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-   -   Why is commodity trading not practiced despite being popular? (http://www.thefinanceforums.com/showthread.php?t=13881)

adamsmiths 10-28-2019 05:19 AM

Why is commodity trading not practiced despite being popular?
 
If you are not new to Forex, you must be familiar with the gold and oil sector. This is a huge industry which has an investment of billions of dollars from all around the world. There is one thing noticeable that not many traders are interested to look forward. Although the potentials of rewards are lucrative, certain factors prevent from undertaking the risks. Read this article to find out why a popular technique remains unpracticed in this financial sector.

Very high volatility
Volatility may help provide windows of opportunity but also can be destructive. If not understood properly, a small error can overthrow the success. A problem with high-frequency trading is, there is not much time to rectify mistakes. Everything is done blazingly fast leaving investor unable to take control of the situation. Exceptions can be made if a person does not want to wait. From the views of experts, it is always suggested to go with a longer timeframe. This reduces the chance of failures by providing an extended period to get the desired price trends. When assessing the risk, one may not find worthy thus not selecting this strategy.

High intensity
A hidden danger with a commodity is, this market is comparatively smaller than others. As a result, intensity sometimes brings unexpected events. Those who are not familiar with such situations may lose capital. An example is the major pairs where the price is relatively stable. The trends do not have any extremely high peaks or lows, keeping the investment safe. The price of oil and gold changes quickly depending on the international markets. It discourages new investors despite highly rewarding trends.

Extremely sophisticated business
If you trade the commodity market, you must keep yourself tuned with the global economic news. The price of commodities in the CFD trading industry changes to a great extent based on major news. Unless you learn to analyze the news data with an extreme level of precision, you are not going to make a profit in commodity trading. For this very reason, the pro-Singaporean traders always suggest the novice traders trade the currency market. Itís much more stable and you can manage to make a decent profit based on technical analysis. Without having extensive experience with the trading industry, you should never trade the commodity. If necessary, use the demo account offered by Saxo to learn the process of commodity trading. But never step into this world without knowing its sophisticated nature.

Less available information
Fewer traders mean fewer resources. Many legends have come out of this sector but due to scarcity of knowledge, smart people decide to ignore. This is a wise decision as there are plenty of strategies to make a profit. On second thought, the unexplored sectors are ideal fishing spots. If you think limited knowledge will not be a barrier to profit, consider becoming a commodity trader to take advantage of fewer competitors.

Not suitable in the long run
Forex is a long-term business. Don't think of just coming and going, instead focus on staying. Many have started with a commodity as the waiting period was less but over time, they identified this was not the best decision. Thinking we are trying to double-cross the traders? Test in demo accounts for a few days and you will find the answer.

Unforeseen risks
Perhaps the ultimate reason is the hidden dangers. Although indicators may help to forecast the future volatility that does not always turn out to expectation. Wise people know what they do not want, hence avoid despite lucrative offers. Critics may argue every decision has risks but this sector keeps the investment hanging on a thread.

Change of mindset
Maturity grows and people begin to realize the ultimate best for them. It is not uncommon to find many fast-paced managers have moved to slow-paced trading styles. It gives mental peace, helps to have a sound sleep at night. It eventually depends upon individuals willing to take challenges.

Valz Miky 11-16-2019 03:28 PM

Re: Why is commodity trading not practiced despite being popular?
 
I think it’s because it requires more knowledge and skills as compared to other stuff. Also, it’s about brokers too as not all allow these. I have no such issues because my broker FreshForex very much allows me to trade on everything I wish to trade on. I love it with their low spreads, smooth trading platform and also excellent 101% Tradable Deposit Bonus.

https://i.imgur.com/Da1bZrW.jpg


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