Many people trade with oil and gold in Forex but they are a risky commodity to trade. This market is volatile and the trend can change at any time. When you are trading with commodity, you are taking the risks even higher. After reading this article, you will understand why it is not wise to trade with oil and gold. Though they may sound tempting as the prices are moving up and down quickly, they are not a good option. It is better if you make your money with the currency trading. However those who still want to trade commodity, should educate themselves with the proper knowledge of risk management. Trading the market is just like catching a sharp knife. If you make a single mistake, you can lose a significant portion of the investment. First all learn about the associated risk in currency trading. If possible demo trade the market for six months to a general about the commodity market.
Trade the higher time frame
Commodity traders are mostly long-term traders. Being a new trader you might be trading the market in the lower time frame. But lower time frame trading is extremely risky and increases your stress. You need to stay calm while taking any decision. If you chose daily or weekly time frame in your technical analysis, you will never have to worry about the false spike. Most of the time you will be able to execute quality trades. Always try to trade the market along with the long-term trend. Stop trading the market reversal.
The commodity traders are always one step ahead in the investment industry. They always keep themselves tuned with the fundamentals factors of the market. If you get involved in spread betting, learn the three major types of market analysis.
The prices changes without notices
One of the many reasons it is wiser to avoid trading with oil and gold is because of their price shift. The price is not stable, they are always changing and it is even volatile than the currency trading market. The Middle Eastern countries control the prices of oil and they are independent. They do not need any reasons to change the prices and this change in price also change the prices of Forex trading with commodities. Professionals who trade with commodities have many years of experience and they only trade when they are certain. It is not good for a novice trader to invest their capital in commodity trading. If you cannot resist yourself from commodity market, we can advise you to trade with the demos. It will make you realize how volatile commodity trading can be.
They display the highest level of volatility
We know that volatility is important for traders to make their profit. Not every time volatility will favor you and you can get to make money. High level of volatility is always risky and this commodity industry has the highest level of price volatility. You need to have years of practice and experience before you can display your performance. People lose their money most of the time because they underestimate the commodity industry.
They are no good for long-term trading
This is the bitter truth in the commodity sector. Though they are good for spawning your profit quickly, they are not a good choice for your long-term career. You can give it a try by placing some trades but for long-term career development, it is not the right choice. Most professionals have successfully built their career on currency trading. You should set your goal for long-term and focus on trading with major and minor currency pairs. They have a steady rate of volatility and you can get much information about them. Most strategies are also developed for trading with currency pairs and you need to work harder if you want to build your career in the commodity industry.