Published : 26 May 2023
Demand and supply for commodities frequently follow seasonal and temporal patterns, which can be caused by a variety of climatic factors. You can avoid the risks associated with short-term sub-cycles by having an understanding of long-term cycles.
A person who keeps up with economic news in its entirety frequently has the ability to foresee black swan events, or at the very least, the events that will happen after they do.
Unless there is a sudden event, some commodities only exhibit minor seasonal volatility. Lot sizes and margin requirements can both be impacted by volatility. It is best to start trading in commodities with lower volatility.
Commodity markets typically have much higher leverage than stock markets (lower margin requirements). For the same level of investment, high leverage also means higher potential losses.
Due to high leverage and high volatility in some commodities, it is recommended to use stop loss to reduce losses.