Global movements: Commodities are impacted more by the developments in overseas markets than in equity. Traders are required to keep a constant eye on the movement of commodity prices in global markets.
Broader market sentiments: As usual, traders should keep an eye on the broader market sentiments. They can initiate short or long positions accordingly.
Liquidity: Liquidity is a very broad term used in the market. It broadly indicates the total amount of trade that happened at a counter, number of contracts traded in a particular counter, the spread between the 'buy orders' and 'sell orders', and many more parameters.
Since all the commodities contracts are not very liquid, traders should keep the liquidity aspect in mind before initiating positions. As usual for day traders, brokerage eats into a lot of their profit pie. Since the commodities trading is still in an early stage here, traders should keep a watch on the brokerage applicable to them.
Delivery of contracts: In commodities futures contracts, taking delivery of an underlying commodity is not as simple as taking delivery of stocks.
Broader market sentiments: As usual, traders should keep an eye on the broader market sentiments. They can initiate short or long positions accordingly.
Liquidity: Liquidity is a very broad term used in the market. It broadly indicates the total amount of trade that happened at a counter, number of contracts traded in a particular counter, the spread between the 'buy orders' and 'sell orders', and many more parameters.
Since all the commodities contracts are not very liquid, traders should keep the liquidity aspect in mind before initiating positions. As usual for day traders, brokerage eats into a lot of their profit pie. Since the commodities trading is still in an early stage here, traders should keep a watch on the brokerage applicable to them.
Delivery of contracts: In commodities futures contracts, taking delivery of an underlying commodity is not as simple as taking delivery of stocks.
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