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Is commodity risky?

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  • Is commodity risky?

    Commodity options are a good way to build an investment but it is risky. suggest me how careful and willing to really put self on the line.

  • #2
    When investing in commodities combine volatility and patience and risk is minimum. Paper losses on commodities become gains over time. Stocks are much more dangerous, tech stocks in particular or a more obvious example, Japanese stocks which still have not recovered from the lows of the early 90′s

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    • #3
      Commodities are including high risk, but it is possible to earn a high amount of money with an investment.

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      • #4
        Trading is risky without knowledge. Gain sufficient knowledge before start investing.

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        • #5
          I agree with preet72787 trading anything without knowledge is risky. The easiest way I learned how to trade commodities was to virtual trade the different strategies. This method helps your learn without having real money at risk and then you can gradually start to trade for real.

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          • #6
            Originally posted by Adityaa View Post
            Commodity options are a good way to build an investment but it is risky. suggest me how careful and willing to really put self on the line.
            Everything that can be traded is risky! You can loose money in any of the vehicles you can find through a broker or exchange!
            Trading stock options you have to worry about balance sheet and the local economy. With commodities you have to know what happening around the world. I don't believe you can only use Technicals with those options, you need to include some Fundamentals.

            There are numerous books on Amazon for this vehicle: search: +commodities +options

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            • #7
              You need to try and find information about the supply/demand present and perspective. I.e if you were trading say Corn/Coffee etc then you would need to find out how much supply (growers, crop yield, storage etc) and how much demand (how much has been used/is needed) in the present and future. I would get a ball park figure and not put hard numbers on it however.

              Commodities can never go to zero - stocks can (and do). Using margin and being on the wrong side however can destroy you.

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              • #8
                well you can reduce your risk by hedging your futures (e.g. futures options) or trade spreads

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