Few tips online commodity trading tips

by Alankit Group Financial Advisor

Trading commodities online is a two-edged sword. Whether you bag profit or lose your money depends on how you approach it. It has been a boon for many and a bane to others. Online commodity trading is a simple process yet one should exercise extreme caution before entering this stream. However, there are some hidden dangers that many novice traders overlook before they open an account to trade commodities online.

We will give you few tips that will act as a warning sign or a precursor before you decide to try a hand at it.

· Choose your commodity broker very carefully- Almost all commodity brokers offer online share trading, but some specialize in it. Select someone who has a good reputation in the market and has an excellent trading platform for charts, quotes, strategy analysis and order entry.

· Novice traders make mistakes which costs them dearly. Hire an experienced broker and discuss trading strategies with him/her. He/she will guide you at every juncture making sure that you do not lose money. You will more than make up for the commission savings of online trading. Many traders take for granted how much they actually learn from their brokers and how much time and effort they have saved.

· For begineers, a good mentor can prove invaluable. Just being able to ask a trading question and receive a good answer in a few minutes can save you many hours or days of researching on your own.

· Once you are done with the selection of broker and your trading account has been approved, you have to fund the account. Start with the capital that suits your comfort level and risk taking ability.

· Follow the old adage of ‘look before you leap’. Have a well researched trading plan in place before you risk trading real money. Use your commodity broker’s simulated trading platform before you start with live trading. This will ensure that you become familiar with placing orders and it would prevent you from commiting errors with real money.

· Over-trading has been a problem with commodity traders for decades, but the advent of online futures trading has magnified the problem. So never over-trade. Remain in your limits else you will be the sufferer.

At the end we would like to say that, those who are disciplined and have a full-proof trading plan, trading commodities through an online broker is the best way to go. One can expect much quicker execution of one’s trades through an online broker as well as lower commissions coupled with a sense of satisfaction and independence.However it can become a menace and turn into a nightmare if one lacks discipline or have a gambling mentality.