Tracking Commodity ProfitsTracking commodity profits can be as important to traders as tracking commodity prices. There are a number of ways to profit from the price swings in various commodities. One can buy stock in a company that produces a commodity. Likewise one can buy or sell stock in companies that process commodities. There are exchange traded funds that track commodities. In some cases, such as precious metals, the trader has the choice of buying gold futures, buying mining stock, or buying gold. The point of tracking commodity profits is to understand how successful a given commodity market is compared to other means of investing in the commodity over time. Tracking profits is an audit of results as opposed to the process testing involved in back testing trading results. To learn and effectively use the technical analysis tools for trading commodities, Commodity and Futures Training is useful. A firm knowledge of Candlestick charting techniques, for example, will help gather profits. Tracking commodity profits leads to an overview of trading success and helps traders direct their efforts into the most profitable trading arenas.
Tracking commodity profits will give the trader a clear picture of return on investment in the commodities markets. The trader will always want to find the best use of investment capital. He or she will also want to keep track of time spent in doing the research necessary for commodity trading. By tracking profits and time spent in a trading a given commodity the trader will be able to compare commodity futures trading and commodity options trading as means of making a profit on commodity price movements. Of course, in order to make profits the trader still needs to track commodity prices. The use of an overview of profits to guide future activity is just another facet of keeping track of the market, which traders have been doing for centuries. Whether it was tulip bulb traders in Holland or rice traders in ancient Japan the old traders studiously keep the records that lead to today’s systems of technical analysis. The use of Candlestick analysis, Candlestick pattern formations, and Candlestick trading tactics still lead to profits in trading commodities.
Tracking commodity profits may seem silly when a trader is making money but when profits disappear he or she will look to see where the problem lies. Just as the trader may develop habits in the use of specific pattern formations he or she may become accustomed to trading one or two specific commodities to the exclusion of others. Looking at how successfully one trades oil futures versus corn futures, for example, will help the trader decide where he or she should be spending time trading. It may also give a hint as where the trader needs to do more homework and fundamental analysis in order to improve his or her insight into the commodity in question. The addition of a profit by trading category to a spreadsheet can be an eye opener in the manner of recognizing that “all of those trees,” as in repeated unprofitable trades, are in fact a forest.
Market Direction: The Dow has consolidated nicely over the past two days of trading. This is the usual result of a nice strong price move. The sideways action is perceived as lettng the T-line catch up. Yesterday's Doji and today's Hanging Man signal implies there might be some topping action occurring but this would not be confirmed until the sellers show some control. The NASDAQ formed a hanging man signal today also. Heading into a Friday afternoon with a strong performance for the week should give the opportunity for some profit-taking. However, that profit-taking has to be viewed with the impression that it is merely profit-taking, not a change of investor sentiment.
When the market is demonstrating a positive bias, this provides the opportunity for the candlestick investor to find bullish chart signals that are going to create bigger profits than the average stock price moving up during uptrend. Our recent recommendation on CRNT has produced a strong price move based upon candlestick reversal signals and a gap up in price. This combination is going to produce common sense analysis allows for the participation of a high profit trade. Any time it can be witnessed at a bullish signal has occurred in oversold conditions and they start gapping up the price, this is usually a prelude to a very strong uptrend.
Being able to identify the market trend and scan for the highest profit potential's makes for profitable stock trading as well as extremely high profit option trading. The Candlestick Forum has multiple training CDs on how to use candlestick signals effectively with option trading. This involves knowing which options strategy to place on particular price patterns. Most investors want to hit that huge home run in their option trading. Candlestick signals allows for the identification of lower risk spread trades that produce high profit returns. Please peruse the different training CDs in the Candlestick Forum products area.
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