One question people have when interested in learning to trade commodities is how long it will take. It can take a couple of months for a hard-working person to learn the basics of trading commodities, but mastering the raw materials inside out can take a lifetime. If you are getting started in the world of commodities trading, you will need discipline because there are many things you have to learn. One way you can monitor your progress is to set a timetable.
The One-Year Mark:
The experts at Swisslinx say your first year, in trade commodities, is the most important. Many people getting started usually want to get a high return in a short period of time. Looking things from this point of view will end being trouble for you. Keep in mind that there is 80-90 percent of traders who are losing money trading in commodities.
You should let the first year, as trade commodities, be about learning how to trade. There are very important lessons that you need to learn when entering the market, monitoring risks, and executing trades. If you manage to break-even in your first year, then consider it a victory. Traders who manage to break even in their first year of commodities trading are the ones who are able to make a good profit for years to follow.
Consistent Profitable Commodity Traders:
It takes about three years of trading for someone to be a making profit from trading consistently. Before you can reach such level of competency, you will have to gain a good understanding of the fundamentals and technical research. You will need to invest time, effort, and a high degree of discipline if you are interested in reaching this level.
Many of the beginner traders out there will go to learn under people who are already successful trading, learning as an apprentice. If there is someone willing to guide you through the process, then you can expect the learning curve to be faster. There is a wide range of courses and trading schools online, but you need to be careful. Invest your time and effort in finding as much information as possible so you will be able to compare the alternatives and make the right choice.
Starting trade commodities:
When getting started, make sure you trade slowly and read. You should read many books on commodity trading because you will get a chance of learning from people who have succeeded in this field. You need to pay more attention to the news. Keep up with the latest updates on political and economic events, the commodities market, and the global market.
There will be setbacks on your first year while you get valuable lessons. If a person does trading for three years but not seeing any return, then they should go back to the drawing board and work on their techniques, discipline, and trading plans. In the world of commodity trading, there is no perfect path to success. Even traders making a lot of profit usually have periods of losses, but they have more profits than losses over a period of time.
There is one thing you need to know when you enter the world of commodity trading. The most successful traders out there start by learning the mechanical tools needed to trade, but they go ahead and develop their own methods to decide whether to buy or sell. Success in trading will be determined by your ability to develop a strategy and plan that will increase profits and reduce losses. Trading is all about stopping losses and running profits.
Years of Experience but Learning Daily:
I have traded for a couple of decades, but I am still learning something new every single day. What you gain from studying and reading is the basics of trading. Learning through experience is even more powerful, and this is what every successful trader will tell you.
One reason I love the commodity market is that every day something different comes up. There is a new challenge daily. The commodities are very sensitive to the fundamentals of demand and supply. This can seem simple, but it is not. There are many different such as acts of nature, weather, political factors, and macroeconomics that can have an effect on the prices.
If you want to succeed, you need to wear the hat of an economist, a political analyst, and a risk manager at the same time. The first step you need to take in order to succeed is realizing and having a good understanding of your limitations then improving and expanding your skill set.
I like advising people to read news around the world. You can easily find data and information from government agencies and trade organizations about demand and supply. There is a wide range of options in commodities, with each having its own characteristics. This is why it is a good idea to choose one commodity then specialize in it. Once you are done with one, you can look for the next one. What I like doing is separating them to categories or sectors.
The ones I monitor are:
- Base metals
- Precious metals
- Ferrous Metals
- Animal proteins
- Soft commodities
Each of the above sectors has a list of commodities falling under them. Soft commodities include sugar, coffee, orange juice, cocoa, lumber, and cotton.
If you decide to be a trader, know it is a lifetime job. You should also keep in mind that there is someone who will know more than what you know because they can access more info than you. Perseverance and disciplines are the two most important things for commodity traders.
Discipline is important for risk management – you should avoid risking more than you are willing to take, and know how much loss or profit you are ready before you enter a trade. Perseverance is when you strive to learn more, never thinking you know everything, and when an idea comes, being brave enough to try it out.