Commodities Tips

Commodities Tips for New Investors

Today’s article will cover commodities tips that every investor should follow. Not only do a lot of these tips apply to commodity trading, but they also apply to other forms of trading and investing as well. Read the commodities tips below to find where you maybe be able to improve.

Don’t push it – Sometimes the best trade you can make is no trade at all. You are not trading for the sake of trading, you are trading to make money and improve your lifestyle. If the signal says to stay away from the trade, then stay away from the trade! Don’t force it and end up putting yourself in a no-win situation when trading commodities.

Don’t trade angry – You have heard other tips such as don’t drive angry, don’t go to bed angry, etc. Well, this rule of thumb should also be applied towards online commodity trading! When your emotions are running high, you are more likely to make mistakes. You are not performing at your best because you are not fully concentrating on the task at hand. If you are angry, or emotional in any way then don’t trade!

Diversify with non-correlated commodities – Commodities tips of this nature state that you must diversify by trading different families of futures contracts. You must look for some of the least correlated groups and invest in those in order to diversify your portfolio.

High probability trades are just that – The point is to look for high probability trades to invest in. That means that they won’t work every single time, so don’t take it personally when they don’t. If something changes with the signal, don’t stay in the game in “hopes” that things will go your way again.

Stay away from “hot” tips – If you receive a so called “hot” tip via mass email or find out about a hot commodity from the media, then its probably too late. Profits have already been made and if you jump in now you are only going to lose money.

Don’t make excuses – When you lose on a trade, accept responsibility, learn from it and move on. Not only commodities tips, but all other investing tips will tell you the same thing. There are no guarantees and you will lose from time to time. You knew when you analyzed your investment options, and starting investing, that you would lose money at times. As long as you are winning overall, that’s what counts!

You must paper trade – You must practice online paper trading before you begin to trade with real money. Paper trade the system that you have developed and you will make money. You must however keep in mind that when you actually trade with real money, anxiety, fear and all kinds of emotions kick in that can alter your perceptions. You must learn to recognize these emotions and learn how to control them in order to trade successfully.

There are many more commodities tips available online.  You must continue to research as much about trading commodities online before you begin and remember to paper trade first before you begin placing trades with real money. You will be glad that you did!

Market Direction

Where does the market go from here? After a very boring and languishing summer, the results of the Dumpling Top produced strong profits if you took advantage of the short funds. Additionally, after a severe downtrend, some big profits were made by covering short fund positions and utilizing the basic rules of candlestick analysis. Where do people sell? They panic sell at the bottom.

How did we know that Friday was a potential bottom day? The Japanese rice traders say “When you see prices gap down in the oversold condition, start watching for candlestick by signals.” Friday morning, the pre-market futures were down excessively, indicating that at least the NASDAQ would be gapping down. If you follow candlestick logic, it was easy to realize that the excess of bearish indication of Friday morning’s pre-market futures was probably representing the panic selling in the oversold conditions.

Commodities Tips, NASDAQ


Commodities Tips, Dow


This does not take extensive analysis. When the Dow moves down hundreds of points in the first few minutes of trading, after an extended downtrend, it becomes relatively clear that panic selling has now hit the market. This provided for some excellent deep discount entry points for stocks that were just getting decimated. Panic selling and the margin calls were making for some huge profit potentials. Knowing these simple principles allows investors to get through the emotional trauma of trying to buy at what most people consider very scary times in the market. The question always comes back to a very simple premise. When everybody is panic selling, who is buying? As illustrated in our trade in FTEK, the extreme gap down in price well in the oversold condition allowed for some hefty profits and a 2/3 day period. Before candlestick signals came along, I would never have been able to buy at the bottom. I would have been the one selling at the bottom.

Commodities Tips, FTEK


Now that the markets have completed the last move following the Dumpling Top, what is next? Today’s trade was a very important indication of what was occurring. Had prices gone down further, the bearish Jay hook pattern would now be in progress. Knowing what we know about the Jay hook pattern, the next viable target would have been at least 1000 points lower. A bullish trading today created a hammer type signal in the Dow and a hammer/harami in the NASDAQ. Consider what has occurred over the past five days. The NASDAQ formed a spinning top/meeting line signal on Friday, followed by a gap up in price. This shows definite evidence of the bulls coming back into the market. The following two days showed continued selling, the residue selling from this current downtrend. Today’s bullish Harami illustrates the Bulls are once again coming back into the market. What would we need for more confirmation? Tomorrow’s trading closing above the T-line. What do we not want to see if we’re expecting a bullish trend? A close more than halfway down today’s bullish candle. Does this mean a strong uptrend is about ready to start? Not necessarily, but the longer the bullish sentiment stabilizes the market, the better the probabilities the bearish/negative sentiment will start dissipating.

Candlestick signals provide an immense amount of analytical information. Each signal alone provides a view into investor thought processes. A few signals in proximity to each other can now be evaluated with a better understanding. Investor sentiment is about to change, although it may not change dramatically in one day.
Chat session tonight at 8 PM ET — everybody is welcome. There are many dramatic reversal signals occurring in this market. We will be discussing what is going on in the current trend and setting up strategies for taking advantage of some possible big price moves. If you already have HotComm installed, click here to connect.

Good investing,

The Candlestick Forum Team

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