Trading commodities is not overly complicated, but there is a rather steep learning curve for anyone new to the market. There are actually two options for trading. The older and more traditional method is to have a commodity broker who will place your orders for you. As time is of the essence in placing a trade, this is not the most efficient or profitable way to trade. The other option is to trade online. Here you have much more control, but there is also more you need to know. Either way you’ll need a broker, so choosing one is a job in itself.
Choosing a Broker
Choosing a broker before understanding how commodities are traded is a little bit like putting the cart before the horse. Rather than begin your journey by choosing a broker, step back a little and do your own homework. Even if you don’t plan to trade online, you should do a search for successful brokers and choose a few of them to learn from. There are a plethora of teaching and training videos and teachers out there as well, so take advantage of all of them. At the days’ end, you need to understand how the system works, how to follow charts and how to map outout your own personalized trading style. Only then will you know which broker is most appropriate for you.
Learning the Ropes – Through the Charts!
Monitoring forex or any other commodity is done by analyzing the charts. Before making any decision on placing an order, you want to see how a commodity is doing, which direction its heading and where it might end up. You will learn, through trial and error, to expect the unexpected. You can also review trading plans and styles of other traders to begin to understand how the whole puzzle fits together. Go ahead and subscribe to the blogs of those traders that you respect and can learn from. Some of them are very helpful while others might just be out there tooting their own horn. This will be a continual learning process, so you should commit for the long run. Commodity trading isn’t something that you can learn in one day or hop in and out of without a proper educational foundation.
Making Your Plan
Once you understand the concepts of when, how and what to trade, you can make your own trading plan, based on what you’ve experienced and one you’ve gleaned from others. After you know what you want, what you’re doing and how to get there, then you can choose a broker who’s ideals line up with your goals. You don’t have to choose the first broker you come to. Ask to begin with a demo account. If you like the way it’s going, great! You’ve found your broker, assuming you have come to terms with commissions. If you’re not sure, try another one on the same basis – with a demo account.
You’ve done your homework, you’ve settled on a compatible broker, now it’s time to get started!