Commodity trading does not need to be difficult, occasionally risky; but not difficult. There are a few basic tips to keep in mind if you are considering starting out in the field of commodity trading. Firstly, if a deal looks too good to be true then it probably is. Sometimes the smartest way to trade a commodity is by not trading at all. Holding back from trading in something that is too risky is a good idea, this is particularly true if you little to no information about the company. Although sometimes a new company will hit the commodity trading scene and start generating points straight away – these companies are few and far between.
Another good tip is to remain level headed whilst commodity trading. It might be easy to get excited or angry about a trade. However, these are the times that you are more likely to make a mistake because you are not thinking properly. If you are trading electronically take a walk in this instance, clear your head and think about your next move. Make sure you think long and hard. If you can’t think straight then take a day or two away from the computer in order to sort out how to make your next move.
Commodity trading while relying on news outlets to fill you in about how a company is going is a bad idea. This is because news (contrary to popular opinion) does not travel all that fast. A company may be seeing a lot of growth during the course of a day – however, the growth will probably stagnate before you have a chance to invest. This means that your initial investment is unlikely to rise any further for a while. It also means that you purchased the stock after the initial surge so you are going to be paying more for it.