Both novice and experienced traders find commodity trading to be a complex undertaking. That’s why it’s distinct from equity trading and other types of investing in that the obstacles are unique. Despite the fact that commodities trading has dangers comparable to those in equity trading, it is also a platform for financial gain that enables traders to make significant profits from purchasing and selling items. Before beginning, traders should know that successful commodity trading involves a lot of commitment, experience, and effort. This article provides traders with a step-by-step tutorial to learn to trade commodities to get started quickly and make acceptable returns.
The commodity market has several additional aspects that a trader should get familiar with. Commodities can be traded through futures exchanges in Australia, such as the Australian Securities Exchange. It sells future contracts on a variety of physical commodities. Users can also speculatively trade on other derivatives markets through this exchange platform, which provides access to commodity value. You must complete several stages to work in commodity trading, including applying, getting experience, and receiving a licence. The following are the steps to begin your career as a commodities trader:
Step 1: Understanding the Commodity Trading Exchanges
To be employed in this position, you typically require a VET credential or a university degree in business, finance, economics, or a similar field. The course provides a synopsis of the financial industry, the present financial structure of the local and international markets, financial ratios, investments, financial instruments, stocks, trading, commodities, and more.
Step 2: Discover More About Commodities
Australian markets offer a wide variety of goods. Choose the one that piques your attention, has a lot of liquidity, and sees a reasonable amount of trading activity. Know the market, the elements that are affecting the trade, prior results, and trends. Learning how to trade in the market comes after you have decided on the commodity you wish to trade.
Step 3: Make Use of a Licensed Platform
Finding a trading platform regulated by ASIC is the next step after acquiring the necessary theoretical knowledge to begin learning how commodity trading functions. Several trading platforms provide the option to trade commodities using a demo account to practise trading methods before using real money. Spend a lot of time studying market behaviour, analysing data, and testing technical charts, tools, indicators, and trading methods.
Step 4: Acquire Experience In Commodity Trading
You may want to think about working as a junior futures trader in a commodity trading firm to improve your self-assurance and develop specialised trading knowledge. You can learn about the market and get ready to work independently for clients by working in the commodities trading business and engaging with individual clients.
Step 5: Obtain A Commodities Trading License By Registering
You must have a licence to work as a commodity trader in Australia. After finishing their coursework and passing the Financial Adviser Standards and Ethics Authority exam, students who wish to be registered must complete a professional year that entails 100 hours of training. The Australian Securities and Investments Commission will provide you with an Australian Financial Services (AFS) licence, which you must get to trade commodities legally.
The trader must also practise all tactics to avoid suffering losses beyond one’s means. Commodity trading is still prevalent due to its advantages. One crucial aspect to learn to trade commodities is that traders must dedicate themselves to training and success in the commodity market. Since the dawn of time, investors have included commodities as a crucial component of their investment portfolios to diversify their holdings, weather any economic downturns, and increase returns.