Whether you are new to commodity trading business, or have been there for many years, there are certain disciplines that one needs to follow to become a profitable trader. There’s a very steep learning curve that decides whether you are a good trader or not. And no matter what you trade, it’s how you trade that matters. So, if you are looking for ways to become successful at non-ferrous trading.
Here are 10 golden rules you must follow.
- Follow a Trading Plan: Before you enter into the real trading, make sure you have a written plan that specifies your entry, exit, profit taking level and a money management strategy.
- Become an Expert in Futures and Options: As compared to equities, bonds and currencies, metal trading is the most volatile asset class. So, it’s important to learn the ins and outs of futures.
- Treat Trading Like a Business: Understand that trading is not a hobby or a job, but a full-time business that requires time and effort.
- Make Full Use of Technology: With advancement in technology, getting used to fully automatic metal supply via Internet of Things (IoT) will take your ferrous trading business a long way.
- Understand Contract Specifications: Each commodity has different characteristics, so understand all the contract specifications beforehand for the markets that you are considering.
- Understand the Fundamentals of Supply and Demand: Metals are economic trading vehicles and the prices fluctuate frequently. Therefore, it is important to learn the supply and demand characteristics of these raw materials in the market.
- Protect your Trading Capital: Trading is all about taking risks, but taking excessive risks can decimate your trading capital, thus putting you out of the business. So, take wise decisions.
- Focus on Learning: Understanding the market is a lifelong process, so you must focus on learning more each day.
- Consider Technical Factors: It is important that you study the behaviour of prices by understanding the historical trends to predict the future trends. And, consider both short-term and long-term price data.
- Keep Trading in Perspective: You must always focus on the bigger picture, and accept winning and losing as a part of business.