www.CandlestickForums.com Commodity Volatility Commodity volatility can be significantly more than volatility in interest rates, and foreign currency exchange rates. Measured commodity volatility as reported in standard deviations in price variability historically does not settle below 15 percent and often rises to more than fifty percent. As a rule supply and demand are the main factors in commodity volatility. Commodity suppliers and commodities buyers often stockpile in order to maintain price stability but when shortages occur either due to production failure or rising demand commodity prices can go up dramatically. It is commodity volatility that makes trading commodities profitable for traders. Using both fundamental and technical analysis, traders can profit by accurately predicting commodity price changes. Commodity and futures training can help someone beginning commodity futures trading to understand the use of technical analysis tools such as Candlestick chart formations in trading commodities.

1. Commodity Volatility
By
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2. Commodity volatility can be significantly
more than volatility in interest rates, and
foreign currency exchange rates.
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3. Measured commodity volatility as
reported in standard deviations in price
variability historically does not settle
below 15 percent and often rises to
more than fifty percent.
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4. As a rule supply and demand are the
main factors in commodity volatility.
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5. Commodity suppliers and commodities
buyers often stockpile in order to
maintain price stability but when
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6. shortages occur either due to
production failure or rising demand
commodity prices can go up
dramatically.
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7. It is commodity volatility that makes
trading commodities profitable for
traders.
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8. Using both fundamental and technical
analysis, traders can profit by accurately
predicting commodity price changes.
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9. Commodity and futures training can
help someone beginning commodity
futures trading to understand the use of
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10. technical analysis tools such as
Candlestick chart formations in trading
commodities.
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11. It is the volatility of commodities
markets that leads producers and buyers
to hedging to protect their investment
risk.
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12. By hedging, an agricultural cooperative,
for example, will sell corn futures in
order to guarantee a stable price for part
of their production.
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13. Oil refiners will buy oil futures to
guarantee a set price a year or more
hence.
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14. Hedging commodities is used
throughout the commodities markets
and supplies the majority of trading
volume.
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15. Traders who speculate on commodity
volatility can thank the major players in
the commodities markets for the volume
and liquidity that routinely make
profitable commodity trading possible.
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16. The volatility of some commodities
becomes a social issue when the
prosperity of a third world country
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17. depends upon high prices for
commodities such as
coffee, bananas, and cocoa.
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18. Unfortunately commodity market
history shows us that commodity
volatility has always been with us
and, probably, always will.
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19. Only with an effective hedging strategy
can producers protect themselves from
devastating market fluctuations.
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20. However, such strategies often require
the kind of political and economic
stability that emerging nations sadly
lack.
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21. For commodities traders it is the
volatility of the commodities markets
that makes trading commodities
financially attractive.
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22. Going back centuries rice traders in the
Japan of the Samurai developed a set of
tools to take advantage
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23. of the ways in which the commodity
prices, driven by commodity volatility,
repeat themselves.
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24. The development of Candlestick chart
analysis allowed traders to let the
market tell them what the market would
do.
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25. This is still true today as traders use
Candlestick chart patterns to predict
price movement and determine where
to most profitably trade.
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26. Candlestick pattern formations are not
only useful in making sense of
commodity volatility futures trading but
also in helping to make decisions in
options trading of commodities futures.
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27. The combination of volatility with high
volume and high liquidity allows traders
to enter and exit trading positions at
relatively low cost.
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28. A fluid market allows for more accurate
technical analysis.
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29. However, the trader needs to pay
attention to the market as commodity
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30. volatility can change a profitable day
into a loss when the trader does not stay
tuned to his or her trading signals.
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