The commodity market is, by definition, the marketplace for buying, selling, and trading commodities like gold, silver, oil, and even coffee. In commodity market trading, investors buy or trade commodities that have good market potential in the future.
As an investor, how much can you hope to earn from commodity market trading? What are the factors you must consider?
How much can you earn from commodity market trading?
If you invest in the right commodities, you can grow a capital investment of around 20,000/- to as much as 60,000/- to 80,000/- in a matter of two months.
For a start, set a daily income target when trading in commodities. Once you do that, it is possible to earn a daily income of 500/- to 1000/- for a capital investment of 5,000/-. Going further, you can earn a monthly income of nearly 40,000/- on capital of 15,000/- through positional trading (or holding commodities for one to three days).
Factors for a profitable commodity trading
When it is a question about commodities, most investors talk about gold, silver, or oil, while there are other commodities like aluminum and copper which offer better returns.
Another factor to consider when investing in commodities is the Risk-Reward ratio. A lower risk-reward ratio of 1% on capital of 50,000/- can earn you around 500/- (minimum) to 1000/- (maximum). A higher risk-reward ratio of 10% can result in daily earnings of 2,000/- (minimum) to up to 5,000-10,000/- (maximum). The more the trader’s experience in the commodities market, the more can be the Risk-Reward ratio, thus 1% is ideally recommended only for beginners.
Additional tips
As a commodities trader, it is a good practice to prepare a trading plan if you want to earn a daily income. For example, for intraday trading, set yourself a daily target and the number of trades you need to achieve this target. Additionally, determine a proper trading setup consisting of a proper entry point, target, and stop-loss point.
Other good trading strategies on commodities include trading breakouts, setting a trading range between purchasing at the bottom end and selling at its top end. If you are a beginner in commodities trading, invest in a specific market instead of trying to be successful simultaneously at several markets.
Conclusion
Once limited to large professional commodity traders, commodity trading is now available and profitable even for small investors looking to invest small amounts of capital. To maximize your returns, learn more about commodity trading and follow the tips and strategies suggested in this article.
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