The commodity that I like to trade is copper, not because it is easy to make money, but because I had done a lot of research on this commodity while I was working as a commodity specialist.
Warren Buffett said investors should invest in the business that they understand. In commodity trading I would advise traders to trade in the commodity that they understand.
Copper is an excellent conductor of electricity, as such one of its main industrial usage is for the production of cable, wire and electrical products for both the electrical and building industries.
The construction industry also accounts for copper's second largest usage in such areas as pipes for plumbing, heating and ventilating as well as building wire and sheet metal facings.
Strategy number 1:
Buy the commodities that China needs and sell the commodity that China sells. Copper is mainly found in South America and Australia. Due to construction boom in China, copper has become a hot commodity, so copper is certainly a commodity that China needs.
This has resulted in backwardation for copper. If you do not know what does backwardation means, click here. So when copper is in contango, traders should grab this opportunity by selling far month contract and buying near month contract.
In the spread chart, value above $1 means copper is in backwardation, value below $1 means copper is in contango. Copper was only in contango 3 times since 2003. During that period of times, its best to trade spreads, means betting that copper will move back to backwardation.
Strategy number 2:
To understand commodity, we have to understand the seasonal trend of the commodity. Buying season for copper comes in when after Chinese New Year. That is when China factories start to place buying order for their production.
If you looks that copper chart, copper price always rises after February which is the Chinese New Year period. So traders should buy copper futures 1 - 2 weeks before Chinese New Year.
Both strategies mentioned above are relatively safe and highly profitable. So to equip yourself with this opportunity, you need to open a commodity trading account.
My commodity broker friend told me that he will give special rate to my friends. If you are interested to trade commodities, send an email to me at [email protected].
To view copper chart and spreads, go to my profile.
Warren Buffett said investors should invest in the business that they understand. In commodity trading I would advise traders to trade in the commodity that they understand.
Copper is an excellent conductor of electricity, as such one of its main industrial usage is for the production of cable, wire and electrical products for both the electrical and building industries.
The construction industry also accounts for copper's second largest usage in such areas as pipes for plumbing, heating and ventilating as well as building wire and sheet metal facings.
Strategy number 1:
Buy the commodities that China needs and sell the commodity that China sells. Copper is mainly found in South America and Australia. Due to construction boom in China, copper has become a hot commodity, so copper is certainly a commodity that China needs.
This has resulted in backwardation for copper. If you do not know what does backwardation means, click here. So when copper is in contango, traders should grab this opportunity by selling far month contract and buying near month contract.
In the spread chart, value above $1 means copper is in backwardation, value below $1 means copper is in contango. Copper was only in contango 3 times since 2003. During that period of times, its best to trade spreads, means betting that copper will move back to backwardation.
Strategy number 2:
To understand commodity, we have to understand the seasonal trend of the commodity. Buying season for copper comes in when after Chinese New Year. That is when China factories start to place buying order for their production.
If you looks that copper chart, copper price always rises after February which is the Chinese New Year period. So traders should buy copper futures 1 - 2 weeks before Chinese New Year.
Both strategies mentioned above are relatively safe and highly profitable. So to equip yourself with this opportunity, you need to open a commodity trading account.
My commodity broker friend told me that he will give special rate to my friends. If you are interested to trade commodities, send an email to me at [email protected].
To view copper chart and spreads, go to my profile.
