Selected row of the transaction

Trading Guide
18/07/2023

There are more than 40 commodities traded through the Vietnam Commodity Exchange. Commodities are divided into 4 main groups: Agricultural Products, Industrial Materials, Metals and Energy. Have you ever wondered about which products to deal with, and what criteria should be used to evaluate potential products?

The answer depends on a lot of factors such as your capital big or small, you choose your strategy long-term or short-term trading, your personality and trading psychology (maybe) you will prefer volatility strong or prefer stability in a price zone). In addition, no matter what market you trade in, large trading volume or high liquidity is always an important criterion, the more people participating in the transaction, the more difficult your buying and selling becomes. should be easier.

When trading commodities, liquidity should be a priority consideration, high liquidity indicates the ease of Buying and Selling of Commodities. In other words, liquidity is a measure of how many buyers and sellers are in the market and whether transactions are easy.

When there is a significant amount of trading, there is both high supply and demand, the market involved will be very liquid. A liquid market is usually less risky, as there will often be other people willing to trade at a variety of prices. High liquidity also means less slippage.

Slippage is defined as the difference between the price delivered to the trader and the actual price at which the trade was executed. Slippage can work both in your favor and against you – for example, if you trade low-liquidity commodities that could potentially lead to higher losses.

In addition, commodities with low liquidity often face strong price fluctuations. As such, if you are looking to trade the commodity market, you should try to focus on highly liquid commodities. Some of these highly liquid commodities are commodity groups such as energies: Oil, Natural Gas, precious metals such as Gold and Silver, and agricultural products such as Cotton, Soybeans and Wheat. i.e. items with high volume of transactions).

One way to manage liquidity risk is to use stops to secure your position closed at a pre-selected price.

It should be noted that each commodity has different characteristics, so their prices are affected by different factors.

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