Unlike the price of a share of stock in a single company, the price of a commodity will never go to zero because of constant demand.
One can obtain physical delivery from the market and store it in a warehouse if the price of a commodity one bought in futures prices drops down.
Trade commodities in accordance with their seasonality can result in significant profits.
Primary physical surveys, as opposed to data gathered by a firm, can accurately predict where a commodity’s price is headed.
Bad Side:
The market is quite volatile because of the low volume.
As a result of a dearth of substantial competitors, the market has become over-operated and manipulated.
Since the operator is familiar with the locations of most Stoplosses, he or she will knowingly trigger it first. Therefore, it is necessary to keep larger Stop losses in place or to keep the stoplosses in mind frequently.
If you have any questions, write below. I shall try to answer your question.
I use range trading. Because Range trading techniques strive to profit from a commodity that is now in a period of consolidation, meaning that rather than making new highs or lows, the market is confined to support and resistance lines. The ability to recognize when a commodity is overbought or oversold is critical to a successful range trading strategy.
I prefer commodities to forex cos v cyclical and more predictable bottoms. E.g in a recession coppers going to be cheap but never valueless (unless u count crude oil a couple of yrs ago!!) Also I find past predicts future more reliably (certainly with oil and copper which are the only two I trade) and, although I haven’t checked this, there seems to be alot more volatility and things seem to move faster. In a recession i can be fairly sure copper will go down, when things are going well u can be fairly sure it will go up, whereas forex is confounded by surprise announcements re interst rates, unpegging one currency from another (chf/eur back in the day) and several other factors that afrect commodities less
The goods market can have different modes in economic conditions. For example, in the conditions of growth and inflation, the price of goods can increase. In situations like war, earthquake and flood, the food and medicine sector increases. These items can be a good option for investment. On the other hand, in recession conditions, economic sectors may not grow and goods may lose their attraction for investment for some time…
