James Trescothick

What is the ISM Manufacturing Index

When it comes to economic indicators that have the power to stir up the markets, the ISM Manufacturing Index is one you want on your radar. Often overlooked by the casual investor, this report is a heavyweight in terms of influence especially for those with an eye on the U.S. economy and broader global trends. So, what is it? Published monthly by the Institute for Supply Management (ISM), the Manufacturing Index also known as the PMI (Purchasing Managers’ Index) measures the economic health of the manufacturing sector. The report is based on surveys of purchasing managers across key industries, touching on everything from new orders and production levels to supplier deliveries and employment. In short, it gives us a real-time snapshot of how manufacturers are feeling and, more importantly, what they’re doing. Now here’s the kicker: the index is a leading indicator. That means it tends to move before the broader economy does, making it incredibly useful for traders and investors looking to get ahead of the curve. The magic number here is 50 readings above suggest expansion, while anything below signals contraction. Why should you care? Because markets move on expectations. A stronger-than-expected ISM report can send equities soaring and boost the dollar, while a weak read can trigger selloffs and spark recession chatter. It’s the kind of data point that can influence Federal Reserve decisions and shape investor sentiment in a big way. In essence, the ISM Manufacturing Index isn’t just a data drop it’s a pulse check on the economy’s production engine. Whether you’re trading currencies, commodities, or equities, knowing how to read this report can give you an edge. And in today’s fast-paced financial world, every edge

اعرف المزيد

Why the Non-Farm Payroll Report is a Market Mover

If you’ve been around the trading floor for more than a minute, you’ve probably heard the phrase “NFP Friday” tossed around with a mixture of anticipation and anxiety. That’s because the Non-Farm Payroll (NFP) report is one of the most important economic indicators in the financial calendar and when it hits, markets move. But why does this report wield so much power? And what should traders be watching out for? Let’s break it down. What Is the Non-Farm Payroll Report? The NFP report, released on the first Friday of every month by the U.S. Bureau of Labor Statistics, tells us how many jobs were added or lost in the U.S. economy excluding farm work, government employees, private household workers, and employees of non-profit organizations. In simple terms: it’s a health check on the U.S. labour market. But it’s not just the headline jobs number traders care about. The report also includes data on: Unemployment rate Average hourly earnings Labor force participation rate Each of these metrics gives clues about consumer spending power, inflation pressure, and the broader economic trajectory. Why Should Traders Care? Here’s the thing the Federal Reserve watches the labour market like a hawk. Their dual mandate is to keep inflation in check and ensure maximum employment. So, when the jobs data surprises either positively or negatively it can shift the Fed’s stance on interest rates, which has a domino effect on everything from currencies to commodities. Let’s look at how that plays out: Impact on the U.S. Dollar The NFP report is often a USD catalyst. Strong job growth signals a robust economy, which may prompt the Fed to raise rates or keep them higher for longer. That’s typically bullish for the dollar. On the flip side, weak numbers suggest economic slowdown, putting pressure on the Fed to ease off the gas pedal potentially weakening the dollar. Impact on Equities Equities can be a bit more nuanced. A strong NFP report might lift sentiment “great, the economy’s humming!” But if it’s too strong, markets might fear rate hikes that could choke off growth, especially in interest-rate-sensitive sectors like tech. Conversely, a weak report might actually boost stocks in the short term if it signals a Fed pivot toward dovishness. But sustained weakness? That’s when recession fears start creeping in. Impact on Bonds and Commodities Bonds: Yields often rise on strong NFPs (as traders anticipate rate hikes) and fall on weak data. Gold: As a safe haven, gold tends to benefit from weak job numbers or inflationary fears sparked by rising wages. Oil: Job growth supports fuel demand. A drop in payrolls? Oil can slide as growth projections are revised downward. Volatility is King If there’s one thing traders should expect from NFP day, it’s volatility. Markets can whipsaw within minutes of the report especially if the numbers deviate sharply from expectations. The key is preparation: understand the forecast, have your technical levels ready, and remember that reaction often matters more than the data itself. The initial move isn’t always the true move. Final Thoughts As I often emphasize in my live shows and webinars: “It’s not about predicting the number it’s about planning your response.” NFP day isn’t the time to wing it. It’s the time to be calculated, cool-headed, and ready to adapt. Whether you’re trading forex, stocks, or commodities, keeping an eye on the Non-Farm Payrolls could be the edge that makes your month. Miss it, and you might miss the market’s next big

اعرف المزيد

How to Trade Gold

I love gold. In fact, I adore it. It’s more than just a shiny metal or a market instrument gold was the very first asset I ever traded. It holds a special place in my journey. Call it sentimental, but when I first stepped into the world of trading, gold was priced at around $635 an ounce. Yes, I know what you’re thinking “Wow, he’s been around a while.” And you’d be right. But enough about me let’s talk about gold. Not just the glinting metal that’s captured human fascination for centuries, but the commodity, the market, and the factors that truly drive its price. A Brief (and Cosmic) Introduction Gold the timeless metal has been cherished for its beauty, rarity, and symbolism of wealth. But where did it come from? Some scientists believe gold was forged during the Big Bang, while others argue it came via meteor bombardments in Earth’s early days. Either way, its journey to our planet was dramatic fitting, really, for a metal with such a dramatic presence in financial markets. Yet when it comes to trading, gold’s allure goes beyond myth and sparkle. The Dollar Connection: A Relationship Built on Tension One of the most important things to understand when trading gold is its interdependent relationship with the U.S. dollar (USD). Let’s take a trip back to 1971 a critical turning point. Amid rising war costs and economic uncertainty, President Nixon made the landmark decision to end the gold standard, effectively untethering the dollar from physical gold. This allowed the U.S. government to print money more freely and so, the floating U.S. dollar was born. Since that moment, gold and the dollar have maintained a fascinating push-pull relationship. Why? Because while governments can print dollars, they can’t print gold. Its supply remains finite, and that scarcity matters. Here’s the dynamic: gold is priced in USD. So, when the dollar strengthens, gold often weakens and vice versa. As a trader, you’ll want to keep a close watch on key U.S. economic indicators like: CPI (Consumer Price Index) Non-Farm Payroll (NFP) reports Federal Reserve interest rate decisions Poor economic data can weigh on the dollar and push gold higher. Conversely, strong economic reports can strengthen the greenback and apply downward pressure on gold. Inflation: The Slow-Burning Fuel Gold is commonly referred to as a hedge against inflation and that’s mostly true. However, history shows us that gold tends to react more significantly when U.S. inflation hits extreme levels, such as double digits. When inflation rises, the purchasing power of currency falls, prompting investors to seek refuge in assets that retain value like gold. But be cautious; gold doesn’t always respond immediately to inflation news. It’s often about expectations, not just the raw data. The Safe Haven Effect: Gold in Times of Crisis Gold shines brightest when things go dark. During periods of economic slowdown, geopolitical tension, or military conflict, investors often rush to gold as a safe haven. It’s a familiar pattern: when fear grips the markets, gold becomes the anchor. A notable statistic: gold has delivered positive returns in five of the last six bear markets. When equities falter, gold often steps into the spotlight. Supply, Demand, and Central Banks Unlike fiat currencies, gold is a physical commodity. It can’t be created it must be mined. This limited supply gives it an intrinsic value, but the demand side of the equation is just as critical. Central banks play a major role here. For example, if the People’s Bank of China (PBoC) is buying gold to increase its reserves, this signals rising demand which can support prices. Conversely, if a major institution like the Bank of England begins liquidating its gold holdings, that excess supply can weigh on the market. In short, gold’s value is as much about geopolitical positioning as it is about jewellery or industrial demand. The Federal Reserve & Real Yields: The Hidden Influence We’ve already touched on interest rate decisions, but there’s another lever the Federal Reserve controls that significantly affects gold: real yields. Real yields refer to the return on U.S. Treasury bonds minus inflation. Essentially, it’s what investors actually earn in real terms. Gold has a negative correlation with real yields. When real yields rise, gold tends to fall. That’s because rising yields offer an attractive return while gold pays no interest. When real yields drop or turn negative, gold becomes more appealing as a store of value. This subtle yet powerful relationship often explains price movements that seem irrational at first glance. Final Thoughts: The Enduring Case for Gold Gold isn’t just a shiny metal or a historical relic. It’s a dynamic, global market influenced by currencies, central banks, investor sentiment, and macroeconomic forces. Whether you’re just starting out or refining your strategy, understanding the fundamental drivers of gold will give you an edge. It’s not about chasing every tick it’s about recognising the broader narrative and positioning yourself accordingly. So yes, gold was my first love. But more than that, it’s a market that continues to teach me lessons even after all these years. And that’s the beauty of trading: it’s not just about profit, it’s about

اعرف المزيد

How to Choose the Right Expert Advisor (EA) for You

Let’s face it automated trading can feel like a gold rush. Everywhere you turn, someone’s promising a plug-and-play EA that’ll have you sipping cocktails on a beach while your MetaTrader account fills up. The truth? Most of those EAs are more snake oil than silver bullet. But don’t worry—I’ve been around the block, and I’m here to help you sift through the noise and find the right Expert Advisor for you. First Things First: What Is an EA? Just in case you’re new to the party—an Expert Advisor is a piece of software that runs on MetaTrader platforms (MT4 or MT5), placing trades on your behalf based on pre-set rules. Think of it like your digital trading assistant who never sleeps, doesn’t get emotional, and doesn’t second-guess a setup because they watched the news. But like any assistant, it’s only as good as the person who programmed it. So choosing one isn’t just about flashy results—it’s about fit. Step 1: Know Your Trading Personality Before you even look at an EA, ask yourself a few questions: Are you a scalper or a swing trader? Can you stomach long drawdowns? Do you want full automation, or are you more into semi-automatic systems that assist but let you take the final shot? Understanding your own risk tolerance, trading goals, and preferred strategies will instantly help you eliminate 70% of EAs out there that just don’t align with your style. Pro tip: If you’re a conservative trader using an aggressive EA, you’re basically mixing oil and water. It won’t end well. Step 2: Don’t Get Hypnotized by the Back test We’ve all seen those glorious equity curves straight lines to the moon, 99.9% modelling quality, zero losing trades. It’s seductive, but back tests can be misleading. What you want is: Forward testing results on a live or demo account. At least 6–12 months of consistent performance. Verified track records, think Myfxbook, FX Blue, or other reputable platforms. Step 3: Ask the Hard Questions When evaluating an EA, go full detective mode. Here’s what to look into: Trading logic – Is it transparent? If the seller won’t even give you a general idea, run. Risk management – Does it use stop losses? Or is it martingale in disguise? Drawdown stats – A 5% gain means nothing if the EA risks 40% to get it. Broker compatibility – Some EAs need tight spreads and low latency. Don’t pair a scalper EA with a high-spread, slow-execution broker. Step 4: Test Before You Trust Never, and I mean never, drop an EA on your live account without running it in demo first. Give it a few weeks. Learn its rhythm. Watch how it behaves in different market conditions. You’re not just testing the results you’re testing your comfort level with how it trades. Step 5: Updates and Support Matter A good EA comes with solid after-sales support. Market conditions change. Brokers update their rules. MetaTrader rolls out new versions. Your EA should evolve too. Is the developer active? Do they release updates? Do they answer questions and fix bugs? If not, you might be left holding the bag when something breaks. Bottom Line The right EA is like the right pair of boots: dependable, comfortable, and suited to the terrain you’re walking. It should match your trading style, come from a transparent and reliable source, and perform well in the real market, not just in back test land. There’s no magic bullet but with the right approach, an EA can be a powerful tool in your trading arsenal. Just keep your eyes open, your expectations grounded, and your due diligence game

اعرف المزيد

Moving Averages

In the fast-paced world of trading, where price moves can seem completely random, every trader craves a bit of structure something to help make sense of the chaos. Enter the humble Moving Average. It’s one of the most popular technical indicators out there and for good reason. It’s simple, powerful, and, when used correctly, can become a trader’s best friend. Let’s break it down, plain and simple. So, What Exactly is a Moving Average? A Moving Average (MA) is just that: an average price, but one that updates (or “moves”) over time. It smooths out price data, helping you focus on the trend rather than getting distracted by short-term volatility. In other words, it cuts through the noise and gives you a clearer picture of where the market’s actually heading. You’ll most often hear about two types: Simple Moving Average (SMA): Just a straight-up average of closing prices over a set number of periods. Exponential Moving Average (EMA): Gives more weight to recent prices, making it more responsive to current market action. Why Do Traders Use Them? Good question. Moving Averages help traders: A) Identify the trend direction B) Spot potential entry and exit points C) Filter out market “chop” D) Act as dynamic support and resistance They’re not just lines—they’re insights into momentum and sentiment. Let’s Talk Timeframes The number of periods you use depends on what kind of trader you are. Short-term MAs (e.g., 10 or 20 periods): Great for active traders and scalpers Medium-term MAs (e.g., 50 periods): Popular with swing traders Long-term MAs (e.g., 100 or 200 periods): Used by position traders and investors to assess the big picture Example: A 200-day moving average is often seen as a key indicator of a stock’s long-term health. If price is above it, we’re in bullish territory. Below it? Things might be turning bearish. Moving Averages in Action One of the most classic uses? The moving average crossover. This happens when a short-term MA crosses a longer-term one. Golden Cross: When a short-term MA crosses above a long-term MA = bullish signal Death Cross: When a short-term MA crosses below a long-term MA = bearish signal Sounds dramatic, but it’s surprisingly useful when paired with other tools like volume or trendlines. Another great tip: Moving averages can act like dynamic support or resistance. Ever notice how price bounces off a 50 EMA? That’s no accident. Many traders are watching the same levels and reacting to them. Things to Watch Out For Look, no tool is perfect. MAs lag behind price because they’re based on past data. In a sideways market, they can give false signals. On their own, they won’t tell you why something’s moving—just that it is. So, always use them in conjunction with other indicators or price action. Think of MAs as your co-pilot, not the autopilot. Final Thoughts Moving Averages are like the compass in your trading toolbox. They won’t predict the future, but they’ll help you stay on course. Keep it simple: understand what they’re showing you, experiment with different timeframes, and don’t forget to use them in context. Over time, they can help you build discipline, spot clearer setups, and avoid jumping into choppy trades. So next time you open a chart, throw on a couple of moving averages and see what story they’re telling. You might be surprised how much they

اعرف المزيد

The Cornerstones of Market Analysis

When you’re first diving into the world of trading, you’ll often hear the terms support and resistance thrown around like confetti. But what do they really mean? Are they just buzzwords used to make trading sound more complicated than it needs to be? Absolutely not. Support and resistance are two of the most foundational concepts in technical analysis and once you get your head around them, they can completely change how you look at price charts. What is Support? Let’s start with support. Imagine the price of an asset falling like a ball being dropped. Now, unless you’re on the moon, that ball is eventually going to hit the floor and bounce. That “floor” in trading terms is what we call support a price level where the market tends to stop falling and may even bounce back up. Why does this happen? Simply put, it’s where buying interest typically starts to outweigh selling pressure. Traders might see the price as a bargain at that level and start buying in, which pushes the price back up. You’ll often see support levels form at: Previous lows Key psychological levels (think 1.2000 on EUR/USD) Moving averages or Fibonacci retracement zones And What About Resistance? Now, flip that example. Resistance is like a ceiling. The price rises, hits a certain level, and struggles to break through. Why? Because that’s where sellers start stepping in, either to take profits or enter new short positions. It’s like the market saying, “Woah, this is getting a bit pricey,” and the selling pressure starts to build up. You’ll find resistance showing up around: Previous highs Round numbers Technical indicators (like the upper Bollinger Band or trendlines) Why Are These Levels So Important? Great question. Support and resistance levels aren’t magical lines. They don’t guarantee a reversal. But they do represent key decision points where buyers and sellers have historically clashed. These zones often become self-fulfilling prophecies. Why? Because so many traders are watching them. If enough people expect a bounce at support or a rejection at resistance, their actions help make it happen. And it’s not just retail traders using these institutions, algo systems, even central banks pay attention to them. Final Thoughts If you take one thing away from this article, let it be this: support and resistance are not just lines on a chart they’re battle zones where the psychology of the market plays out. Learn to recognize them, watch how price reacts around them, and always stay flexible. Markets evolve, and what was support yesterday can become resistance tomorrow (yep, that happens it’s called a role reversal). Keep practicing, keep observing, and over time, your ability to spot these levels will become second

اعرف المزيد

ما هو أسلوبك في التداول؟

One of the first things I ask new traders is this: “What kind of trader do you think you are?” Cue the blank stares. It’s not their fault when you’re new to trading, you’re bombarded with strategies, indicators, timeframes, and buzzwords. But here’s the truth: Knowing your trading style is as important as knowing the market itself. It’s about matching your personality, your lifestyle, and your mindset to a method that actually works for you. So let’s break down the main trading styles. You might spot yourself in one or maybe a mix. Either way, by the end of this, you’ll have a clearer picture. Scalping – The Speed Demon If you’re the kind of person who gets bored after two minutes of silence, scalping might be your game. The vibe: Ultra-short-term trades. In and out of the market within seconds or minutes. The tools: Fast execution, tight spreads, quick decision-making. The catch: You need laser focus, rock-solid discipline, and no fear of staring at screens for hours. Ask yourself: Do I enjoy high-speed, high-pressure environments? Can I handle dozens of trades in a session without burning out? Scalping might be for you if you’re fast, focused, and thrive on adrenaline. Day Trading – The Active Hustler You’re not into overnight risk. You want to start the day with opportunities and finish flat. The vibe: All positions opened and closed within the same trading day. The tools: Economic calendars, technical analysis, intraday charts. The goal: Grab the moves, avoid the news bombs overnight. Ask yourself: Can I commit a few hours each day to watch the markets? Do I want full control and no surprises when I sleep? Day trading might be your thing if you’re active, strategic, and like to end the day knowing exactly where you stand. Swing Trading – The Cool, Calm, and Collected You’re in it for the slightly longer haul. You want to catch those juicy moves over a few days or weeks—without babysitting every candle. The vibe: Trade setups that play out over several days. The tools: Technical setups, trend analysis, fundamental catalysts. The lifestyle: Great for people who work full-time or want less screen time. Ask yourself: Am I patient enough to let trades breathe? Do I trust my analysis to ride out a few bumps? Swing trading might suit you if you’re strategic, calm under pressure, and prefer a “set it and monitor” approach. Position Trading – The Long-Term Visionary Now we’re talking big picture. You’re not here for quick wins you want to ride major trends, like a market monk. The vibe: Holding positions for weeks, months, even years. The tools: Macro analysis, fundamentals, interest rate trends. The mindset: Think investor more than trader. Ask yourself: Can I stay in a trade for weeks without panicking over a pullback? Do I have the patience to trust the long-term process? Position trading is for the thinkers, the planners, the macro buffs. So… Which Style Is Your Style? There’s no one-size-fits-all in trading. The best strategy in the world is useless if it doesn’t fit you. Ask yourself: How much time can I dedicate to trading? Do I like fast decisions or slow analysis? Am I emotionally wired for rapid wins—or long-term growth? The sweet spot? When your trading style matches your personality. Final Word From the Pulpit Whether you’re scalping EUR/USD or holding gold long-term, consistency comes from self-awareness. Try different styles. Track your results. Learn where you thrive and where you struggle. And most importantly: Don’t copy someone else’s strategy just because it worked for them. Trading is personal. Make it yours. Now go on pick a style, test it, tweak it. See what clicks. Because the markets aren’t going anywhere… but your success might, if you find your

اعرف المزيد

رحلة المتداول: من الفوضى إلى الوضوح

Trading isn’t just a skill. It’s a journey and like all journeys, the destination isn’t always where we expect it to be. Some arrive swiftly, others take the scenic route, and many find themselves looping back before moving forward. But if you’re truly committed to becoming a successful trader, there’s a path that every trader must walk a path defined by growth, failure, self-awareness, and eventually, mastery. Here are the six essential stages every trader must pass through. Miss a step, and you’ll find yourself stuck in a loop. Embrace each one, and you just might evolve into the trader you were meant to be. 1. Unconscious Incompetence: The Blissful Beginning This is where it all begins. The charts look like opportunity. The market seems simple. You hit “buy” and “sell” with the confidence of someone who doesn’t yet know what they don’t know. In this stage, traders leap into the market with enthusiasm but without understanding. They dismiss the need for skill or education, mistaking luck for talent. Sometimes, they even see early profits — a cruel twist, because it reinforces bad habits. Eventually, reality hits. The account depletes. Confidence shatters. And the trader is faced with a choice: walk away or step up and begin learning. 2. Conscious Incompetence: The Harsh Realisation This is the toughest stage but also the most powerful. Here, the trader finally realises: “I don’t know what I’m doing.” They begin to explore strategies, read charts, and study the markets. They dive into technicals, fundamentals, and indicators. But despite all the learning, they’re still losing. Why? Because they haven’t yet built a plan. Emotion drives their trades. Impulse overrides logic. Losses feel personal. And in frustration, they may even start blaming the market or the broker instead of looking in the mirror. Want to know if you’re still in this stage? Ask yourself: Do you still let emotions drive your trades? Do you take full responsibility for your losses? Do you blame external forces when things go wrong? Do you have a written, structured trading plan? If any answer is uncomfortable you’re likely still here. But that’s okay. Awareness is the gateway to progress. 3. The Awakening Moment: Seeing the Light This is the turning point. The trader, now humbled and educated, finally gets it. The charts haven’t changed they have. They begin to understand that trading isn’t about knowing everything it’s about knowing yourself. They realise that without discipline, no strategy can save them. They learn to take full accountability. And above all, they discover the necessity of a plan a real, structured, and repeatable approach. It’s not enlightenment. It’s responsibility. And it’s the beginning of true change. 4. Conscious Competence: Trading with Awareness Now, the trader becomes deliberate. They have a plan perhaps not perfect, but it’s theirs. Every trade is calculated. Every move is part of a process. It’s no longer about instinct, but about consistency. They follow rules. They journal trades. They reflect. And they know that if they stray from the path, they’ll slip back into old habits. This stage requires effort. Focus. And patience. But for those who persist, something magical begins to happen. 5. Unconscious Competence: Flow State This is the destination every trader dreams of not riches, not glory, but effortless execution. The plan is second nature. Emotion is no longer a threat. Trades are taken without hesitation, not because of arrogance, but because of clarity. The trader becomes the strategy. Like a seasoned athlete or a concert pianist, they no longer think they simply do. This is mastery. But it’s not an endpoint. Even here, vigilance is required. The market evolves, and so must the trader. But now, they have the tools and the mindset to adapt. Final Thoughts: Know the Road, Respect the Journey No trader is born a master. Every expert has walked through failure, doubt, and frustration. The difference is they didn’t quit they learned. Understand where you are on this path. Be honest with yourself. And most importantly, don’t rush the process. Each stage has its lessons. And every lesson, no matter how painful, brings you one step closer to becoming the trader you deserve to be. Because in the end, trading isn’t just about profits. It’s about growth. And the real destination? It’s you, at your

اعرف المزيد

What is a Pip?

Ah, the humble pip. No, we’re not talking about fruit seeds or Dickens characters here. In the world of trading especially in the fast-paced lanes of forex a pip is the heartbeat of price movement. It’s short for “percentage in point” or “price interest point.” Doesn’t exactly roll off the tongue, does it? But bear with me. Let’s break it down in proper English. Imagine you’re trading currency pairs, say, GBP/USD (because of course, the pound deserves top billing). If the price moves from 1.3000 to 1.3001, that tiny shift is called one pip. It’s the fourth decimal place in most currency pairs. Just one wee click on the ladder but when you’re trading in bulk, that pip can pack a punch. Some of the overachievers in the room deal in pipettes fractional pips measured at the fifth decimal place. Great if you’re a precision nut or enjoy staring at charts until your eyes water. How Do You Actually Calculate a Pip? (In USD) Right math time, but don’t run for the hills just yet. Let’s say you’re trading a standard lot, which is 100,000 units of the base currency. In most major currency pairs, one pip is 0.0001. So, the formula to calculate pip value in USD (when USD is the quote currency, like in GBP/USD or EUR/USD) is: Pip value = (1 pip) × lot size So, for GBP/USD, with one pip being 0.0001 and a standard lot of 100,000: 0.0001 × 100,000 = $10 per pip Yep $10 per pip on a standard lot. If you’re trading a mini lot (10,000 units), it’s $1 per pip, and a micro lot (1,000 units) gives you $0.10 per pip. Simple, right? Now, for pairs where USD is the base currency, like USD/JPY, the calculation’s slightly different due to the way the yen is quoted. But let’s not make it a maths class just know that the value shifts depending on which side of the slash the dollars on. Final Over Bottom line: a pip is how you measure the movement of price in forex. It might look tiny, but when you’re trading big volume, it’s like watching singles turn into centuries. So, the next time price shifts by one pip, don’t blink it could be $10 up or down on your position. That’s the game, and those are the stakes. Now go on treat those pips with respect. They’re the runs on your

اعرف المزيد

Fundamental Analysis for Commodities

The Two Most Important Words when it comes to trading commodities are: Supply and Demand! That’s what moves commodity prices plain and simple. Let’s dive in… Types of Commodities We can group commodities into three main categories: Soft Commodities, are agricultural goods like: Cotton, Coffee, Cocoa, Wheat, Soybeans Metals, including: Gold, Silver, Copper, Platinum Energies, the big movers: WTI Oil, Brent Crude, Natural Gas Soft Commodities (Agriculture) These are crops and crops depend on weather. Was it a good harvest? Droughts? Floods? You can find updates from the U.S. Department of Agriculture (USDA). Also, which countries produce these commodities? Take coffee beans, major producers include: Brazil, Vietnam, Colombia, Indonesia Ask yourself: Is there civil unrest? Are there export bans? What’s the local economy like? Example: When the conflict in Ukraine (a major wheat producer) started, global wheat supply dropped and prices spiked. Then look at demand: Is there rising global consumption? Any new uses for the commodity? Metals Ask: What is this metal used for? Is demand rising or falling? There are two main roles metals play: 1. Safe-Haven Metals Gold is the classic safe-haven. In times of war, recession, or uncertainty, investors flee to safety. Other safe-haven assets include: USD, JPY, CHF, and of course — gold. “When the world looks uncertain, gold tends to shine.” 2. Industrial Metals Copper is a great example also known as “Dr. Copper” because of its close ties to economic growth. It’s used in construction, electronics, and manufacturing. Check supply too: Who mines the metal? Are there labour strikes, political issues, or regulatory crackdowns affecting supply? Energies (Oil & Gas) These commodities drive the world, literally and economically. Ask: Who produces oil and gas? What’s happening in those regions? Example: Middle East tensions? Markets react quickly. Russia’s gas exports were heavily impacted by sanctions during the Ukraine war. Then there’s OPEC, the Organization of Petroleum Exporting Countries. They can increase or cut production, which moves oil prices significantly both at the pump and in the market. And finally, demand. Is the global economy growing? Is industry active? Are airlines flying more? Are factories ramping up? In boom times, demand rises. In slowdowns, demand and prices drop. Final Thought: When it comes to commodities, always come back to: Supply and Demand. That’s what drives the

اعرف المزيد