Commodity Trading Tips

The floor of the Chicago Board of Trade, a major commodities exchange in the United States. (Photo credit: Wikipedia)

Curious about dabbling in the commodity markets? Here are some top tips to help you avoid losing your shirt.

Understand Your Psychology

When you are making commodity trading decisions you are involved in a delicate balancing act. On the one hand you have to act swiftly to profit from the opportunities that arise, whereas on the other you have to be very cool and analytical to make the right calls.

Getting an understanding of your own psychology is very important for all successful trading. Often the worst decisions are made due to emotions interfering with the thought process. If your mind is clouded by strong emotions it is easy to make poor decisions.

Don’t follow the crowd

The chances are when everyone is talking about a trend it will be too late to jump on it. This especially goes for any kind of ‘hot tips’ that you get on the internet and through social media. You can’t bet on a race that has already been run.

It is important to be able to have the courage of your own convictions. Making money is commodities investing is a matter of being right when others are wrong. This can mean buying precisely when others are desperate to sell.

Be genuinely informed

There are all kinds of information that you can have access to that will be able to give you an insight into the state of the market. Commodity traders will keep a very close eye on the news and will be able to read between the lines in order to extrapolate likely trends.

Don’t ever buy something that you do not understand. If you are contemplating sinking funds into a raw material, do your homework first. Make sure that you know what a product is, what it is used for and how it is produced.

Make sure that you keep yourself abreast of the world political situation and current events. War, revolution and natural disasters can all have an impact on commodity prices. Technological developments and changing social trends will also play their part.

Get expert help

It is not always going to be possible for you to have all the information you need as an individual to make successful commodity trades. This is where buying into funds that are invested in this area makes sense.

Just as particular foods are only good for you as part of a balanced diet, any given investment is only wise as part of a balanced portfolio. This is why many individuals consider it worthwhile to pay the premium demanded by a wealth management company who understand how to balance risk against reward.

Ultimately all investments can go down as well up. The big advantage of commodities though is that they are real things, with real uses and real demands.

Simon Grant produced this guide in association with Adam & Co., who offer their clients bespoke wealth management. 

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Forex Broker Choosing: My Tips on How Not to be Scammed

The other day, I was on a popular Forex trading thread on an online forum, when someone interrupted the flow of trading ideas and strategies we had enjoyed for three days straight to spit out a heart-rending story of how he had been ripped off by a Forex broker based in Seychelles (he only found out the broker’s location after the incident; how naive could traders get?).

The poor fellow had apparently been taught the rudiments of Forex trading and by all accounts, he was doing well for a first timer (probably ticked off the scam market maker broker he was using). Then from out of the blue, he got an email from his broker, accusing him of using a third party access to trade his account (supposedly against their rules). He was branded a cheat and as punishment, his account was suspended and his funds seized. Now the broker could have their own rules regarding account access, but if you have a problem with a trader, why not at least return the trader’s original capital instead of using some cheap excuse to brazenly steal the trader’s money? The community of traders is presently contemplating sending representatives to Seychelles to take legal action, a process that will cost a lot of money without a guarantee of success. All this could have prevented if the trader had done his homework. In the next few sentences, I will briefly outline what I would have done from the get-go after coming across the broker’s web page, which had lured the unfortunate trader in with a 100% bonus.

Step by Step Process of Conducting Due Diligence of a Forex Broker

The first thing I would do on coming across this broker is to find out the true location of the broker. Some unscrupulous brokers maintain bank accounts in countries that have strong regulation, maintain a skeletal office there but site their main office somewhere else. It gets worse; the main office could be the cellar of a building in some far flung island on the earth, or some country with very lax financial and banking rules. This system of structured deceit is difficult to unravel. For this information, I would head over to some popular Forex review sites to check the broker out. This serves many purposes. Not only are you likely to get the actual location of these guys (and therefore their true regulatory status), you could stumble on some precious information. More often than not, you will get reviews of such a broker from others who have used their services. The bad ones do not hide.

If I visit the forum of a group like ForexPeaceArmy, there is a structured review system that tracks the complaints against any broker and how the brokers respond to the complaints. Complaints range from withdrawal issues to trading practices such as stop hunting. It is not unusual to see scam brokers paying off people or using multiple IDs to write good reviews about themselves. It is not long before they are caught. If you see this, you are better off running away from such a broker.

My next stop would be the websites of the regulatory agencies. This is assuming the broker in question passes the location test. Find out the status of each broker. Regulated brokers are assigned specific registration numbers and it is not hard to find out if a broker is a scam broker.

Usually, these steps are enough to fish out scam brokers. You can also add some good old commonsense to the mix. Personally, I do not use brokers that offer bonuses. That 100% bonus may just be a sign that the broker is getting desperate for money to steal or settle other clients in an elaborate Ponzi scheme.

Article provided by Alexander Collins. To learn more about smart ways to choose a Forex broker and unethical practices scam brokerages use, visit Alexander Collins blog.

Happy Trading!

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Consumers Guide to Commodity Trading

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Taking a practical approach to trading commodities can be really difficult for some who have preconceived notions that are inaccurate, or really make a negative impact on their morale.

Commodities are unique in that they are (almost always) tangible goods that are bought and sold, there can be price discrepancies on these goods that make them profitable to trade. Such a fact is not lost on the various commodities traders out there who make assumptions about futures and other financial instruments in an effort to bring about successful commodity trading. Unfortunately this can often result in losses if the trader is not experienced enough to make the right call, so it is important that one consider the chances of loss before moving forward with their trade.

Commodities trading often involve the use of equities (stocks) as a type of representation of what a rising or falling commodities price means to their particular profitability. A logging company for instance will greatly benefit from a rising cost in wood, while a company that specializes in electronics that feature precious metals will benefit in a drop of the cost of those metals.

It is these relationships that make commodities trading a natural pairing to occur with the equities market, and indeed it is this pairing that makes it possible for many traders to make a good deal of money. While it might seem like no big deal, this relationship is the beginning of how most private traders make their living from home involving commodities. In order to deal with commodities futures, derivatives, futures contracts, and other instruments you must either become a professional trader or pay someone else such as a CTA to act on your behalf.

If you are going to have another company act on commodity prices for you it is important that you trust this company or individual with your life, since they will be in charge of your money. One wrong move or misinterpreted order and you could find yourself losing a good deal of money, making the effort to avoid this sort of thing should be paramount on your to do list if you are going to employ the use of a third party.

If you want to take on the commodities market on your own it is important to realize that the single best way to do this is through the equities markets. Trading commodities futures online is another way to utilize commodities for trading, but it is a very complicated financial instrument that should never be used by anyone that does not understand what they are doing.

If you are interested in commodities futures you should take it upon yourself to understand this instrument inside and out, it is not nearly as simple as the spot market and if you do not make the right call you will quickly find yourself in some trouble. Taking the time to properly learn your craft before beginning is something that is extremely important, and you need to keep that in mind at all times.

Mark James is an intersted author in the world of commodity trading and investment in order to help investors make the most of their money.If you are interested in reading more about commodity trading and Gold investment, then please visit the following sites:QIA Commodities.com, Gold investment.com and Thisis money.com

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Stock Carnival ecstasy - April 21, 2011

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Welcome to the April 21, 2011 edition of Stock Carnival Ecstasy. Hope you enjoy the articles we have from a number of great blogs this time. Steve Smith gives some helpful information about trading the Forex Markets in 'Need Help in Learning about Forex Trading?'. Jackson takes a look at inflation and how commodity prices continue to rally. Finally Hussein Sumar has two really good posts, one on the S&P 500 High Yield Dividend Aristocrats Index and another on HSBC Holdings plc., the fastest growing bank in Asia. You will like both of these great articles if you are an active trader. Make sure to bookmark, share, like and come back often for other great articles and carnivals.

Matthew Paulson presents Four Audiobooks That Will Help You Get Out of Debt posted at Audiobooktopia.

Pinyo presents How Much Money Do I Need to Retire? posted at Moolanomy, saying, "This article takes you through three easy steps to help you calculate how much you need to save for retirement."

Wez Brown presents How Your Tax Code Deals With Other Income posted at Tax Codes, saying, "This article explains how your tax code will be adjusted based on any other income you may earn."

other

Jeff Weber presents Pros and Cons of Credit Union Credit Cards posted at Smart Balance Transfers, saying, "An overview of some advantages and disadvantages of credit union credit cards."

brand ltardy presents Financial Spread Betting posted at , saying, "Spread Betting Industry News and Happenings"

Steve presents The brewing US debt crisis - Solutions that can help you with your debt blues posted at FastSwings, saying, "As the Congress turns its attention to the US budget and the nation's fiscal situation, the debates over the debt ceiling that have been seething underneath the surface could boil in the near future."

Steve Smith presents Need Help in Learning about Forex Trading? posted at Forex Trading System Central, saying, "If you think that you do not know everything about forex trading yet, or if you believe that you will not be able to make sound decisions related to finance with all the things that you know already, you may have to do some research."

Jeff Weber presents April 2011 Balance Transfer Credit Card Report posted at Smart Balance Transfers, saying, "In April, credit card companies offered average 0% introductory rates on balance transfers lasting more than 12 months, marking the first time this average has eclipsed the one year mark since inception and a good oportunity for consumers to save money."

Jackson presents How Inflation has Bolstered Commodity Prices posted at 2009 Tax, saying, "An examination of different commodity markets and how inflation is affecting each one."

stocks

Hussein Sumar presents Investing in S&P 500 High Yield Dividend Aristocrats Index posted at High dividend stocks, saying, "The S&P High Yield Dividend Aristocrats Index is a method of measuring the 60 highest dividend paying stocks in the S&P Composite 1500 index & only lists those companies that have consistently raised their dividends in the last 25 years, without missing a single year."

Alexander presents 7 Dividend Blogs You Need To Read posted at Dividend Stocks, saying, "Use these blogs to help you with your dividend learning and research."

Sun presents Scottrade Commission Free ETFs [Reviews] posted at The Sun’s Financial Diary.

Hussein Sumar presents HSBC Holdings plc. - Fastest Growing Bank in Asia with a Juicy Dividend Yield posted at Best Dividend Stocks, saying, "London & New York remain the largest financial centers of the world. The remaining largest financial centers in the world fall in Asia; Tokyo, Shanghai, Singapore & Hong Kong. Given that China grew its economy by 9.2% in 2010 and Singapore grew by 18%, banks that do not operate in these demographics are missing out on growing deposit bases and loan allocations."

Kevin McKee presents Get Paid for Passing Gas posted at Thousandaire, saying, "Energy Transfer Partners (ETP) is a great way to capitalize on the energy sector. They own natural gas pipelines and charge fees, similar to a toll road. As long as Americans are using natural gas, this is going to be a solid investment."

Hussein Sumar presents S&P 500 Dividend Aristocrats of 2011 posted at Best Dividend Stocks, saying, "The S&P 500 Dividend Aristocrats Index is the most honorable list of dividend paying stocks as measured by the S&P 500 Index that have consistently increased their dividends for the past 25 years, without missing a single dividend payment."

That concludes this edition. Submit your blog article to the next edition of stock carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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