As with any asset you trade, it is important that you have a solid trading plan and strategy in place for what you want to achieve when you open a position.
Research, and both technical and fundamental market analysis, form a crucial part when it comes to devising a trading strategy that suits your goals helping you set realistic limits and a maintain a clear idea of your profit targets.
If you’re just starting out, these trading tips and strategies could help you build up a more sustainable trading plan and help you decide when to enter the market.
Trading with prevailing trends
Both medium and long term market trends can be indicators of potential market movements. Make sure you research the asset you want to trade in detail and if beneficial think of trading with the trend and market momentum.
Our powerful charting package allows you to view price movements over a variety of time frames so that you can track and zone in on trends and price movements.
With precise indicators, drawing tools and customisable watch lists, we make it easy for you to monitor market volatility and spot trading opportunities.
Rely on your research, not emotion for trading decisions
It can be easy, especially when you are relatively new to trading online, to get carried away in the emotion of trading.
Whether this is in overleveraging yourself and doubling down after a winning trade or chasing losses you shouldn’t after an unsuccessful trade, it is crucial that you remain grounded and as detached as possible from your position.
Your trading is similar to running a business, it’s success or failure will come down to solid planning and good decision making, so always make sure your trading decisions are validated by your trading strategy and plan.
Define clear parameters and limits for what constitutes a “successful” trade and ensure that you close positions that meet these criteria.
Understand how support and resistance levels impact your trading
Being able to quickly and confidently identify the upper and lower levels of price action is crucial in helping you get a better feel for the range in which you might confidently trade.
Your research and analysis of your chosen market as well as charting tools like trendlines and drawing tools will help you accurately map up an asset’s support and resistance levels which in turn will allow you to make more confident trading decisions based on market data.
Support levels indicate the downward trend price at which an asset will pause or stop as demand or trading volume increases.
Similarly, resistance levels indicate a price level on the upside at which market sentiment begins to indicate that an asset may be overvalued. Resistance levels can therefore serve as sign-posts ahead of a potential sell-off.
Both support and resistance levels are useful as part of your trading strategy in understanding potential market entry and exit points.
Avoid extreme volatility
Excess volatility creates trading opportunities but also brings with it increased risk as the market can move against you quickly.
When you’re starting out it is important that you understand the risks of market volatility and how quickly price movements can change.
Trading Commodities comes with an inherent risk as they can be relatively volatile assets compared to some other types of markets.
For this reason, you may want to, at least initially, avoid trading around events that could quickly and significantly impact price movements, these include; major geo-political events, natural disasters, tariff disputes.
Take advantage of technical indicators
Indicators are designed to help you test your trading ideas and subject them to raw data analysis so that you can make informed decisions based on real market conditions.
Indicators can be especially useful for deciding when to both enter and exit a market. One of the most useful indicators for newer traders is Moving Averages, a tool which allows you greater control over your range trading.
As the name implies Moving Averages track the average price of an asset over time and any divergence from this trend either to the upside or downside could indicate a move away from the current market direction, highlighting key trading opportunities.
It is important that you remember that Moving Averages are not completely failsafe and like any tool used for trading the markets they cannot predict future market movement with absolute accuracy.
When used correctly however they are a powerful tool for validating and testing your trading ideas and an excellent way to stay on top of market trends.