Commodity investment is the actual transaction of assets such as gold and agricultural products and the transaction (investment) of commodities. Unlike stock investment and FX, it is attracting attention because it is not easily affected by corporate performance and inflation. However, what are the characteristics of commodity investment and what kind of strategy should be used to succeed? Below are three practical strategies.

• Understand the market cycle

Commodity investments are geopolitically sensitive. Therefore, it will be easier to invest if you know under what circumstances commodities will rise and fall.

For example, “the more geopolitical tensions are, the easier it is for gold to rise” and “when demand increases, it rises, but when consumers are less willing to buy, it falls.”

• Focus on one commodity

Commodity investments are as volatile as equity investments. Due to the wide range of price increases and decreases, it is easier to track movements by deeply researching one commodity. In other words, you can reduce the risk of losing money.

• Use a breakout strategy

Commodity investments are highly volatile, so a breakout strategy of buying and selling in anticipation of the moments of price increases and decreases is suitable. The moment of price increase / decrease can be analyzed by looking at the past increase / decrease.

Source: Plato Data Intelligence: Platodata.ai