23 JulTypes of Commodity Trading Strategies

Commodity trading strategies are simply the basis for why and when you will buy and sell commodities. You should have some well thought out strategies before you begin trading commodities.

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Most commodity trading strategies consist of either a range trading or breakout methodology. Each type of strategy has its pros and cons, so it is up to your personal taste on which type of strategy might work best for you.

Range Trading Strategy

Range trading in commodities simply means buying near the bottom of a range (support) and selling at the top of a range (resistance). Another way to look at this strategy is that one might look to buy a commodity after it has experienced a lot of selling and becomes oversold.There are numerous indicators which measure overbought and oversold levels like RSI, Stochastics, Momentum and Rate of Change. These strategies work well when the market has no significant trend.

Trading breakout Strategy

Trading breakouts in commodities means that a trader will look to buy a commodity as it makes new highs and sell a commodity as it makes new lows. New highs and lows can easily be spotted on a chart, as they are the peaks and troughs.

This strategy works best when commodities are trending strongly.  To know more about the commodities trading strategies click here