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Commodity Market Liquidity
Commodity market liquidity often correlates very well with commodity market trading profits. There are three benefits to traders in high commodity market liquidity. The first is that it is easier to enter and exit trades. The second is that bid and ask prices are commonly closer. The third is that with high trading volume and liquidity the statistics of online trading software as well as the predictive ability of time honored tools such as Candlestick pattern formations tend to be more precise. Traders can find reports of the previous day’s trading volume online as well as updates during the trading day. A useful measure of trading volume and a useful predictor of trading volume is open interest. This measure is the number of open contracts between buyers and sellers in commodity futures trading. To learn to use commodity market liquidity to the maximum advantage in profiting from commodity trading, traders are wise to take Commodity and Futures Training and to develop their skills in Candlestick analysis of commodity prices.
Commodities that can offer good commodity market liquidity include trading in corn futures, oil futures, and gold futures. Each of these is a commodity that trades at high volume and high liquidity. In the case of each commodity both fundamental and technical analysis are necessary to understand the scope of trading and the day by day or minute by minute changes in commodity price. Candlestick charts of these commodities will help predict price movement and allow traders to buy or sell commodity futures contracts with the reasonable expectation of making a profit with anticipated market moves. The tight spreads between bid and ask prices on commodity futures contracts will allow the trader to profit by buying and selling at smaller intervals in a market trend than when the market is less liquid and the spread is greater. Understanding the fundamental analysis of gold, oil, or corn futures will give the trader an overall perspective of the market. However, it is technical analysis that predicts the next price move. The use of Candlestick chart patterns will predict market moves within the trading range dictated by commodity fundamentals.