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Successful Commodity Trading Strategies to Follow in 2022

Personal Finance

Commodity trading is the buying and selling of real-world goods like gold, silver, steel, oil, etc., in digital and physical forms. The main goal of traders and investors in commodity markets is to make money from price changes and protect their spot positions.

In recent years, commodities traded on an exchange have become a popular way to invest, along with stocks, bonds, mutual funds, exchange-traded funds, etc.

But just like with any other investment, investing in commodities requires knowing the right commodity trading strategies and tricks.

In addition, the commodities market is constantly changing, so there are just as many chances to make money as there are to lose money.

Let’s look at seven successful commodity trading strategies that traders and investors can use to make money in this market segment:

1. Find Your Commodity Market Niche

  • Most well-known commodity traders only deal in one thing, like gold, cotton, wheat, or oil. Every one of these markets is special. You have to become an expert in one market and find a niche.
  • You can check out a niche product and learn about its features. This is the first step in making a good plan for trading commodities.
  • To find your market, you need to be more confident about the market you trade in.

For example, if you know more about how silver prices move on the market, you might do better as a silver trader. But if your commodity trading strategy works best on the oil market, you should be an oil trader.

2. Study the Commodity Market Thoroughly

  • Studying the market carefully is a good rule of thumb for any investment.
  • Before putting money into the market, traders and investors must do research. This is even more important for trading commodities because, like stock markets, commodity markets are very volatile.
  • Experts say you should buy when the markets slowly move from a normal trend to a bullish one.
  • On the other hand, the best time to sell an item is when the market is going down. This is done by keeping short positions at resistance and using stop-loss orders.
  • When traders and investors learn this skill, it makes trading commodities much more manageable and makes it more likely that they will make money.

3. Limit Yourself to One Commodity Market

  • You need to narrow your focus if you want your product to give you consistent, long-term returns.
  • To be a successful commodity trader, you must focus on one item or a specific part, such as an agricultural product.
  • This is also a powerful but time-consuming way to trade commodities.
  • Do in-depth research on a specific item if you want to trade.
  • You should be able to find out how your product has sold in the past.
  • If you trade in two very different commodities, like oil and silver, you could lose track of both. Still, you can sell other things in the same area if you want to sell more than one thing.

For example, soy and wheat are both things that can be bought and sold. This means you can apply what you know about one field to another.

4. Conduct a Fundamental Analysis of the Commodity Market

  • Before putting money into trading commodities, investors should do a lot of research on what they want to invest in.
  • To do this, you need to know how the demand and supply of different goods work.
  • If there isn’t much demand for a product and the supply increases, the interest rate may go down.
  • On the other hand, the price of a good will go up if there isn’t enough of it to go around, but there is still a lot of demand for it.
  • Beginners who don’t consider this factor and use fundamental analysis less often make mistakes.
  • This is an essential thing to know about trading commodities.

5. Carry Out a Comprehensive Financial Analysis of the Commodity Market

  • Before you start trading and investing in the commodity market, one of the most important steps is to do a thorough financial analysis of the commodities, their prices, and their performance over the past few years.
  • This will help you find the commodities that have consistently done well.
  • Traders and investors can figure this out by reading newsletters, journals, financial magazines, blogs, and articles about the best ways to trade on the commodity market.

6. Be Aware that the Commodity Markets are Subject to Seasonal Variation

  • Traders and investors should never forget how strong seasonality is in commodity markets.
  • Seasonality is essential in determining how much things will cost in the commodity market.
  • In addition, it’s important to remember that commodities are real-world things whose availability and use can change with the seasons. For example, the amount of grain grown in a country depends on the monsoon and the weather in general.
  • In the same way, things like heavy rain can affect the production of crops, which can then change the price of those crops. So, traders and investors need to keep up with the seasonality of commodity markets by using trading apps or talking to a professional advisor.

7. The Role of Breakout Trading in Commodity Markets

  • In commodity trading, breakout trading is another essential thing to think about.
  • It is a classic commodity trading strategy.
  • A breakout happens when the price of an item moves below or above its range.
  • In this case, the breakout trader will choose a long position if the price of the item goes above the higher value of the range and a short position if the price of the item goes below the lower value of the range.
  • This commodity trading strategy is essential because commodity prices move toward the breakout, where the next trend emerges. So, this commodity trading strategy is necessary for trading commodities.


Understanding the commodity market is one of the essential parts of being a successful trader. However, it is critical to remember that commodity trading strategies require time to function in the desired direction.

Therefore, it is often necessary to seek the advice of a professional financial advisor who can help you with commodity trading tactics, commodity trading strategies, and general commodity market trading. Visit the Piramal website for more such articles.