A commodity trading advisor is one who is adept in ever nitty-gritty of commodity trading. He not only has complete knowledge of the commodity trading system, but also about every commodity. Usually, the advisor is trained to understand the trends and fluctuations in the market. Based on the study and research they can, more or less, accurately predict the shifts and turns in the commodity pricing.
The commodity trading advisor maybe employed in a firm dealing in commodities, or by the commodity exchanges as a consultant or may then run his own business in this area. The advisor prepares charts on each of the commodities listed on the exchanges. He updates these charts, as and when there are modifications. His charts would consist of all details with regards to the commodity.
For instance, the commodity trading advisor prepares a chart on the specific commodity rice. His entire chart would contain the following details:
-The graph representing the price movements
-The past crop trends
-The expect crop trend in the current year
-The next five years, expected trends
-The import-export scenario
-The domestic demand-supply scenario
-The weather expectations that would affect the yield
-The seasonal cycle expectation that would affect the yield
-The Government policies and announcement regarding rice
-Technological advancements being made in rice cultivation and processing
Apart from the above, the advisor may take other factors into account.
Apart from studying the commodity trends, the commodity trading advisor also gives professional advice on investing options. Clients seek his/her service so as to ensure that their money is placed in the commodity that would possibly render them the highest returns, in comparison to others.
Thought the commodity trading advisor conducts detail studies before making any kind of suggestions there is no full-proof method to ensure that the commodity may move in the same expected pattern. Certain uncertainties can crop up to affect the commodity trend in the reverse direction, unexpectedly. Thus, there is a high risk factor that all advisors warn their clients about.