How to earn profitable returns by day trading in commodity market?
Day trading refers to trading practice in which buying , selling of stocks and commodities is done within the same trading day. Strictly traders have to square off their positions same day before the market closes.Every trader who wants to trade on intra-day basis have a big question in his mind related to profitability of day trading. Usually intra-day traders books profit for small margins. Like in stock market, intra-day trading is quite popular in commodity market also. People are making profit by trading in large quantities. Day trading in liquid commodities like gold, silver , oils can also be done. Crude oil tips and other tips related to commodities are helpful in earning better returns.
Following are some suggestions to earn good returns while trading in commodity market :
Traders should trade along the trend as it is one of the golden rule of intra-day trading. Market is of volatile nature and traders often panic with these movements . Trading along the trend helps in managing risk in an optimum manner .
Make use of proper stop loss. This helps in preventing unexpected loss in the market. Analyzing previous day charts will help in understanding what levels of stop loss should be used.Another thing to keep in mind is keep trailing stop loss and when one is in profit then revise the stop loss. Instead of squaring off the positions, trader can keep stop loss for profit and revise it according to the upward movement .
Keep your trade volumes constant. It means if you are trading in 5 lots of crude oil then trade in same number of lots for at-least a month. Do not make it 10 lots or more next day.
Pay attention to market news. As news in commodity market is very important. Major fluctuations in market trends is the result of international market news mostly.So missing any of it can make you pay big cost.
Two things which traders must avoid in day trading is greed and panic. When you are trading and it is not giving the expected results then do not panic.Use strict stop loss and if it triggers, do not enter again. Waiting for more and more profit is also dangerous. In day trading book profit with every high and enter again if the same trend sustains.
These are few guidelines which can help you in earning profitable returns.Traders must adopt a disciplined trading practice always.Day trading in commodity market should be done after at-least 20-30 minutes of market opening. As it will give you time to understand the present market trend. Traders who are new should learn how to invest in shares and commodities first before beginning to trade in the market.