The commodity industry is the markets where oil and gold are commonly exchanged. These markets have a high volatility and you will be surprised to know that, many traders avoid trading in these commodity industries. When most traders of Forex are looking for volatility and this commodity industry was thought to be the best for them, many traders like to trade in the common markets where currency pairs are traded. This article will try to explore the reason why traders avoid commodity markets where they have the chance to make money quickly? What is the reason behind their avoidance that makes this attractive market less traded than the other markets? This article will tell you the reasons and you will know why some magnificent markets are better not to trade.
Before we dig deep, you have to understand there are many traders in the United Kingdom trading commodity market. Though the article title suggests commodity trading is avoided by most trades but in reality, it should be avoided by most trades. In fact, the leverage is extremely low and the market spread is very high. So if you trade commodity you are exposing a big portion of your investment at risk. The new trader should always look for potential opportunity to limit the risk factors in Forex trading. Due to this very reason the expert always suggest the novice traders trade the Forex major pairs only.
If you still want to become a commodity trader, be sure that you have very good knowledge of the three major sectors of the market. The technical data will help you to find the best trades in your trading platform. Fundamental analysis will give you a clear clue about the strength o the market trend. Based on these two factors you will have a general idea where the price of a certain asset might head. Once you have a confirmation signal on a certain trade setup, trade the market with very low risk and be prepared for the worst-case scenario.
Commodity markets have high volatility, impossible to predict the trends
The reason many people like to trade in this commodity industry is also the reason most people like to avoid trading. The prices of gold and oil are always changing in the economic market. You will not find a day where the prices have been stable. They are always in a move and this makes this market less desirable for trading to the traders. Even the successful professional traders who give lessons to the other traders on how to make a profit also avoid oil and gold industry. They know this market is volatile and anytime they can lose their money. Their risks to reward ratio may not work in this currency trading. If you are thinking to place the trade in a commodity market, accept that you have lost that money. Very few traders are successful in commodity trading. They also did not trade for a long period of time as this market can change anytime. Even with your most successful strategy, you will not be possible to predict the trends. This currency industry is always risky and this commodity gives it a new level of risks.
Oil and gold are not good for trading in the long-term
You may get success one time in this industry but for a long time, they are not a good choice. Many traders have tried their luck and it was good. They knew it was not a good choice and they changed the markets after making some profit. If you think you can have a heart attack if you do not trade in this commodity industry, you can trade this oil and gold market. You will get the experience what it feels like trading with high volatility. If you think of your career in the long term, they are better to avoid for trading.