate your risk-bearing capacity and then choose the commodity you want to trade.
Together with the above-mentioned factors, traders must as well comprehend kind of trader they are. A few people can deal the force of selling and day trading, whereas others do not have adequate time to dedicate to the market. Comprehend the kind of trader you are to trade in a more effective mode. Even though there are a few general attributes which every kind of trader shares like capital disclosure and risk managing. Market expert advice on intraday trading tips, most excellent MCX tips and more are as well supportive in better managing risk and returns. To become a triumphant commodity trader always be thoughtful, plan a trading strategy, understand the strategy and use it in conformity with the market requirements.
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