Do you know how to invest in commodities for long term?

Portfolio for investments can be of many types. Few of them can include shares, bonds, FD, commodities, real estate, etc. Here we will talk about commodity as an investment portfolio since many use this to diversified (alternate) their portfolio. Hence we should know various types of Commodity Derivatives that are allowed to trade in the Indian market.

commodity tips

Time period (3 months, a year or 10 years) for which one wishes to stay invested and the objective (marriage, education, home purchase, foreign trip etc) should be clear. Every commodity has its range and characteristics which are different from each other.

Commodities can be classified as
1. Bullion
2.Base Metals
3. Energy
And many more…

1. Bullion

Bullion usually consists of precious metals such as gold and silver. Many investors (especially old aged) consider gold as one of the best option (youngsters go in for EFT’s). Be it in terms of ornaments or bars /coins. It acts as long term hedge for one’s portfolio against uncertain volatile condition arising out of government policies or change in personal financial conditions.

Uncertainties can be of any type like change in government rules and regulations, change of power at top, high inflation, free fall of stock market, monsoon conditions (floods, drought or normal), uneasy or war like situation with neighboring countries, global economic slowdown, etc. which has its effect on bullion prices (positive or negative). In turbulent times long term returns from real estate, stocks, equities, bonds etc usually underperform. Usually, these follow certain cycles. Bullion is virtually equal to ready cash, anytime and everywhere.

Hence bullion should be a part of everyone’s investment portfolio. It gives security and protection in bad times. Though appreciation and return on investment vary, still depending upon the conditions, it is advisable to have bullion investment allocation in your portfolio in the range of 15 to 20 %. Investment in bullion can be in a systematic way, purchasing small quantities whenever one has surplus funds. And build upon the portfolio gradually.

2. Base metals

Aluminum, copper, lead, nickel, tin and zinc are the base metals which can be traded on an exchange. These are metals that oxidize, corrode or tarnish relatively easily when exposed to moisture or air. They have their use mostly in industrial units and are commercial traded and usually in huge quantity. These are mostly raw materials for industries. If one has knowledge regarding the surplus and shortages of availability of these commodities one can use for long term fundamentals. As with any other asset, base metal prices can also rise and fall on speculation by investors and traders.

3. Energy

Crude oil and natural gas are traded on Commodity Exchange. There are many companies which provide commodity tips. Companies dealing in energy use this as the hedge to tide over the fluctuating prices. Speculators can use derivatives to profit from the changes in the underlying price and can amplify those profits through the use of leverage.

They have their use mostly in industrial units and are commercial traded and usually in huge quantity. You can “play” in energy if you have deep pocket and the heck to “smell” the favorable/unfavorable conditions from OPEC meetings, Gulf war, Syria crisis, fluctuations in USD, etc. for future demand and requirements. Oil, coal, electricity are considered as most useful energy sources for driving industrial growth.

Best five Commodity Trading Tips For Beginners

Everyone knows that, the commodity market is increasing enormously that’s why traders are starting to enter in the trading market. It is really true that the commodity market has determined economies of different first class countries more than the past few years. Commodity traders require a right strategy of how the best part of traders believe and respond to certain market circumstances. It is important to know about the commodity trading tips for development of the worldwide financial market. It will helpful for you to make more profits. If you make a decision to invest in the currency trading, commodity or stock trading then it is necessary to know that the production can be unsafe. Thus, there are following some tips of commodity trading that is useful for beginners.

commodity tips

  1. Be familiar With The Commodity Trading Technical Language

It is important for beginners to know the language that used in commodity trading. The language level is one of the major that is also difficult areas for traders. When you familiar with language, it provides you lots of knowledge about commodity, commodity tips, increasing number of market concepts and change nature of economic transactions. There are many commodity traders think about this face for their trading achievement.

  1. Select Area Of Specialization

There are many types of commodity trading so you are able to select from your preferred fields according to the commodity trading markets. You need to improve yourself according to trading choices because understanding the inner working of market depends on your ability to focus in a particular area of expertise.

  1. Know About How Other Traders Earn

You should be familiar with how your competitors earn from the equivalent market or other markets. It is necessary to find out what others traders earn, what commodities tips that they follow and some other things that can be cost-effective to you. While it pays to use your knowledge and the familiarity of other traders, it is very important to look for the support of commodity discount brokers.

  1. Choose the popular commodity exchanges

It is significant for a learner in commodity trading to understand some facts about the well-liked national level exchanges that is available for commodity trading in the India. This can decide which exchanges are suitable for you according to their needs.

  1. Set The Initial Investment Amount

It is essential to decide the right investment strategy for trading. When start initial business, you don’t have to put all your assets. It is suggested to recognize the market before providing your whole promise. So, you have to to decide invest amount and put your convenient funds. Therefore, time and money is essential stage for the commodity trading. If you do perfect then you get more back.

However, there are several methods and techniques to boost your possibility of success in trading. They are generally referred as plans that are useful to accomplish specific goals to enhance the possibility of taking income and limiting loss. Therefore, for people who want to expand their selection away from shares, bonds and actual estate than commodities is the best choice.