Traders in Commodities
Traders who trade commodities so do for many reasons. One reason is that commodities provide the opportunity for investors to make huge profits in a relatively short period of time. Also, futures trading as it relates to commodities, is not as complicated as trading stocks. There are only about forty markets to speculate on when trading futures compared to trading stocks where there are literally thousands of stocks to choose from. Additionally, futures are very easy for investors to buy and sell and there is the potential for profit whether or not prices go up or down. Not to mention the fact that commission fees are much lower than the commission fees when trading stock.
Futures trading involves the speculation of whether or not the price of a commodity will rise or fall. It is not like buying stocks and bonds in which you physically own something. Investors will, for example, speculate on the price of soybeans. If the trader thought that the prices of soybeans was going to rise, then he or she would purchase a soybeans futures contract. On the contrary if the investor thought the price of soybeans was going to fall, then he or she would sell their soybean futures contract.
Another plus to trading commodities is that you can begin trading with very small purchases. Of course the smaller the trade, the smaller the profit, but there is also a lower risk with smaller trades. This is an advantage because it allows traders to get up to speed in the futures markets before they begin to place larger trades. Additionally, may investors will implement a stop loss order in order to minimize risk. This stop loss will automatically happen when the set price is reached. Then the commodities previously purchased are sold automatically to prevent from a larger loss.
For those investors interested in this type of investing there are certain fundamentals that must be understood. Growth and inflation are the most important factors to take into consideration. The prices of the futures markets are based on the predictions of what the futures market will do. Therefore future predictions of growth and inflation are crucial to commodities trading so that investors can accurately predict what is likely to happen. Inflation and growth are far more important than historical data when commodity investing.
In addition to the fundamentals, traders must also understand the technical indicators used to spot trends before prices become unprofitable. They should also become familiar with concepts such as market value, supply and demand, and trading behavior. Market value is important to understand because it has to deal with price fluctuations and trend reversals. Supply and demand is a familiar concept to many however commodity trading requires that investors research all factors that come into play with supply and demand. Trading behavior is also very important no matter the type of trading whether it is stocks, bonds, stock options, or commodities. It deals with the psychology of trading and how self-awareness or lack there of in regards to individual trading behavior affects every day trading decisions made by investors.
Continue to research the futures market and decide if it is the market for you. Be sure that you fully understand the concepts discussed above, that you implement a trading plan, and that you develop and maintain the discipline to stick with your plan.
Market Direction
Candlestick signals reveal the truth! No matter what the rhetoric is being reported on specific topics/stocks, candlestick signals reveal the true sentiment that is conveyed by investors. When you see record-breaking earnings reported by a company and a candlestick sell signal appears, that reveals the true sentiment of what investors were expecting or anticipating. When you see politicians reporting one thing, and the market responding in a different manner, that reveals investor sentiment is reacting to what is really occurring. When the Dow was trading down 200 to 300 points on a day when the signing of the mortgage bailout bill was supposed to occur, that was an immediate indication that something was not right. Did the markets already know that there were not enough votes to pass the bill? If you are controlling billions of dollars of investment funds, you probably have the research capabilities to know the true prognosis of how many votes are going to be voting for and against the Bill. When money is on the line, the smart money will know what the truth is well before the average investor on the street. The benefit the candlestick investor has is being able to see what is occurring with people that actually buy or sell based upon the information they have.
Candlestick signals provide a huge advantage. It allows for a visual confirmation of what buyers and sellers are actually doing. Candlestick patterns provide a broader road map to indicate what is occurring in investor sentiment as time moves on. A pattern can be the accumulation of individual candlestick signals. It is very important to remember that each signal is the result of investor reaction that occurs over and over. That information can be extrapolated into accurately projecting what is occurring during a price trend or a pattern. Because each signal incorporates common sense analysis, that common sense can be applied to bigger price moves. As discussed in the previous newsletter, the Dow is in the process of forming a Dumpling Top. The ‘result’ of the Dumpling Top is in progress currently. A large price decline is usually the result after a Dumpling Top has been identified.
DOW
Large profits can be made with confidence when the results of investor actions can be identified. The Candlestick Forum Online Training seminar concentrates on ‘what’ produces excessive profits in the markets. This boils down to knowing what signals and patterns to recognize and understanding the ramifications. The most powerful element of investing is committing funds where the probabilities are greatly in your favor. Fortunately, candlestick analysis is the implementation of visual common sense graphic depictions. You do not have to be a great fundamental analyst. You do not have to understand the results of political involvement in the equity markets. All that information is provided by candlestick charts. Wouldn’t you like to be able to visually evaluate price movements with a high degree of accuracy? That is what you will get from two days of candlestick training.
Many investors go through a lifetime of following the practices of Wall Street. Most people learn too late that Wall Street does not instruct people how to make money. Wall Street is established for making money through the mechanics of investing your funds. Wouldn’t you like to know why prices move as they do? It is very simple once you understand the information conveyed in candlestick analysis. This coming weekend, October 4 and 5, you have the opportunity of gaining extensive insights into the movements of investment prices. It is not based upon “secret” trading methods that are just now being revealed. You will learn the simple common sense techniques that the Japanese rice traders proved to be extremely profitable over the past four centuries. Take time to learn what the most proven trading method has to reveal. Whether you are a day trader, swing trader, or long-term investor, candlestick analysis allows you to understand where the high probability profitable investment situations are developing. This is not rocket science. These methods were developed by simple rice traders. The result was that the simple rice traders became legendarily wealthy. Investor sentiment has not changed over the past four centuries and will not change over the next four centuries. The human mind works with reoccurring habits. Fear creates panic. Greed creates exuberance. When you can identify those factors with simple graphics signals, you now control your own investment destiny. Join us this weekend. It’s well worth your while. Click here to sign up.
Chat session tonight at 8 PM ET for members. – We will discuss what created the dumpling top and what could result immediately from actions or non-actions of Congress that could produce extremely large profits.
Good investing,
The Candlestick Forum Team
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