Markets vary in affordability. For instance, futures contracts in spices, sugar and grains tend to be relatively affordable, while bullion, energy and metals are more expensive. Generally, two factors make a futures market expensive to trade: the value of the contract and the volatility of the contract. You need to check both.
Find out from your broker what the initial margin requirements are for the commodities you're interested in, as well as the special margin needed to keep your trading position open. Some brokers may require an added cushion as extra insurance. At no point should you stretch your budget to fit in a commodity. Remember Rule Number One? Your budget is cast in stone. You really can't afford to lose any more.
Once you have the list of commodities whose margin requirements you can afford, focus on those that you know or have ways of knowing more. Tap family and friends. If your family has interests in real estate, for instance, then it may be easier for you to track trends in base metals. Similarly, if you know some exporters of spices or grains or coffee, that is your cue. If your cousin works in a tyre company, rubber may be a tad easier to understand.
All these people can alert you to tiny changes in the spot market. Simply focus on the few commodities with which you are confident you have some natural linkage.
Find out from your broker what the initial margin requirements are for the commodities you're interested in, as well as the special margin needed to keep your trading position open. Some brokers may require an added cushion as extra insurance. At no point should you stretch your budget to fit in a commodity. Remember Rule Number One? Your budget is cast in stone. You really can't afford to lose any more.
Once you have the list of commodities whose margin requirements you can afford, focus on those that you know or have ways of knowing more. Tap family and friends. If your family has interests in real estate, for instance, then it may be easier for you to track trends in base metals. Similarly, if you know some exporters of spices or grains or coffee, that is your cue. If your cousin works in a tyre company, rubber may be a tad easier to understand.
All these people can alert you to tiny changes in the spot market. Simply focus on the few commodities with which you are confident you have some natural linkage.
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