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1 year or the expected duration of your holding to know how muct return it will offer with
specific % movement in the index.Formula 7: Try to Use the GRACH method to find the
expected volatility the stcok may show during the period of your holding - See more at:
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Learn Commodity Trading Technique
Introduction: Trader say Commodity future trading is the safe bate as compared to the stock
trading. It is not because of the low margin it attracts for the trade. Trading in the commodity
future is a structured affair and it is balanced globally hence forth is safe to trade in commodity.
The demand and supply curve which makes the movement in the commodity price is always
over shadowed by the global activities. Though it is a broad and wide spectrum of study but
much time the traders used to neglect its study and analysis. It is my sincere requests do not
ever analyze the commodity price based on technical indicator, oscillator or moving average
study alone. You must understand the internals of the commodity tradingTradable commodity is
classified into 2 categoriesA. Cyclic commodityB. Non Cyclic Commodity.Further more
commodities are classified as the nature dependent and industry dependent. Going one step
further it is classified into two more categories economy dependent and economy independent
commodity. All agree cultural tradable commodities are cyclic, nature dependent and economy
dependent too. Similarly all industry used metals, energy products are non cyclic, industry
dependent and economy dependent. Some economists also argued that semi cyclic commodity.
The demand of a specific commodity is complex tasks to analyze since it depends on many
inter continental and global factors. As a trader though you require the sound knowledge in all
these but it is quite difficult to master. Hence the next way out of this problem is "Simplest
analytical procedure to understand and apply in commodity trading"a. For cyclic , nature
dependent and economy dependent commodity the fall in production is directly proportion to the
raise in price.b. For non cyclic , industry dependent commodity the price is directly proportional
to the demand.The most intelligent method to analyze this commodity price is to use the
correlation analysis of domestic currency with the domestic commodity price. The correlation
tool is readily available in Microsoft excel to do the job for you. The 2nd intelligent procedure to
identify the price trend of the commodity will be using the cycle theory approach of the Elliot,
W.D.Gann. As a commodity trader identify the trend using the cycle theory approach, do the
correlation analysis with domestic or any global standard currency. if possible find the beta and
initiate a successful trade . Though the information given by me is half cooked but I have given
the hint for all the necessary parameter which you need to do a perfect commodity analysis. The
beta decoupling method also has great success in commodity trading.
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