In the past, commodity trading has provided the biggest fortunes worldwide. Had originated centuries back, even before the stock markets came into presence, albeit traded then in an unique manner, than as seen today on electric exchanges. I possess often cited that ” If trading in the speculative market segments, then Stocks & Equities is for boys but Commodities & Forex is for men” (No girl or boy bias intended). Wealth creation is not a subject of chance. It is a process that needs sharp analysis & a lot of work time. Plan your play and then play your plan. Happy investing! fusionex
The likeness in Stocks & Products commences & ends at the point that they will be both speculative trade markets, but there are a whole lot many distinctions in both these markets. Unlike the stock markets where even a highly valued stock could eventually see all it’s commercial-value being worn away due to several reasons, the values of products could see corrections on a huge supply but eventually will only increase again with time, as the inherent imbalance in the need and supply ratio would always favor demand more than supply due to many influencing factors like growing populations, rising companies and better lifestyles to name a few. Most adverse scenarios like geo-political tensions, wars, climatic instability, catastrophes and other man-made disasters, and so on which pull the stock markets down generally drive the commodities up (especially Agro-Commodities & safe safe place instruments like Gold), essentially because of the differentiating factor that these commodities generally are also regular necessities to normal life and not investment instruments. Most Products are traded globally & the price rigging in these is next to impossible unlike, as observed in a lot of collateral instruments where manipulation is easier & occurrences of traders getting duped are rampant.
Massive wealth creation can be done through Commodity Trading & Investments if done the proper way & with a lot of strict self-control. When done the incorrect way, which is usually the most followed path, there will be enormous failures also. You can start off equity trading or investment with smaller amounts of money, but would require deeper pockets to be able to carry out some modest trading in the Commodity Exchanges & also to sustain the “Mark to Market” volatility in the Commodity Markets. Boosts in size & loss in both also become proportionately small or big eventually. I would now want to highlight some basic Do’s & Don’ts for the most frequently seen habits & maybe undoubtedly committed mistakes, which My spouse and i have noticed in most traders & had to address to several of times as a Marketplace Analyst & an Item Market Trade Advisor.
1] Do not control with hesitance, half heartedly or in over self confidence. You may incur small but repeated losses if you are fearful of the markets or heavier ones if you are overloaded brave and foolhardy.
2] Be patient when your trade positions are moving in the right expected direction to remove maximum gains and be sure the gains by improvising the stop-loss level, time and again. Make an effort not to be gloomy here or else you could book gains pre-maturely & may later repent on exiting early. This may lead to keeping on re-entering the same investment at further levels & repeatedly exit at small reversals in panic, which in turn would go earlier small gains & also build losses. It can not whether you’re right or wrong that’s important, but how much money you choose when you’re right and how much you lose when you’re incorrect & that makes all the difference between Winning trades & Losers.
3] Do not be over optimistic when trades have hit the suggested stop-loss levels and be sure to quit there. You might miss better and multiple opportunities on being stuck in discounts gone wrong leading to higher and higher deficits everyday.
4] Perform not discuss your open up positions with one and all. This will lead you nowhere and befuddle you more, as all would air their own thoughts about the same (whether knowledgeable or not) and most, would make your trade decisions seem to be as foolishly and rapidly taken. If only you would probably have consulted them before…