Commodity markets tremendously affect the economy and the life of individuals. Despite the fact that request supply is the prime factor behind the value unpredictability, cash moves, geopolitical issues, financial development and government arrangements are different components affecting commodity costs. Commonly, the commodity market in India is liable to rises and crashes, so it is more defenceless in theory than the stock markets.
Here are a few ways an investor can avoid making mistakes while investing in the commodity market in India:
It is basic to express the extent of risk and reward. One must know ahead of time how much risk he can bear the cost of on his accessible capital while exchanging futures. Additionally, never put the entire money in a solitary commodity. The best choice is to designate the capital in various resources, so any off-base trade bringing about a misfortune can without much of a stretch be ended. Moreover, while confronting any questionable circumstance, the perfect procedure will be to stay persistent until a clear picture is revealed. Executing a terrible choice is more awful than not exchanging by any means. Compared to equities, a commodities futures contract provides greater flexibility to the participants, helps the hedgers to protect their physical position and attract more speculators. Consequently, foreordaining the risk reward is essential to beat the enormous number of theoretical traders.
Keeping up stop losses
Exchanging commodity incorporates a specific level of risk as it is impacted by different components, it is important to ensure self-protection. Utilizing a sell or purchase contains loss at an agreeable level or through utilizing supporting systems are important. The fundamental motivation behind why traders quit any pretence of exchanging is because of gigantic loss they endure as they regularly would not put a stop loss in their trade strategies. It has been seen that keeping up proper stop loss aides limiting loss and amplify benefits while investing in shares .
Each effective trader has his own framework that encourages them improve benefits and keep loss at the minimum.
These systems can be picked up by steady market consideration over some undefined time frame. Maintaining a strategic distance from basic errors will help improve gains. Planning ahead is also important. Any abrupt price hike may not be an appropriate move for your trade.
Play it safe
It has been seen that traders with little experience race to book profits on their winning methodologies at the principal occurrence, yet clutch the losing systems to gather loss. It is important not to close the winning trades too soon. Continuously attempt to trail the market cost by persistently changing stop loss and snatch most extreme benefits in such trades. Dread and anxiety will prompt out of line choices; so, stay away from it.
Aside from the above strategies, it is essential to control one’s feelings.
Fear, anxiety and greed are the common traits of human beings, overcoming such emotions are a must for every winning trade. Confidence based on solid research helps overcome emotional trading decisions. However, real success in trading comes with discipline and experience.