Month: April 2018

Commodity trading is actually a stirring and matured type of investment. Specifically, it is an activity that involves investing or trading in commodities. Akin to stock trading where a trader buys and sells companies shares, commodities trading involves the buying and selling of commodities. Commodities that are traded are goods of value which are consistent in quality and produced in large volumes by assorted suppliers like sugar, wheat, coffee, corn, oats etc. Trading is always involved with supply and demand, thus limited supply causes a price increase while extra supply causes a price drop off. Hence, either directly or indirectly but the entire process of commodity trading is affected by the demand and supply in the market. Commodity trading is all about purchasing and trading commodities while in stock trading trader focuses on company shares. Similar to stocks, commodities are also traded on exchanges where investors purchase or trade products so as to make profit from the instability of market prices.

Over the last few years, online commodity trading has gained immense popularity as the platform offers a trouble-free and handy trading experience to investors. Trading commodities online is also emerging as a well-accepted and popular mode of business because it allows instant trading and frees a trader to get in contact with a live broker for placing orders. One can trade almost everything through an online commodity trading account including commodity news, commodity trading charts, and technical analysis programs. Traders also get a sense of independency with online commodities trading as it allows them to make end trading decisions by themselves. The execution of online trading is also much swifter unlike a few years ago when traders had to call the broker and provide then instructions about the trade. Online commodity trading comes with scores of advantages such as convenient trading, lower commissions, liquidity etc. Trading commodities online also allows traders to place different types of orders, namely limit order, market order, day order and stop loss order.

Derivative trading is emerged as a newer concept that introduced in the market recently. Basically a derivative is a security that derives value from an underlying asset which could be an equity share, debt instrument, a currency or a commodity. Derivatives deal with an agreement to trade at a future date or at a certain price. In practical sense, derivatives are financial contracts which derive or get their value from spot price, which is termed as underlying. For instance, a rice farmer can also enter into a contract to sell his/her harvest at a impending date so as to reduce the risk of a variation in prices by that date. Such a transaction would take place by means of futures market and this market is derivates market. The prices of the derivates market would be driven by the spot market price of rice which is underlying.

If you want to learn Forex trading, and join the elite 5% of traders who make money, then you need to consider the following 4 key points. If you ignore these 4 key points, then you’ll lose money – and never achieve currency trading success.

Anyone can learn Forex trading – but most traders simply get the wrong Forex education and then lose their money.

Here are the 4 key points:

1. You’re On Your Own

There are many e-books and currency trading systems sold online, each of which promise you success in return for spending a few hundred dollars. However, these books and systems wont help you win in Forex trading.

If you think about it, if these vendors were so good at currency trading, they wouldn’t need your money they’d be too busy making money trading. They wouldn’t have the time, or inclination to sell you their winning strategies!

If you want to learn Forex trading, you’re on your own – and you need to devise your own Forex trading strategy, in order to achieve success. This is a lot easier than many traders think and is covered in part 2 of this article series.

There’s another advantage to building your own Forex trading strategy which is:

You’ll understand the strategy, and it will suit your trading personality. This will lead to confidence in your method – which is essential, if you are to follow it through the inevitable losing periods.

It’s a fact that if you don’t understand and have confidence in your system, then you won’t have the discipline to follow it. Without the discipline to follow a trading system, then you don’t have a system in the first place.

2. Use Technical Analysis

When you start to learn Forex trading you need a methodology – and the best place to start is with Forex charts – and a system based on technical analysis.

Technical analysis works because human nature is constant – and chart patterns repeat themselves. This means we can trade the patterns for profit.

Many traders like to trade using news – but this is a critical error! Why? Quite simply, news is stories – and you can’t trade news for profit. The stories are interesting and convincing – and in most cases dead wrong.

The main thing to remember is that the Forex markets are a discounting mechanism – and news is instantly discounted in the price. This means that you are trading old information. The market moves on future perception – not what has just happened!

By simply looking at your Forex charts, and following price, you see the reality of prices now, and act on them – that’s what makes technical analysis so powerful.

3. Keep it Simple

Any currency trading system based on technical analysis should be kept simple. Simple systems work much better than complicated methods. Why? Because they’re more robust they have fewer elements to break, in the brutal world of trading.

You should use trend lines, and just a few confirming indicators, to give you an indication of price momentum – and that’s it.

In currency trading, you get your reward for being right, and the success of your trading signals – not the effort you put in.

4. Patience and Discipline

You’ve probably heard that discipline is a key factor in successful currency trading – and it is, but don’t forget that you also need patience. You need patience to wait for the right opportunities to present themselves. You also need patience to trade through the losing periods. Finally, you need patience to make the huge gains.

Many Forex traders lack patience and discipline, and trade too often. They can’t follow a big trend they get excited when they make a decent profit. In their excitement, they can’t resist taking their profit too soon – or move their stop to quickly. This leads to marginal profits – when they could have made a much bigger profit.

If you want to make money in Forex trading, then you need patience and discipline. Without patience and discipline, you’re certain to lose your money.

Finally

The 4 points above are critical to your currency trading success especially when you’re starting to learn Forex trading.

So far, you’ve learned that you need to devise your own system – to gain confidence and discipline. Then, by basing your system on simple technical analysis, you have the basis of your Forex trading strategy.

Part 2 of this article continues your Forex education with the need for money management, the best trading methods, and how to trade the odds in order to achieve success in Forex trading.

Online trading has gained immense popularity and the reasons for that are simple.

First of all, it is convenient and easy. You don’t have to leave your room. Who could have imagined a few years before to trade on stocks while lying on his bed with his laptop in front of him? But this is how easy online trading has become. And who wouldn’t want that extra bit of comfort.

Then there is the advantage of paying substantially less commission on your transactions. On the physical market the brokerage you pay is a lot higher than what you do while trading online. The online trading firms charge a nominal brokerage which hardly affects your margin. These firms make their profits by the sheer volume of trade they do.

With online trading you can trade at whatever time you feel. Yes, you can trade beyond actual trading hours of the market. So now you can come back from you regular work and before you go to bed spend an hour looking at your investments.

But while trading online, there are a few things that you should be careful about. We will try here to provide you with some basic indicators.

First of all, you must understand that however fast your internet connection is, and whatever software and hardware you are using there will be some time lag between the time you click to place your order and the actual time when your order gets processed and registered. This time lag, depending on how long it is can seriously alter your final gains or losses. What you can do is to see the time-lag is kept to a minimum. That would be possible if you have the best set-up in place and your trading firm provides its subscribers with the best service.

Secondly, you must get real time updates and stock quotes from your service provider. If it is delayed then you will be placing orders for rates which are long history. And then it will take further time to process your order. What you will finally get is something a lot different from what you were expecting. So the feeds have to be live and real time. There can be no two-ways about it.

Thirdly, see if your brokerage firm is giving you the best rates for the stock options you are going for. If your service provider is not getting you the right rates, then you have every reason to move to a different broker who will offer you better rates.