Styles Of Trading

There are many ways to profit from commodity trading. Even though most successful commodity traders develop their own style, some of the best trading methods and strategies are used by most traders.

Note: If you are new to commodity trading, we suggest you start out with a demo account, followed by a mini account. This way, you can experiment with various trading styles and methods.

Below is a sample of the most common trading styles in commodity trading:

Arbitrage trading:

Trading horizon: Minutes to a couple of days.
Typical movement before taking profit? 10-30 pips.
Charts used: 1, 5, 15 and 30 minute commodity charts.
Popular platforms for scalping? AC Markets

What characterize commodity arbitrage trading?

Developed into a common strategy among all big commodity brokerages. Basically, it all about finding divergences between currencies pairs and commodities (ex: brent oil against USD and EUR), or between various commodities (ex: gold spot vs silver spot).

Scalping in Commodity

Trading horizon: Intraday.
Typical movement before taking profit? 5-20 pips.
Charts used: 1, 5 and 15 minute commodity charts.
Popular commodity platforms for scalping? ForexYard

What characterize commodity scalping?

Involving quick execution and a fast moving market, commodity scalpers tend to do many small profits each day, while cutting the losses short. A typical set-up for commodity scalping may last for 1-15 minutes. Look out for divergences between commodity spot, futures and options.

Day Trading commodities

Trading horizon: Intraday.
Typical movement before taking profit? 10-100 pips.
Charts used: 1, 5, 15, 30 and 60 minute charts.
Popular commodity platforms for scalping? ForexYard, AvaFx and AC Markets.

What characterize commodity day trading?

Day trading is a general trading style for commodities. This trading style can be used together with any of the other methods.

Fundamental trading

Trading horizon: Days, weeks or months.
Typical movement before taking profit? 100-700 pips.
Charts used: 1, 7 and 30 day charts.
Popular commodity platforms for fundamental trading? ForexYard and AC Markets.

What characterize fundamental trading for commodities?

In the longer run, the fundamental factors are very important for commodity prices. Make sure to look at the latest inflation rates for major commodity buying and producing countries, supply and demand for the commodity you are trading, current exchange rates, the business cycle and future interest rate outlooks.

Technical Analysis trading

Trading horizon: Minutes to weeks.
Typical movement before taking profit? 10-100 pips.
Charts used: All from 1 minute to daily commodity charts.

What characterize technical analysis as a trading style?

All kind of equities can be traded using technical analysis and it has become the most popular method during the last 30 years. You are adviced to use several technicalk indicators to confirm a trend or trend change. Also try to use various lenght of the charts. Some of the most commonly used technical indicators for commodities is moving average, stochastics, RSI, fibonacci and elliott wave theory.

Swing Trading with commodities

Trading horizon: Hours to days.
Typical movement before taking profit? 80-250 pips.
Charts used: 60, 120 or 240 min charts up to daily.

What characterize commodity swing trading?

Swing traders capitalize on short term trend movements, usually from 2-10 days. Commodities such as brent oil can move up to 1000 pips some weeks, and large profits can be made if you are entering at the right time. Swing traders are heavily using technical analysis to get successful trades.