We will delve into the secrets of thriving in the commodity market. Whether you’re a seasoned trader or a beginner looking to boost profits, Mr. Amit Jain, a semi-registered professional, is here to reveal essential insights gained through his experience.
Let’s rewind a bit and explore the journey that led Mr. Jain to share his expertise. Back in 2004, he ventured into the commodity market, focusing on Soya Bean, an agricultural commodity. Like many beginners, he faced challenges, especially when a deal went south. Stuck without knowledge of stop loss or target strategies, and with the other party evading calls, Mr. Jain experienced a significant setback, losing the capital he had invested.
This setback became a turning point, leading Mr. Jain to a commitment: never to rely on others for advice. Despite the limited resources available at the time, he persisted in learning, even spending ₹10,000 monthly on chart platforms. Today, he shares his insights to empower others in the market.
Fast forward to the present, Mr. Jain emphasizes the advantages and disadvantages of the commodity market. One notable advantage is the market’s volatility, which spikes around 6 o’clock, coinciding with the opening of the US market. This volatility persists for 3-4 hours, providing ample opportunities for traders.
Another advantage lies in the flexibility of the commodity market’s trading hours. If your schedule restricts participation in the market until 6 o’clock, the commodity market allows you to engage after this time, extending trading opportunities until 11:30-12. This flexibility caters to professionals and beginners alike, providing a chance to formulate strategies.
The third advantage revolves around options trading. In the commodity market, various options are available, including crude oil, natural gas, gold, and silver. Options trading requires lower capital, making it accessible to those with limited funds. However, Mr. Jain advises caution, recommending intraday trading for options in commodities.
Moving on to the interconnected nature of global markets, Mr. Jain emphasizes the correlation between different markets. Events like geopolitical tensions impact commodities such as crude oil and precious metals like gold. For instance, during the Ukraine-Russia war, crude oil prices experienced substantial volatility, influencing global markets.
In the commodity market, understanding these correlations becomes crucial. Crude oil, for instance, tends to be inversely proportional to Nifty, meaning an increase in crude oil prices may lead to a decrease in Nifty and vice versa. Similar connections exist with gold, silver, and even the US Dollar.
To illustrate, when war-related tensions escalate, gold, considered a safe haven, sees increased demand, affecting its prices. Mr. Jain points out that tracking these correlations can offer valuable insights for traders.
In a recent example, during the conflict between Israel and Hamas, the price of gold surged. This scenario demonstrates how geopolitical events impact commodity prices, providing traders with opportunities.
In the ever-changing landscape of the commodity market, staying informed about global events and their potential impact is crucial. As Mr. Amit Jain shares his insights, we gain a deeper understanding of the dynamics that influence commodity prices, particularly focusing on gold.
During times of geopolitical unrest, gold often emerges as a safe haven. As Mr. Jain notes, when news breaks from conflict zones, the price of gold tends to rise. This trend is evident in recent events, where tensions in specific regions have propelled gold to impressive levels, currently standing at ₹63,300.
Gold’s significance as a safe haven becomes even more pronounced when negative data emerges from the US. In times of economic uncertainty, gold serves as a compensatory asset, as its value increase can offset losses in other areas of the economy. Governments often utilize gold as a safe haven to present a more favorable economic picture.
The recent rally in gold, reaching ₹63,300, is a testament to its status as a safe haven. The closing of ₹63,357 last week marked a historical high, underlining the resilience and attractiveness of gold as an investment option.
Mr. Jain emphasizes that such rallies in gold are not isolated incidents. Over the past decade, numerous geopolitical events have triggered fluctuations in the commodity market. Whether it’s a dip or a surge, gold has demonstrated its ability to recover and maintain its allure for investors.
One key takeaway from Mr. Jain’s insights is the importance of tracking the commodity market’s intensity. The example of the Ukraine-Russia conflict, where crude oil prices experienced a 10% surge, serves as a clear indicator of potential repercussions in the equity market. The interconnectedness of global markets highlights the need to stay vigilant and consider the implications of significant movements in commodities.
Mr. Jain also touches on the practical application of these insights through live examples of trading calls. The recent gold buy call, initiated at ₹62,550-62,700 with a small stop-loss at ₹62,399, showcases the potential for profits in the commodity market. The call’s target at ₹63,825, yielding almost ₹1,200 in profit, reflects the effectiveness of well-calculated strategies.
Furthermore, Mr. Jain emphasizes the transparency of his services, providing access to performance sheets and call records through Google Drive. This transparency instills confidence in users, allowing them to verify the accuracy and success of the calls made.
Intraday trading is another facet of Mr. Jain’s expertise, demonstrated by the meticulous approach to setting stop-loss and profit targets. The example of the gold buy call illustrates the potential for significant gains with minimal risk, further emphasizing the value of Mr. Jain’s insights and recommendations.
The fifth advantage highlighted by Mr. Jain pertains to the commodity market’s impact on the equity market, sector-wise. By tracking commodity movements, traders can gain insights into the potential effects on specific sectors within the stock market. For instance, rising gold prices may positively impact stocks related to gold, while adversely affecting sectors with increased production costs, like consumer goods or electronics.
Navigating the intricate world of commodities demands a nuanced understanding of its advantages and disadvantages. Mr. Amit Jain sheds light on the potential pitfalls within the commodity market, offering valuable insights into the challenges traders may encounter.
Firstly, the commodity market is known for its volatility. As Mr. Jain emphasizes, news-based markets can exhibit extreme fluctuations, capable of wiping out entire capital if leveraged positions are mismanaged. While volatility presents opportunities for profit, it also carries inherent risks. Mr. Jain advocates seeking expert guidance, especially for those lacking expertise and knowledge. Partnering with a knowledgeable mentor or expert can help navigate the unpredictable terrain of the commodity market.
Another significant disadvantage is the high leverage associated with commodity trading. Unlike purchasing physical commodities where the full amount is required, trading on the exchange allows for leveraging, meaning traders can control a larger position with a fraction of the total value. While leverage provides potential for increased profits, it also magnifies losses. Mr. Jain cautions against excessive leveraging, as it can lead to financial troubles. Cover orders, offered by some brokers, further increase leverage and should be approached with caution to avoid unnecessary risks.
However, Mr. Jain suggests that these disadvantages can be turned into advantages with careful risk management and emotional control. Traders can mitigate the impact of volatility by working with options and smaller contract sizes. The key lies in responsible trading practices, avoiding unnecessary risks, and spreading investments sensibly.
Transitioning to the most crucial point, Mr. Jain guides traders on how to anticipate market movements based on scheduled data releases. Using Forex Factory as an example, he demonstrates how to access and interpret economic data that can impact commodity prices. Highlighting specific events like crude oil inventory data releases and employment change reports, Mr. Jain encourages traders to exercise caution during these times due to potential market volatility.
The blog elucidates the importance of being aware of economic indicators and their potential effects on commodities. Mr. Jain advises traders to be vigilant during certain data releases, particularly those labeled as “danger zone” events, indicating a higher likelihood of significant market impact.
Furthermore, Mr. Jain delves into the interconnectedness of global markets, emphasizing how changes in the US dollar can affect commodity prices, particularly in the Indian market. The explanation provides valuable insights for traders seeking to understand the intricate relationship between international and domestic markets.
In the final stretch, Mr. Amit Jain emphasizes the importance of a comprehensive approach to trading. By combining technical analysis, fundamental understanding, and psychological resilience, traders can enhance their ability to interpret market movements effectively. The blog serves as a valuable guide for both novice and experienced traders, offering practical insights into managing risks and capitalizing on opportunities within the dynamic commodity market.