Here, you will get to know about the step by step process or golden rules to become a successful commodity trader.
While commodity trading started in the ancient civilizations, the modern-day commodity market is something entirely different.
Due to the digitalization, everything is online now! Now people do not need to carry physical commodities and go around to exchange.
Just with the use of web or mobile, the trades can be executed in a regulated global market. This revolution is attracting a number of traders to try their hands in the commodity market.
However, only a few are able to become successful!
Attributes to become a Successful Commodity Trader
In order to become a successful or pro commodity trader, one needs to have the following attributes:
Discipline: To become a successful commodity trader, this is one of the most critical character traits. One needs to be disciplined enough to create a financial plan and then stick to it while trading.
Financial limits need to be kept in mind while taking risks in the market. Without discipline, you might just lose all you have in the market
Self-control: Greed is the biggest problem in the market. The desire to get more usually makes one lose what they already have.
A prudent commodity trader calculates his risks and rewards well and keeps a strict check on his greed.
Awareness: You cannot trade in a market you do not know anything about. Thus, it is essential to keep yourself updated with the happenings around the world.
Since the commodity market operates on a global level, a successful commodity trader keeps himself updated about all significant international events that might affect the market.
Curiosity: To become a pro commodity trader, one needs to have the curiosity to find more. There might be a set strategy that works for you, but there is no harm in learning about more.
There is no end to knowledge and the one who thinks they know all, always end up as a failure.
Patience: No trader becomes successful in a day or a week. It takes time for you to find your comfort in the market.
You need to be patient enough to learn the market before stepping into it. Also, after entering, you need to show a lot of patience and perseverance to earn profits!
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Guidelines or Golden Rules of Commodity Trading
If you think you possess the above traits, then here are some golden rules you need to keep in mind to become a successful commodity trader:
No Confidence means No Trade
It is not important to take every trade or even trade everyday. You need to keep a check on your financials and take limited risk only.
If you are not sure about what the outcome of a particular trade will be, then you should avoid it. Being unsure would make you more skeptical, and there is a very high chance that you would end up in losses only.
Learn to afford to Lose
No trader, no matter how experienced or successful, always ends up in profits. If you are unable to cope up with losses, either mentally or financially, then it is better to refrain from entering into the market.
Like any other market, the commodity market is bound to give you some losses in your trading journey.
Do not ignore the Trend
If you are a trader, then you must have heard, “Trend is your friend.” A successful commodity trader always analyzes the trends in the market.
Staying in the market after the trend is exhausting, be it bullish or bearish movement, will only lead to losses. You need to be aware of what the market tells you!
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Do not fall for the “buying at the bottom and selling at the top” rule
This is one of the most common mistakes new traders make in the market. However, a successful trader waits for a trend to develop before entering into any trade. A top or bottom doesn’t guarantee anything!
Unless you are confident that the commodity will rise in price after hitting bottom, you should not take a buying position! Such inaccurate and hasty trades will only give you losses.
Margin Calls mean Exit
Margin calls need to be taken as an ultimate stop loss. This situation arises when your trade position weakens considerably. It is often difficult to get out of a trade. Mostly this happens because of the greed of earning more.
However, when this happens because of a wrong trade, the situation is worse off. People have a problem admitting they were wrong, and they continue in the market with the hope that the trade will turn in their favor.
This is the worst trading mistake you can make in your career! If you get a margin call, admit that you made a wrong decision, and exit the market with a lesson. Do not answer the margin call.
Do not try to trade too much
It is impossible for a trader to keep track of the fundamentals, technical and news updates about so many markets and so many commodities.
Hence, it is always advisable to find the ones you are comfortable with. And then stick to the same!
One needs to control their greed and do only as much as they are capable of. Trading requires time and effort, so enter only in so many commodities that you can handle.
Understand in Detail about Commodity Market here
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Adopt a Trading Plan
To become a successful commodity trader, it is very important to have to trading plan.
No successful trader trades in the market using a hit and trial approach. The markets can be a highly stressful situation, so you need to have a plan in mind before entering.
You cannot find your suitable plan in a day or a week. A successful trader needs to be patient enough to find something that works for them!
Most of the time, your emotions and your plan would not match, but you should always stick to your trading plan. Emotional temptations and stress will only cause losses in the market.
Do not try to be Right Every time
While making a speculative decision, you should not expect to be 100% accurate every time. However, you need to ensure that, even with 40-50% accuracy, you are able to maintain a profitable position.
This means you need to learn to cut your losses and let your profits run. Even by being less right than wrong, if you are able to end in green, then you can indeed call yourself a successful trader!
Do not enter in thin markets
The market works on the fundamental rule of “For every buyer, there is a seller.” The exchange acts as an intermediary between the buyers and sellers.
However, in thin markets, there is an inadequate number of buyers and sellers. Hence, the trades are not very successful or profitable. It is always better to avoid such markets.
Here are most important rules you must follow, if you want to become a successful commodity trader.
Successful Commodity Trader – Conclusion
Every person who enters the commodity market aims to become a successful trader. However, the journey from a beginner to a successful trader is a tedious one. One needs to be highly dedicated to this.
The rules mentioned above are the basics which you need to keep in mind to fulfill your aim of success.
Apart from this, it is always advisable to keep yourself up to date with all the latest technologies and happenings in the field.
Open a Commodity Demat & Trading Account Now! – Fill up the Form
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