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The Secret Of Online Commodity Trading

The world economy has seen a sudden turnaround in recent times. Given the threat of recession, GDP growth looking anemic and inflation touching heights every fortnight, should you consider investing your hard earned cash into the share market? Or more importantly, is online share trading a wise choice considering such a stormy climate? If you are looking for a new way of investment, look no further than online commodity trading and you can earn rich rewards depending on your investment, knowledge, risk taking ability amongst other things.

The very reason most people are attracted to online trading is the same reason they feel a natural resistance to rules and boundaries. The need for rules may make perfect sense, but it is difficult to generate any enthusiasm for these rules when you have been trying to break free of them most of your life. It usually takes a great deal of effort to break down a traders resistance to establishing and abiding by a trading regime that is organized, consistent, and reflects prudent money-management guidelines. But, once they do, the possibilities for attaining consistent trading success are limitless.

If you are a first-time online trader, the easiest and most useful avenue to choose for yourself is commodity trading, with its myriad choices. It is an upcoming avenue for investors who are looking to earn a lot of money, with an extremely comprehensive and unlimited list of products which can range from agricultural products to petroleum and consumer products, or even currencies.

It is only natural with the advent of technology that commodity trading now takes places on the world wide web as well. Online commodity trading is quite the rage, especially with first-time traders. Online commodity trading, in essence, is no different from a classic trading environment. The trading floor and the broker along with all the basic principles of trading apply to online commodity trading too. The only difference is that the trading is going on online.

How do you get started with commodity trading?

Getting started is very simple. You choose any good online commodity trading software and start trading. Yes, it is really that simple. Of course, you must ensure that you are aware of the techniques and terminology involved in trading commodities. Today, online commodity trading is a convenient and easy way to reap profits from an industry that is fast becoming very appealing to almost everyone. With online commodity trading software you can not just watch how the commodities you have invested in grow, but also analyze new trends, devise strategies, amongst other features.

It is advisable for novices to begin with seven to eight commodities - this ensures the two fold purpose of proper monitoring and remaining on the safe side. Since commodities are tracked online everyday, it makes sense to have a reasonable number of commodities, especially in order to truly understand the nuances of the market. Not only novices but experienced traders too opt for no more than eight commodities because the simultaneous tracking of more than eight is confusing and troublesome.

Commodity Trading provides flexibility

If you don't wish to or can't handle online commodity trading directly, it is possible for your chosen executor to hold an account, as long as you use a written power of attorney. This executor must be extremely reliable because trading involves making very important financial decisions and in this case you are handing over this power on your own behalf to the executor.

If you prefer to work in a group as opposed to trading individually, then you can join commodity-related mutual funds and commodity pools similar to limited partnerships. You can make this even easier for yourself by simply going through online commodity trading exchanges. You can offset risks in your whole portfolio by combining the low-margin markets of commodities with shares and bonds investments. This is one of the major reasons why commodity trading is so useful.

A word of caution though. If you are a novice commodity trader and are looking for a sure-fire formula to help with the management of online commodities, you will be disappointed. You should be extremely careful as to where you click because that one click could prove fatal.

What commodities should you invest in?

With food and crude prices touching an all time high, the current market may not look as attractive to an outsider, but ask the futures traders who find it a challenging task to make money when the going gets tough. So, if you invest in crude, oil, gas you can benefit from the skyrocketing prices that are expected to further intensify as the quest for newer oil sources gains impetus. Similarly, if you have heard of the latest food crisis, investing in agriculture shares will help you make money as the price of food prices soar.

What Commodity companies can you consider investing in?

While there are many commodity leaders, there are some companies that are promising. Of course, you should only invest in them if you have done your own research and should never decide based on advice alone. For online commodity trading in agriculture, especially seeds etc, Monsanto is a world renowned leader. The company spends much time and effort in innovating ways for agrarians to increase their produce. And because food grain demand is on fire now, Monsanto is reaping rich dividends with this rise in demand.

Another company that manufactures chemicals and produces seeds for various food grains is Syngenta. Using innovative techniques, Syngenta has managed to help farmers increase their crop yield. Also, the company is witnessing a tremendous growth in sales and annual earnings due to the rising prices of these commodities. Both Monsanto and Syngenta are good share choices for a serious commodity trader.

What are the other commodity trading options?

After food, the next most favorite sector for commodity traders is energy. Alternate sources of energy are hot investments in a world driven by global warming threat. However, before you invest you must be completely sure of your choice and be able to back it up with analytical data. Also, Mosaic, Potash, Agrium are other companies witnessing an increasing interest leading to high gains in sales and earnings. These fertilizer companies will benefit from the rising prices of food.

While online commodities trading may seem like a prudent investment option in these uncertain times, it requires discipline, the right mindset, and a sound trading plan in order for you to succeed in it. For beginners, the best way to trade commodities is through an online broker.