Making The Right Moves In Commodities Trading

Commodities trading involves more than casually dipping a toe in the waters of the stock market. Commodity traders take the plunge and spend time learning about the commodity itself, as well as how it moves within the market. If you’re a beginner in the commodities market start with an area you already know, and then evaluate your inclination for risk.

Select The Right Commodities

Refrain from choosing multiple commodities to trade that you know nothing about, and concentrate your efforts on only one or two commodities that you can study. Oil and gold are popular trades, but corn and soybeans are worthy alternatives. Day traders like to deal in oil and mini S&P. Oil is a popular trade on Friday’s when the CFTC Crude Oil speculative net positions are revealed, and when Baker Hughes reports its U.S. oil rig count.

You’ll find multiple trading opportunities in liquid markets, as certain setups occur frequently, but be aware that you’ll also find multiple crowds. With the constant change in trading conditions and markets, what offers a good trade one year might not offer as much the next. And since global supply can change within minutes, commodity traders must monitor the market daily.

Expand Your Industry Knowledge

Commodities are basically raw materials that make up the goods that people manufacture, transport, and consume. The most common commodities and their trading symbols are:

  • Gold (GC)
  • Crude Oil (WTI)
  • Rough Rice (ZR)
  • Corn (EMA)
  • Wool (ASX)

It’s likely that you already have some good knowledge about at least one commodity in your daily life. If you’re an Uber or Lyft driver, you likely watch gas prices daily. A bakery owner keeps a close eye on the price of wheat or sugar. Construction companies watch the price of lumber. If you have any commodity experience through your work, you’re already one step closer to profitable trading.

Keep An Eye On Small Moves And Large Swings

Some commodities can make small moves each day, while others can make large swings. This is part of the volatility of commodities. Be sure that the commodities you trade fall into your risk parameters. Not all commodities have equal risk, and you should always make sure that the amount of risk is appropriate when you pick your tradable commodity.

Check the futures margin to judge the validity of each commodity. This margin is based on several factors, but it mainly deals with the daily price swings of futures contracts. Pay close attention to the exchange, as the values change with market conditions. Many traders stay away from commodities like pork belly, rice, oats, and feeder cattle for liquidity reasons. They aren’t very active, which makes them difficult to trade. There are other commodities you might not be able to trade simply because you don’t have enough in your account. Refrain from risky trades in futures options unless you have gotten to a professional commodities trading level of control and trading insight.

TRADING DISCLAIMERS

US LAW requires trading and trading education accompanied to post legal disclaimers as to market and personal performance, as well as investment risk. Please carefully read and study the Legal section of this website and any agreement you sign. Any agreement to doing business with SP500Trader.com website is verification that you have read, understand, and agree to the terms of risk associated with futures trading and financial investing as described.

Important Futures Trading Disclaimer

Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options.  Investors could lose more than their initial investment. You must review customer account agreement prior to establishing an account.

Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial. Carefully consider the inherent risks of such an investment in light of your financial condition. Though proper education, tools, and practice are necessary, they do not guarantee profitable results. 

Education Oriented

SP500Trader.com and the Delta Trading Group, Inc. are educational entities; be sure to consult with your financial advisers, brokers, and other professional services about the risk of trading. Though we offer a common language to learn about trading and risk, we are not a signal service. You must use your own discretion when doing any kind of trading in the any financial market. SP500Trader.com and the Delta Trading Group, Inc. are not responsible for interpretation, opinions, or losses by its members, liaisons, instructors, mentors, vendors, contractors, or administration, as none of these entities can guarantee your success. 

Internet Trading Risks

There are risks associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, internet connection, or services provided by third parties. Since SP500Trader.com and the Delta Trading Group, Inc do not control vendor signal power, its reception, or routing via Internet, configuration of your equipment or reliability of its connection. We are not be responsible for communication failures, distortions, or delays when trading via the Internet. 

Accuracy of Information

The content on this website is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. SP500Trader.com and the Delta Trading Group, Inc have taken reasonable measures to ensure the accuracy of the information on the website. The company does not guarantee its accuracy, and disclaims liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the website, for any delay in, failure of the transmission, or the receipt of any instruction or notifications sent through this website.

Distribution

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Slippage

Your broker may have a contractual agreement not to seek redress for slippage, it’s obligation to execute stop loss orders at the stop loss price or better, will not apply to limit and stop loss orders during hours when it is closed. This also does not include bad price spikes. Bad price spikes are removed from the price charts quickly to alleviate confusion.

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