Before starting an investment in any of the financial markets, you are required to understand various aspects of the investments such as the product, risk associated with it, reward you are going to get, service provider as well as pros and cons of investment. In this article, we are sharing successful commodity trading tips for beginners. 

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The first step in commodity trading is knowing about the commodity you are going to invest in terms of nature of the product, price driving factors, contract specification, risk-reward, expiry date etc. In the following paragraphs, you are going to Know Your Commodity. 

Whether you realise it or not, commodities are an important element of human civilization. From the food we eat to the fuel that powers our modern modes of transportation, commodities are what make the world go round. Commodities are not only consumed but may also be invested in as well. That&#;s why banks, hedge funds, institutional investors, businesses and even nation-states trade in commodities each day. Let us understand in detail the different commodity types we use in our daily life.

Different Commodity Types

Metals

In commodities trading, metals are of two types: precious and base. Precious metals are shiny metals that are valued for their rarity and high economic value. The most common examples of precious metals are gold, silver, and platinum. Precious metals are considered &#;safe haven&#; assets for their ability to retain value during times of market turbulence and uncertainty. When there is fear, investors park their money into gold and silver.

A base metal, on the other hand, tends to corrode relatively easily, which makes it more useful in commercial and industrial applications. Base metals are more abundant than precious metals and are therefore cheaper. The most common base metals include aluminium, copper, lead, zinc, tin and nickel.

Additional Read: How to trade in commodity?

Energy

The energy commodities include products like crude oil, natural gas, and gasoline. As you can imagine, energy commodities play a huge role in the global economy because nations rely heavily on these and other fossil fuels to keep their economies running. Oil prices are influenced by such things as production, the supply-demand balance and even politics. The price of oil also influences other financial markets ranging from stocks to currencies.,

Agriculture

Agriculture is a massive global industry that feeds billions of people. Soybeans, corn, wheat, coffee, cocoa, cotton, and sugar are all available on the global exchanges, giving investors an exposure to diverse commodities within agri classification.. Factors that affect prices of agricultural commodities are supply,demand, population growth, extreme weather, droughts, and other forces.. In India, agri commodities available for trading are soybeans, soybean oil, rapeseed mustard seed, cotton, chana, crude palm oil, turmeric, jeera, dhaniya, mentha oil etc. 

Understand Commodities Before Investing

The commodity derivatives price movement happens based on various factors such as supply and demand, GDP, inflation, interest rate, growth in manufacturing and services sector, international trade as well as movement in the stock market, bond market and currency market. Following are the some of commodity selection criteria for beginners, 

High Volume: Commodity selection is heavily influenced by volume. A commodity's volume indicates how many investors and dealers are selling or purchasing that commodity on a given day. Commodities with a larger volume are usually the ones that have the potential to give good gains to traders and investors, because high volume will indirectly enhance volatility, resulting in a variety of opportunities for intraday traders to book profits.

Selecting Popular Commodities: The commodity market has a wide range of commodities from numerous categories. Base metals, precious metals, energy, and agriculture are the four main groups. Crude oil, silver, gold, natural gas, zinc, soybeans, and other commodities are among the most popular in the market. 

Avoid Unpredictable Commodities: Commodity trading, as previously stated, necessitates a great deal of information and expertise because you may make an approximate projection on a commodity's future movement based on your market knowledge and experience. Any commodity that had a bullish run for a few weeks before crashing could  be a lousy choice.. A trade in such commodities could provide high returns, but the risks could also be higher. Therefore, it may  not a sensible option to use them for your trading.

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Risk Profile Analysis: This is the most critical factor to consider before selecting the ideal commodity for your transaction, and it is generally overlooked by most traders. When you trade in the market, you're always taking certain risks with your money. An understanding of  risk profile may help you determine how much risk you could assume in the market. If you have a low risk profile, you should avoid commodities with a high-risk reward ratio. Trading in high risk reward commodities could be an excellent way for traders with a high risk profile analysis to profit from risky market moves. Entering the market without a current risk profile can jeopardise your financial stability. As a first and main step before joining the commodity market for trading, it is recommended that you assess t your risk profile...

Full broker support

Selection of broker is very essential to have a smooth trading experience. It is advised to select a broker that  is having PAN India presence, state-of-the art technology for seamless trading experience, strong risk management and operations division as well as a dedicated research desk to advise the customers on commodity trading. Research is one of the most crucial criteria for trading in any section of the financial markets, including stocks, bonds, and commodities. It is critical to thoroughly investigate any commodity before deciding on it for your trading. A review of the charts, demand and supply chains, and economic news may  aid you in selecting the best commodity for your trade. You may  take an  advice of research analyst to assist you in making better trading decisions.

Additional Read: How MFs Add Value to Commodity Trading?

Do's and Don'ts in Commodities Trading

Investment in any of the financial instruments carry risks such as market risk, price risk, geopolitical risks etc. Hence, it is utmost important to take calculated risks while making investment decisions. Here are some of the do&#;s and don'ts in the commodity derivatives market. 

Do&#;s

• Trade only through registered brokers.
• Assess  on your risk-bearing ability
• Familiarize yourself with guidelines and rules, regulations, byelaws, circulars, etc. 
• Take an informed decision
• Understand the Delivery and Settlement Procedure.
• Understand and Comply with Taxation and other relevant laws.
• Pay all applicable margins. Collect/pay mark-to-market margins daily.
• Insist on documentation with the member such as Member Client agreement and Know Your Client.
• Read and understand the Risk Disclosure Document.
• Insist on signed Contract Notes containing all relevant information such as Member Registration Number, Order Details, Trade Rate, Quantity, etc.
• Insist on a periodical statement of your ledger account.

Don&#;ts

• Don't get misled by rumours, luring advertisements and promises, and bull/bear run of market sentiments.
• Don't trade any contract without knowing the associated risks.
• Don't undertake off-market transactions.
• Don't accept/pay cash.
• Don't sign blank Delivery Instruction Slips.  
• Don't delay payment/deliveries to Members.

6 things Customers look for in Stores they choose to visit "first"

Kevin Carr

Kevin Carr

INDEPENDANT RETAIL HARDWARE SPECIALIST NEW RETAIL BUSINESS ADVISOR MARKETING SALES STRATEGY STOCK CONTROL TRAINING

Published Feb 19,

Have you ever wondered why some locally owned stores become famous for something and others come up a little short? Why do some stores build tremendous loyalty with their customers?

There are a number of things you can do in your store to improve the overall equity in your business. Whatever you do, it should be relevant to your targeted customer.

Inspirational loyalty quotes

"Do what you do so well that they will want
to see it again and bring their friends."
WALT DISNEY

Ultimately, it will be your customers who decide how successful you will be and they always make their decision to shop in your store around the delivered value and choice you can offer them every day.

Consider the things your customers would expect when they enter your store. These 6 factors are critical for a store to have in mind when they grapple to answer the question on why customers would shop in their store first: 

1. Consistent Width and Depth of Offer: Customers go to the store that they think will have the best &#;Value & Choice&#; for their money. Stores that stock the best merchandise mix in their available space create more customers for their store. Their width of range will equally enhance choice for a customer in their mind. Consumers also expect stores to be in stock of what they need when they enter a store. Customers don&#;t return to stores that disappoint them in their purchase need.
2. A Consistent Pricing Policy: Stores that give an expectation of value to customers with pricing will enhance the expectation of factor 1. David Jones & The Reject Shop all set differing expectations for their customers with price and quality. Consistent delivery of Merchandising and price pointing can ensure you build equity here. Utilising the a core stocking program along with a price sensitive list can help set your customers expectations on price effectively.
3. A Consistent Marketing Message: Stores that understand what they can deliver to consumers every day will ensure that they deliver this message consistently to the market. Marketing what they can deliver in Factors 1 & 2 will create the right expectation for a consumer.
4. A Perception of High Service Level: Every purchase is driven to solve a perceived problem and a store&#;s ability to solve these problems through product choice and advice will enhance a store's ability to meet their customer&#;s expectations. Customers will go to stores that endorse solutions better than their competitors through great customer service. Customers want courteous, informative, helpful & friendly store personnel that engage in their needs.
5. Convenience &#; easy selection & easy access to goods: Stores that provide good ambiance & convenience to their customers are easy places for customers to shop. Handy locations, good parking, plenty of payment points, good layouts that are easy to navigate & quick to access goods and services all build value in customers minds. Don't make it hard to shop in your store.
6. Perceived Value Risk: - Will I get what I pay for? Customers will look at the overall characteristics of a business to ensure they get the best value & choice for their money. They don&#;t want to make a mistake when they buy something. The reputation in the community; number of stores; their friends and/or their associates perception of the store & if it well liked and recommended by them are all factors that consumers consider when they decide on a store to visit. Several studies have found that consumers still can see more risk in in-home shopping than in-store shopping. They also see discount stores more risky to shop in than specialty or department stores.

Business owners and their teams should look to build their offer around providing the best &#;Value & Choice&#; for the customer however most businesses cannot meet the needs of every single customer profitably. A business must identify which Market segments that they can realistically provide a superior proposition in and aim to shape their store&#;s offer around meeting this audience&#;s expectation.

If you would like to talk to me about this further, please contact me and I would be happy to help you.

If you are looking for more details, kindly visit commodity department store.