Trading in Commodity Emini Contracts

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When trading commodity emini contracts, you need to factor in fundamental data that includes crop sizes, money supply and even weather supports. Most traders tend to use one indicator religiously and disregard the other. This approach has advantages as well as disadvantages.

Commodity prices can indeed change direction faster than other types of investments, for instance company stocks. It is thus important for all traders to stay on top of all market announcements that may affect their contracts. Professional traders use a number of avenues to do this such as using the technical indicators and fundamental information. So what are these technical indicators and fundamental information? Technical indicators are the mathematical tools that are used to plot out market prices and other behavioral patterns on graphs. These include the over-sold and over-bought indicators, trend lines, momentum indicators, moving indicators, Gann theory and the Elliot wave analysis. As an emini trader you must know how to analyze the market from a technical aspect.

Fundamental data includes crop sizes, producer's figures, interest rates, money supply and even weather reports. Other fundamental news that may affect a commodity includes the outbreak of war in a certain region. While some people use a combination of the two, other people don't use both these indicators at all. They choose to go with only one indicator religiously and disregard the other completely. Doing this has its advantages as well as its advantages. For instance choosing to ignore one indicator when it is affecting the commodity you are holding a position in could mean losing money.

Many traders, especially the smaller investors device their own trading strategies, learn from experienced traders or buy one from another trader. When buying a trading strategy or learning from someone who has one, be careful not to go with one that is over-optimized and curve fitted in order to fit past data. In most cases you will see systems out there claiming to offer hugely profitable trades on past data but when you run these systems on current prices their results aren't even breakeven. In most cases, people offering these ‘miracle' systems paper trade the method. This means that they follow the markets but pretend to actually place the trades. They do this for a while to make sure that the trade works for them before they do place any actual trades. Buying these ‘miracle 80%' systems isn't a good idea at all since it takes a lot more than the push of a button to trade in any market.

Tracking price charts as well as keeping up with the fundamental data is a difficult task and some organizations employ dozens of employees to do it for them. Some traders, especially those on the market floor, hold onto a position for a few hours and even minutes. However, even if you are a small emini trader, there is no way to get around this. Most small traders trade on a daily or weekly basis. They note the market prices at the end of each day then make their decisions based on this data. Often times they hold onto a position for a few weeks or even months. This is considered to be a safer way of trading since any market fluctuations are simply ridden out and there is less panic selling or buying involved.

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