Learn Commodity Trading Courses
Commodity Trading is one of the largest financial market in the world. Commodity traders invest in the commodities trading market popularly known as Commodity Trading for speculation purposes. Commodity traders are attracted to commodity trading because of the following reasons:
Commodity Trading Leverage - commodity trading leverage means that traders can make more money in commodity trading by investing little of their own capital. This is because traders can borrow money to trade with from their commodity broker using commodities trading leverage.
Liquidity - The fact that commodity trading is one of the biggest financial market in the globe means that there are very many traders trading the commodities trading market at any time of the day or night during the commodities trading market week. The fact that there are many traders investing in this market make the commodities trading market a very liquid market meaning trader can open and close trade in a matter of seconds.
Low Transaction Cost - Because in commodity trading there are many traders trading at any one given time means that the trade costs are lower because of this large volume of trade transactions taking place in commodities trading market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they do not pay any cost.
This learn commodity trading tutorial presents the various commodity trading education courses that technical traders or traders who want to learn technical analysis can learn from. After traders have learnt the basics of commodity trading it's then time to learn more about technical analysis topics that they can use to trade with.
The commodity technical analysis lessons can guide beginners on how to study the various technical analysis concepts.
Basics of Commodity Trading Technical Analysis
Candlestick Charts
For technical traders the basic technical analysis tool that they use is the commodities trading chart. There are 3 types of commodity charts: line charts, bar charts & candle charts. The type of commodity chart most commonly used by traders is the candlestick chart. This is because the candlestick chart has a visually appealing format that clearly represents the movement of commodity prices, by displaying different colors for different movements; that blue color when prices close higher than they opened or red color that represents when prices close lower than they open. In addition these candles show the distance between the open and close commodity price and this forms the body of the candlestick. This body of the candlestick is looks similar to the wax part of a real candle. The highest point of the commodity price will be drawn with what is known as a shadow, the shadow is a thin poking line that is drawn above the candlestick and it looks similar to the wick of a real candle. There is also another shadow drawn below the candlesticks and this one represents the lowest point of the commodity price.
The information drawn by the candlesticks is known as OHCL –which represents Opening commodity price, High, Low and Closing commodity price.
Japanese candles were developed in Japan by a traditional rice trader that used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo commodity market that was in the 18th Century & he made a fortune trading the Tokyo commodity market using these candlesticks: He is said to have made over 100 consecutive winning trades.
In addition to showing the graphical representations of commodity price traders also use candlestick patterns to gauge and determine the strength of the commodity price movement. Commodity traders also study these candlestick patterns so as to learn how to interpret and trade signals from the various candlestick patterns. Commodity traders wanting to about the various candlesticks patterns can learn from our commodity trading section under the technical analysis topics, the various candlestick patterns used to trade Commodity Trading are:
1.Long & short Candles
2.Spinning Tops & Doji Candles
3.Hammer Candlestick Pattern & Hanging Man Candlestick Pattern
4.Inverted Hammer Candle Pattern and Shooting Star Candle Pattern
5.Piercing Line Commodity Trading Candlestick Pattern and Dark Cloud Cover Candlestick Pattern
6.Morning Star Candlesticks, Evening Star Candles and Engulfing Candles Patterns
Support & Resistance Levels
Some traders also refer to these levels as support and resistance lines. Concepts of support and resistance levels refers to commodity price zones where it's difficult for the commodity price break through and move beyond these levels.
At these levels traders are likely to perceive the commodity price of the commodity trading instrument as being cheap or being expensive.
Support
Support prevents the commodity price of an asset from getting pushed downward. Support levels are therefore regarded as the floor because these commodity price levels prevent the commodities trading market from moving commodity prices downwards past a certain point.
Resistance
Resistance prevents the commodity price of an asset from getting pushed upward. Resistance levels are therefore regarded as the ceiling because these commodity price levels prevent the commodities trading market from moving commodity prices upwards.
Therefore, these levels may be used by trader to determine where to open trades at the points where there is a high risk: reward ratio. For example a trader may open a buy commodity trade at a support level and place a stop loss a few pips below that level. The trader buys at this point because they perceive the commodity price to be cheap. A trader may open a sell commodity trade at a resistance level and place a stop loss a few pips above the resistance level. The trader sells at this point because they perceive that at that point the commodity price is very expensive and therefore there will be less people willing to buy commodity because the commodity price is very expensive and therefore the commodity price is likely to start moving down soon rather than continue to move upwards.
Commodities Trend Lines
Commodity Trading Trend lines are used to determine the general direction of the market.
Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a trend, a commodity trend is a sustained movement in one direction either upward or downwards.
A commodity trend line depicts these points of support & resistance for the commodity price.
Commodity Trading Trend line is an aspect of technical analysis that uses line studies to try and predict where commodity price will move next.
A commodity trend line is a straight diagonal line that connects two or more price points & then extends into the future to act as a line of support or resistance.
Commodity Trading Trendlines are based upon the idea that markets move in trends. Commodity Trading Trend-lines are used to show 3 things.
- The general direction of the commodity price movement up or down.
- The strength of the current commodity price movement and
- Where future support & resistance of the current commodity price movement are likely to be located.
If a commodity trend-line forms in a certain direction then commodity price usually move in that direction for a period of time until a time when the trend line breaks-out.
Upwards commodity trend line - If commodity price is moving up then a line is formed that is also moving up. This line is called an upward commodity trend line.
Downwards commodity trend line - If commodity price is moving down then a line is formed that also moves down. This line is called a downward commodity trend line.
Moving Averages Commodities Trading Technical Indicator
Moving averages are also used in commodity trading to determine the general direction of the market. Moving average is a commodity trend following technical indicators that is used to show the direction of the market.
The most common trading method of determine the direction of the trend is by using two moving averages to form the moving average crossover commodity trading system. Moving average cross-over commodities trading system is covered in our commodity trading strategies section. The moving average crossover system is made up of two moving averages one with a lower period and the other with a higher period, for example a trader may use the 5 period moving average and the 7 period moving average, when price is moving up the two moving averages will also be moving up and when prices are moving down the two moving averages will also be moving down. Commodity traders can also identify when a commodity trend changes its direction because the two moving averages will cross over each other once there is a change in the direction of the commodity price movement. This crossover signal is used by traders to determine when to open a new trade after the crossover signal has been generated and the two moving average start to move in the same direction. This crossover signal is also used to determine when to close a trade and take profit after there is a crossover in the opposite direction.
Bollinger Band Indicator
Bollinger bands is a very popular commodity indicator, it is also a commodity trend following indicator & it's used to show the general commodity trend of the commodities market. Bollinger band is made up of 3 lines, these are:
·Middle band - this is a moving average of 20 commodity price periods
·Upper Band -shows upper limit of commodity price
·Lower Band - shows lower limit of commodity price
Middle band will show the general direction of the trend whether up or down.
The upper band is where a trader will open a sell commodity trade if the commodities trading market commodity trend is down or close their buy commodity trade and take profit at this level if the commodities trading market is trending upwards.
The lower band is where a trader will open a buy commodity trade if the commodities trading market commodity trend is up or close their sell commodity trade and take profit at this level if the commodities trading market is trending downwards.
Commodity Trading Fibo Retracement Areas
Fibonacci retracement levels are popularly used to determine the levels where commodity price retracements are likely to go up to. Commodity traders use these retracement levels to determine where to open trades after a commodity price retracement.
Fibo retracement levels are covered in the learn commodity lessons section of this website under the technical analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are commonly used to open trades and how to draw these retracement levels using Fibonacci retracement indicator.
All these technical analysis techniques are also covered on the commodity trade strategies section of this learn commodity trading tutorial website & trader can learn more about these concepts and get example of these concepts are used in trading from this commodity trading strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on commodity charts along with explanation of they are used to generate commodity signals.
