Commodity Market Liquidity

Commodity Market Liquidity

By
www.CandlestickForums.com

Commodity market liquidity often
correlates very well with commodity
market trading profits.


There are three benefits to traders in
high commodity market liquidity.


The first is that it is easier to enter and
exit trades.


The second is that bid and ask prices are
commonly closer.


The third is that with high trading
volume and liquidity the statistics of
online trading software as well as the
predictive ability of time honored tools
such as Candlestick pattern formations
tend to be more precise.


Traders can find reports of the previous
day’s trading volume online as well as
updates during the trading day.


A useful measure of trading volume and
a useful predictor of trading volume is
open interest.


This measure is the number of open
contracts between buyers and sellers in
commodity futures trading.


To learn to use commodity market
liquidity to the maximum advantage in
profiting from commodity
trading, traders are wise to take
Commodity and Futures Training and to
develop their skills in Candlestick
analysis of commodity prices.


Commodities that can offer good
commodity market liquidity include
trading in corn futures, oil futures, and
gold futures.


Each of these is a commodity that trades
at high volume and high liquidity.


In the case of each commodity both
fundamental and technical analysis are
necessary to understand the scope of
trading and the day by day or minute by
minute changes in commodity price.


Candlestick charts of these commodities
will help predict price movement and
allow traders to buy or sell commodity
futures contracts with the reasonable
expectation of making a profit with
anticipated market moves.


The tight spreads between bid and ask
prices on commodity futures contracts
will allow the trader to profit by buying
and selling at smaller intervals in a
market trend than when the market is
less liquid and the spread is greater.


Understanding the fundamental analysis
of gold, oil, or corn futures will give the
trader an overall perspective of the
market.


However, it is technical analysis that
predicts the next price move.


The use of Candlestick chart patterns
will predict market moves within the
trading range dictated by commodity
fundamentals.


Even though corn, oil, and gold
commodity futures all offer high liquidity
they are driven by different factors.


Gold and other precious metals typically
do well when investors are worried
about inflation or when there is the
threat of economic or political
disruption.


Corn and other good stuffs are driven by
supply and demand.


When there is a draught in a major
producing area such as the American
Mid West the price of corn futures will
go up as traders expect there to be
shortages.


When the economy slides into a
recession the price of oil futures
typically falls as traders anticipate a
reduced industrial demand for
petroleum products.


It is when the fundamentals of these
commodities change that there is
typically increased commodity market
liquidity as more traders enter the
market in search of profits and
producers and their customers engage in
hedging to guarantee prices.


Hedging commodities is the province of
gold mining operations, farming
cooperatives, oil producers and their
customers.


Increased activity by these big market
players provides the trader with an
opportunity for profit in the resulting
increased commodity market liquidity.


Commodity Market Liquidity

Recomendados

Recomendados

Más contenido relacionado

Destacado

Destacado (19)

Similar a Commodity Market Liquidity

Similar a Commodity Market Liquidity (20)

Más de InvestingTips

Más de InvestingTips (20)

Último

Último (9)

Commodity Market Liquidity