Free Commodity Tips for today - 21/02/24
The below Free Commodity tips are updated daily at 9.30 am based on the previous days data of the mcx commodities and today's open price. Based on the quant's accurate & advanced pivot point equation and today's mcx open price we have plotted the buy above & sell below price levels with 3 targets & stop loss. Make the best use of the below levels for trading purposes.
Intraday MCX Commodity Free Tips for Today
Last Updated: 21/02/24
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The above online live market tips with buy sell levels are updated every day.
Commodity Trading Tips
Commodity Trading refers to the buying and selling of commodities like metals, spices, food grains, livestock etc. This trade takes place on a exchange such as the Multi Commodity Exchange or MCX. The functioning of the MCX market is similar to the functioning of a stock exchange or any other market place.
However, prices of commodities fluctuate more easily and quickly with changes to demand and supply as compared to any other trade forms. This high volatility influences the nature of trading on a commodity market to a great extent.
On one hand, high volatility results in quick movements of prices and higher risk on investment. On the other hand, the same high volatility of prices allows traders to make quick decisions to move in or out of the market that can result in quick gains albeit at a higher risk.
Therefore, it is very important for traders to gain basic knowledge of commodity trading before trying their hand in the market.
Understanding cyclic commodities
A commodity trader must have thorough knowledge of the nature of commodity they’re trading in. This will help in understanding the correct direction of the commodity’s trend. Cyclic commodities such as agricultural goods depend on factors like monsoon and economic conditions. Their price rises with plummeting supply.
Understanding non-cyclic commodities
Contrary to cyclic commodities, non-cyclic commodities such as crude oil are dependent on the industry they’re consumed in. Their price rises with rising demand. When in doubt, correlate the price of the commodity with the domestic currency. Once the trader identifies a trend and the correlation of a commodity with the domestic currency – a trading decision may be taken.
Commodity Trading is not Stock Trading
Never assume that a strategy that worked well in the stock market will give you good results in commodity trading as well. Factors that influence the price of commodities are different from those that influence the ups and downs of the stock market. Even though both the markets are speculative in nature – trading patterns in the mcx market need to be approached differently.
Crucial aspects like profit management and risk management are vastly different in both these markets and many stock market strategies may have to be unlearnt to succeed at commodity trading.
This is a best trading tip which even the most experienced commodity traders like to keep in mind. Risks may go against anyone – whether it is a beginner or a veteran. It is advisable to diversify your capital into different commodities so that even if one of the markets does not go as planned, the trader may still protect some part or all of his capital.
As per this method, a trader may balance his proportion of rewards with the risks involved by not keeping all his eggs in one basket. For the long run, a balanced approach like this may keep a trader safe from significant losses.
Expert traders use specific technical indicators for commodity trading. One of the most significant technical indicators is the Average Trading Price or ATP. It serves as a “support level” for strong commodities and as a “resistance level” for weak commodities. Every trader should be keenly observant of the ATP of the commodity they’re dealing in or plan to deal in.
Strong commodities that rise above the ATP support level must be bought. Similarly weak commodities that fall below the ATP resistance level must be sold. This is also known as the ATP Crossover. There are many other important technical indicators that can guide traders towards good trading decisions and must constantly be observed.
Timing and logistics
A trader must never enter the commodity trading market unprepared. Past trends and timeframes for trading must be closely examined. This helps traders to understand the best time to invest in a particular commodity.
Understanding of timing and logistics involves reading the charts specific to the commodity, considering the cycle if any, noting the average trading price of the commodity and following the news related to the specific commodity a trader plans to deal in.
Position yourself as per the bullish and bearish market
A trader must always observe the pulse of the market and judge whether it is normal, bullish or bearish and take trading decisions accordingly.
For example, for a particular commodity when the market changes from normal to bullish – it is a good idea to buy. Similarly a bearish market is a good time to sell a commodity.
Variations in the value of the local currency is bound to influence the commodities market. Also keep in mind that the value of the dollar index also has an impact on commodity prices. Some of the most important examples of the commodities that react to changes in the dollar index are crude oil and gold.
Influence of Inflation
It is common knowledge that inflation influences the prices of commodities in an economy. Up to a certain level, inflation is the sign of a healthy economy and leads to an upsurge in the demand for commodities thus resulting in rising prices. Usually, an inflation influenced upward trend is seen in prices of commodities related to agriculture and metals.
Use volatility to your benefit
Each commodity has a different nature and degree of volatility. It is always beneficial to be well versed with the volatility trends of the commodity you are investing in. In simple words, the trader should know the range of price within which a commodity price generally moves.
Determine lot sizes based on the volatility and not necessarily on the basis of margins required. This can help you make a profitable trade even in case of a volatile market.
Commodity Trading is a skill which needs practice to be perfected.
By keeping the above commodity trading tips in mind, beginners & pro traders may find mcx market trading to be a rewarding market to trade & invest in.