Trading systems for making money in the commodity markets are being created all the time. The only problem with this is that the newer or inexperienced traders don’t have the experience to weed out the bad systems from the good and end up loosing money instead. But by using a tried and true system of trading, you can be a profitable trader in the commodity markets.
A good commodity trading system has to be easy to manage, especially for newer traders. A good trading system doesn’t have to have you in the market all the time to make money. There are signals that indicate a market is about to make a big move. If you wait for the big moves, you can end up with some very large gains with fewer loses. And last but not least, you need a commodity trading system with predetermined entry and exit rules to help keep your emotions at bay. This article will walk you through the steps of setting up a commodity trading system like this.
This commodity trading system is easy to manage. You won’t be doing any short term trading, and you may only catch a few good moves a year in each market, but they will be larger moves and that means more profit. You won’t have to spend great amounts of time each day on this commodity trading system. Also, by having predefined rules for entering and exiting your trades, you should be able to let your trades practically run themselves, especially when you are riding a big move.
This commodity trading system is for catching big moves and the best way to do that is to find a price chart for a commodity and look for a price pattern called a sideways trend. This pattern is like a spring coil tightening up, and when the price breaks free, the move could be huge. The longer this pattern continues, the bigger the potential move is when the price breaks out. This pattern could last for weeks, months or more. When you see this pattern, you should be watching for your entry signal.
This commodity trading system has predefined entry and exit signals you should follow. A trade entry will be triggered when the price breaks free from this sideways pattern. If it breaks up, you buy. If it breaks down, you sell. A stop should be placed beneath the last price low made before a break up, or above the last price high with a break down. As the price continues to move and make corrections, move your stop along with these new highs and lows. This brings us to your exit rule.
The exit rule is simple. Let your stop get you out. As the price moves and you follow along with your stops, the price will eventually fall enough to stop you out. Stick to this rule. Don’t move your stop to try to stay in a trade longer than you should. And don’t try to chase the market by re-entering the trade. Follow the rules and you can make this a profitable commodity trading system.
Tony is an individual commodities trader and has a site called TheGrainTrader.com with tips and help for traders to learn to trade the grain commodity futures market. Visit his blog where he offers his very accurate predictions of the short to near term grain market direction.
Article Source: http://EzineArticles.com/?expert=Tony_J_Lorenzo
http://EzineArticles.com/?How-To-Predict-And-Profit-From-Major-Commodity-Market-Moves&id=756832
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