There are many people, who think they can make a fortune if they trade with a commodity. We do not know how these people, got this idea but commodity trading is one of the risky task in Forex. If you look at the market, you will find that a lot of people are only trading the market with currency pairs. They know this trading is profitable but the risks involved with commodity trading is so high, many traders do not like to trade with the commodity. The commodity is the gold and oil and trading with them is very much risky. This article will tell you why you should not trade with the commodity because of its risks. Traders who are professional never trade in commodity because it is a never a good investment and you can also lose your money.
Impact of news
When you trading the commodity market you need to understand the high risk associated with commodity trading. If you are completely new to this trading industry then you won’t understand how easily you can lose your money in commodity trading. But if you seek help from the professional Aussie traders then every single one of them will tell you to start trading with the currency market. When the high impact news data has released the price of the commodity market reacts very violently. Being a new trader it will be almost impossible for you to deal with such market condition.
After knowing the risk factor if you still want to trade the commodity than you will have to learn more about the fundamental analysis. In Forex trading, you can easily make tons of money based on the technical data but when it comes to commodity trading you can’t take a single step without doing the fundamental analysis. For instance, if you want to trade the oil then you need to keep yourself always update with the latest OPEC decision. A single press conference or small event in the energy field will ruin your profit factor very easily.
The market is very volatile
The first reason you should never place your money on oil and gold is it is very risky. The prices of the old and old are changing from time to time. You will have the hard time to remember when the last time these prices were stable was and people could trade the market in Forex. If you look at the other markets, you will find that that the volatilities in commodity markets are very common. The oil prices a rot fixed and they can be sky-high at any time. You need to know how to save your money from the market volatility if you are trading with a commodity. Many people think they can make money with their oil and gold but they lost all of it. Market volatility in commodity trading is one of the risky things that makes the traders lose their money. Professionals also do not invest money in oil and gold.
Not much information is known
Not much information is known to the traders who trade with oil and fold in the market. There are lots of scams and you can lose your money anytime. Professional traders also do not trade with commodity because it is very risky and the chance of losing your money for not getting the information has given it another level. If you are interested in trading with oil and fold, you should know the risks in this commodity trading. It is not possible to make your profit and the market has no trends. Your analysis can hardly tell where the market is going and it can lose your money. Oil and gold may sound fancy to trade but it is no good if it does not add money to your account. Trading with currency pairs is better than commodity trading.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.