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Gold crude research

Why Lose Money ?

Why Retail Investors Lose Money in commodity market ?

  • He is among the last few people to enter into the Bull Run
  • He keeps on changing a single commodity
  • Never put the stop loss in the system
  • Always, the first one to exit from the commodity which are in the bull run, with minimum profit
  • Don’t have a habit of trading with robotics mechanism
  • By doing Emotional Trading, Holding the positions in Loss and cutting down the positions early in profit
  • Lack of homework before entering in a commodity market
  • Lack of resources about the movements and news which affects the commodity market
  • Too much greed from a single commodity
  • Day Dreaming in commodity market also makes him suffer huge losses
  • Never traded with the trend of the markets
  • Fear in going shorts in commodity
  • Was not able to stay away from the market when is is sideways
  • Didn’t invested money in sectors which are outperforming the index
  • Listening to rumors and investing money there.

Do’s & Dont’s

  • It seemingly looks to be the simplest and the most rewarding. But in intraday trading one has to be very fast and quick and have to be on your toes always, so there are certain rules which one has to keep in mind
  • If index is in positive from yesterday and the commodity you are holding is in minus then it should be cut and if intraday trend of index is in buy then one should buy a commodity which is in plus.
  • If index is in minus then one should look to short commodity which are minus and not commodities which are in plus.
  • It is not necessary that a commodity which is weak today during intraday trading might be weak tomorrow also, simultaneously if a stock is strong today might not be strong tomorrow.
  • If International markets have gone up overnight, the markets here in all profitability will open strong, so one should be quite careful when buying commodities as the general psychology of public is to buy when good news is there.
  • Being a contrarians is very important while trading intraday.
  • Stop Loss is a must while trading intraday.
  • Always trade in very liquid commodities i.e. which have high volume because as entry and exit can be very fast in such commodities.
  • Do paper trading before you actually start trading so that when start making paper profits, then shift to actual trading.
  • Keep your volume constant e.g. if you trade in five lots of Crude Oil futures then trade in five lots only. This Position can be increased only when you are satisfied with your trading for a month. It should not be that one day you buy five lots and next day trade in ten lots and third day you get a loss and stop trading for two days.
  • Fear and Greed are at maximum levels while trading intraday so always have less position when you are new to intraday trading as otherwise you will be mostly under tension.

– Gold Crude Research Team

Trading Rules

Never risk more than 10% of your trading capital in a single trade. Always use stoploss orders.

(Here you should know your loss you can give in a situation where the trade starts going against you.)

  • Never do overtrading.
  • Never let a profit run into a loss.
  • Don’t enter a trade, if you are unsure of the trend.
  • When in doubt, get out, and don’t get in when in doubt.
  • Only trade active markets.
  • Distribute your risks equally among different markets.
  • Never limit of you orders. Trade at the markets.
  • Extra monies from successful trades should be placed in a separate account.
  • Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
  • Avoid taking small profits and large losses.
  • Never average a loss.
  • Never cancel a stoploss after you have placed it.
  • Avoid getting in and out of the market too soon.
  • Be willingly to make money from both sides of the market.
  • Never buy or sell just because the price is low or high.
  • Never hedge a losing position.
  • Never change your position without a good reason.
  • Avoid trading after long periods of success or failure.
  • Don’t try to guess tops or bottoms.
  • Don’t follow a blind man’s advice.
  • Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
  • When you lose, don’t blame it on luck.
  • Aluminium Scenario
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  • Crude Oil Scenario

    Crude Oil:

    General Characteristics:

    • Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground reservoirs. Oil and gas account for about 60 per cent of the total world’s primary energy consumption.
    • Almost all industries including agriculture are dependent on oil in one way or other. Oil & lubricants, transportation, petrochemicals, pesticides and insecticides, paints, perfumes, etc. are largely and directly affected by the oil prices.
    • Aviation gasoline, motor gasoline, naphtha, kerosene, jet fuel, distillate fuel oil, residual fuel oil, liquefied petroleum gas, lubricants, paraffin wax, petroleum coke, asphalt and other products are obtained from the processing of crude and other hydrocarbon compounds.
    • The prices of crude are highly volatile. High oil prices lead to inflation that in turn increases input costs; reduces non-oil demand and lower investment in net oil importing countries.

    Categories of Crude Oil:

    • West Texas Intermediate (WTI) crude oil is of very high quality. Its API gravity is 39.6 degrees (making it a “light” crude oil), and it contains only about 0.24 percent of sulphur (making a “sweet” crude oil). WTI is generally priced at about a $2-4 per-barrel premium to OPEC Basket price and about $1-2 per barrel premium to Brent, although on a daily basis the pricing relationships between these can vary greatly.
    • Brent Crude Oil stands as a benchmark for Europe.
    • India is very much reliant on oil from the Middle East (High Sulphur).
    • The OPEC has identified China & India as their main buyers of oil in Asia for several years to come.
    • Oil accounts for 40 per cent of the world’s total energy demand.
    • The world consumes about 76 million bbl/day of oil.
    • United States (20 million bbl/d), followed by China (5.6 million bbl/d) and Japan (5.4 million bbl/d) are the top oil consuming countries.
    • Balance recoverable reserve was estimated at about 142.7 billion tones (in 2002), of which OPEC was 112 billion tones.

    OPEC fact sheet:

    • OPEC stands for ‘Organization of Petroleum Exporting Countries’. It is an organization of eleven developing countries that are heavily dependent on oil revenues as their main source of income. The current Members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
    • OPEC controls almost 40 percent of the world’s crude oil.
    • It accounts for about 75 per cent of the world’s proven oil reserves.
    • Its exports represent 55 per cent of the oil traded internationally.

    Indian Scenario:

    • India ranks among the top 10 largest oil-consuming countries.
    • Oil accounts for about 30 per cent of India’s total energy consumption. The country’s total oil consumption is about 2.2 million barrels per day. India imports about 70 per cent of its total oil consumption and it makes no exports.
    • India faces a large supply deficit, as domestic oil production is unlikely to keep pace with demand. India’s rough production was only 0.8 million barrels per day.
    • The oil reserves of the country (about 5.4 billion barrels) are located primarily in Mumbai High, Upper Assam, Cambay, Krishna-Godavari and Cauvery basins.
    • Balance recoverable reserve was about 733 million tones (in 2003) of which offshore was 394 million tones and on shore was 339 million tones.
    • India had a total of 2.1 million barrels per day in refining capacity.
    • Government has permitted foreign participation in oil exploration, an activity restricted earlier to state owned entities.
    • Indian government in 2002 officially ended the Administered Pricing Mechanism (APM). Now crude price is having a high correlation with the international market price. As on date, even the prices of crude bi-products are allowed to vary +/- 10% keeping in line with international crude price, subject to certain government laid down norms/ formulae.
    • Disinvestment/restructuring of public sector units and complete deregulation of Indian retail petroleum products sector is under way.

    Market Influencing Factors:

    • OPEC output and supply .
    • Terrorism, Weather/storms, War and any other unforeseen geopolitical factors that causes supply disruptions.
    • Global demand particularly from emerging nations.
    • Dollar fluctuations.
    • DOE / API imports and stocks.
    • Refinery fires & funds buying.

    Exchanges dealing in Crude Futures:

    • The New York Mercantile Exchange (NYMEX) .
    • The International Petroleum Exchange of London (IPE).
    • The Tokyo Commodity Exchange (TOCOM).

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  • Silver Scenario
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