Commodities trading is touted to be one of the most famous and commonplace investment activity where even the ordinary and not-so-wealthy can participate. With the increasing popularity of online brokers, individual investors find it even more accessible to trade from home. In fact, traders and investors will be happy to know that there are several other ways in which they can earn money through commodity trading without having to own the underlying asset.
Commodity Trading What is it?
Though there will be fluctuations here and there in quality among multiple producers, the commodity will remain the same, regardless of where it is coming from. The value of the commodity is determined by external factors like demand and supply and the total amount of investment that is being put into it.
The driving factor of commodities Few of the most-overlooked ones
The forex traders usually tend to overlook the world of potential profit and they forget that it is not just the British pound or the Euro or the US dollar or the Japanese Yen which people trade. Nevertheless, being in the forex trade, there is one pivotal factor that drives commodities. Check it out.
The US Dollar
Did you know that the most important factor that drives the price of commodities is the dollar value? Majority of the commodities are traded in dollars and this is the main reason behind this relation. For buying oil (which is usually traded in USD), if the value is very strong, you will require less of those dollars to purchase the product. Youll get a clear idea on where you could trade the commodity as this is the same trend that you could see with other commodities like coffee, sugar, starch or any other commodity which is traded in USD.
Utilizing the brokerages for trading commodities
There are several brokerages which can be leveraged for trading commodities. Futures brokerages are regulated highly but they are pretty costly for few traders as futures markets take more margin than what you may predict. Suppose you have a $2000 market, you dont have a business trading futures. Nevertheless, you can trade contract for different markets which are usually offered by the brokers.
The brokerage firm should be regulated. Though most of them are, yet you should check whether or not the brokerage firm is trustworthy enough before finalizing the deal. You may stay aware of few brokerages which offer Forex and futures . If the investor has enough money available, he can seek benefit of this situation.
Commodities trade like any other product
Commodities trade in a very similar way like any other market. Resistance and support is the same and also technical analysis. This is why the forex traders are considered as the most technical people in the world. Every commodity has a unique feature of its own but the similarities usually outshine the differences.
Planning your first move
The foremost course that you should take in commodity trading is opening a demo account. You cant forget that the future brokerages offer limited demo accounts and hence you have to try many to choose one. It is common for the brokerages to offer you a trial of 14 days and hence it limits the features of a demo account. Majority of the brokerage firms offer trials for a longer time period.
So, at the end of the day, there are several opportunities for the traders to make profit and when you choose to enter the commodity sector, you just add another feather to your investment portfolio. This article has been written in reference to this commodity trading post. You may check out the site for more forex trading articles.
Hello Trader, My name is Ankush. On the blog "AM Trading Tips" contains Indicators and Trading Systems for Forex and Binary options. With a variety of trading (Forex and Binary indicators,trading strategies for different trading styles,and also Expert Advisors) that can be absolutely free
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