Strategies in commodity trading are important when it comes to commodity future trading. The construction of a strategic plan before jumping into the world trading is commodities to avoid risking any capital or wasting time, effort, and money. Getting updates from commodity newsletters and financial news does help, but that’s not enough to make a trade succeed in the business. It’s also important to note that commodity trading tips and strategies are not cast in stone since these will undergo changes through time, once the trader experiences the risks, rewards, and constant changes in the markets.

Commodity Trading Strategies

One of the popular strategies in commodity trading is called the Range Strategy, where the purchases are done at the bottom of the range (support) and the sales are done at the top (resistance). This strategy relies so much on the capacity to buy commodities after the sale makes the price low enough to be counted as oversold. When we say oversold, we mean that the market has already absorbed all of the buying and selling that could possibly emerge. Traders tend to think it’s still possible to sell a certain commodity after a long rally, which causes its price to rise and become an overbought condition – sales emerge, and there’s a decline in buying.

Another strategy is called Trading Breakouts, where traders purchase commodities while it’s still high, and sell when it’s low. It’s easy to spot highs and lows on the chart since they represent both the peaks and the troughs of past movements. Successful traders, especially those who have been in the business for a long time, use this strategy so they can properly manage their money. It also keeps them on their toes when it comes to major trends.

Fundamental Trading Strategy is dependent on factors that affect the demand and supply for the commodities. Rookie investors and traders will have a very difficult time with the Fundamental Trading Strategy because it requires so many hours of number crunching, research, and homework. Add to that the fact that Fundamental Trading Strategy is open to a lot of risks, and it takes an awfully long time for the results to unfold.

Commodity Basis

Aside from strategies, there are also tools that traders can use so they can make wise decisions about whether it’s the right time to buy or sell commodities. Once such tool is CommodityBasis, a platform that gives traders real-time updates about the status of commodities, and enables them to forge partnerships and networks farmers, traders, people working with the USDA, and potential buyers from different parts of the world. Ever-fluctuating prices of commodities are also posted on their website so traders know whether the price given to them by the seller is fair or not. Another good thing about CommodityBasis is that they also post the history of commodities, so traders can create forecasts and figure out when is the best time to take risks.