Basic Question

[Turboman24]

I dont really know much about commodities trading, but recently I've been going over some charts just for the heck of it. I know they have the reputation of trading primarily off of the technicals.............I was surprised to see certain patterns on the charts play out in textbook format (much less common in the stock market), and futures seem to have a much higher level of respect for S/R, Fibs, MAs, candlesticks, etc with futures.

So my question is........what is the catch. We are all mostly technicians on ET, and our tools seem to work much better with futures than on stocks.........why do so few people trade them. I'm not referring to daytrading......I'm talking swing/position trading. From what I can see the reasons are:

1. Many consider basic commodities an obsure game
2. Liquidity/Execution issues

What else?

 

[Jayford]

Quote from Turboman24:

I dont really know much about commodities trading, but recently I've been going over some charts just for the heck of it. I know they have the reputation of trading primarily off of the technicals.............I was surprised to see certain patterns on the charts play out in textbook format (much less common in the stock market), and futures seem to have a much higher level of respect for S/R, Fibs, MAs, candlesticks, etc with futures.

So my question is........what is the catch. We are all mostly technicians on ET, and our tools seem to work much better with futures than on stocks.........why do so few people trade them. I'm not referring to daytrading......I'm talking swing/position trading. From what I can see the reasons are:

1. Many consider basic commodities an obsure game
2. Liquidity/Execution issues

What else?

Good question. I started out with futures, so I've always wondered this myself. I believe the leverage creates greater perceived risk. Trading in the pits doesn't help either.

It is completely true what you say about the technicals with commodities. There is a very good reason for this. The leverage involved makes them, for the most part, a shorter term trading vehicle, and thus fundamentals have much less impact. Traders thus turn to the technicals more often than with stocks. I didn't do well applying technicals to stocks when working at a prop equities firm. Has always worked like a charm for me in futures.

Jay

 

[dojibear]

3. If you are forgetful, you may have 200 cows at your doorstep, or someone calling you asking if you want your 1000 barrels crude oil delivered via barrels or pipeline .

".........why do so few people trade them. I'm not referring to daytrading...... "

A lot of people trade them, you just don't see them here, because most of them have real jobs.


I think technical analysis actually started with the comm. market, and later applied to the stock market. The problem with this is that 'they' know that traders follow the TA signals, therefore in illiquid market, you can have 'fake' signals., or have your stop loss picked up.


Cheers !!

 

[Turboman24]

thanks for the responses guys.

 

[VictorS]

Quote from Turboman24:

"I dont really know much about commodities trading,..I was surprised to see certain patterns on the charts play out in textbook format (much less common in the stock market), and futures seem to have a much higher level of respect for S/R, Fibs, MAs, candlesticks, etc with futures. So my question is........what is the catch. We are all mostly technicians on ET, and our tools seem to work much better with futures than on stocks..."

I,TOO, AM NEW TO COMMODITIES TRADING. ANY SUGGESTIONS FOR WEBSITES PROVIDING TECHNICAL INFO ON COMMODITIES?

 

[Turboman24]

Victor, for free charting I use this site
http://futures.tradingcharts.com/menu.html

Also, the Elliott Wave Daily Futures Juncture is pretty good.

 

[-ooO-(GoldTrade]

Turboman24 >1. Many consider basic commodities an obscure game
2. Liquidity/Execution issues

Turbo I think you have a lot of explaining to do here.

Jayford >(TA) always worked like a charm for me in futures. <

Me too Jay

dojibear >If you are forgetful, you may have 200 cows at your doorstep, or someone calling you asking if you want your 1000 barrels crude oil delivered via barrels or Pipeline.

Sarcastic for sure. Cattle do not get delivered and nobody has had to store Oil. The only thing that happens at pipeline is Surfing.

>".........why do so few people trade them. I'm not referring to daytrading...... "<

Why do people daytrade? Is the real question.

We do pretty good volume trading futures, this comment goes back to the comment “commodities an obscure game.” It is just a misunderstand with no actual evidence behind it. If you include all commodities on and off the exchange (hedging). You might find that the gamblers of Wall Street are the small time obscure game.

> Technical analysis actually started with the comm. market, and later applied to the stock market.<

I have met many of the originators of today’s popular indicators. The oscillators were developed designed and perfected in the stock market with the help of volume.

They told me they turned to Commodities because stocks take to long to see what’s going to happen.

But sure, stocks have been around for a long time, but we know commodities have been around since 3000 B.C. The thing is indicators came into their own with the advent of hand held calculators and later computers.

Stochastic was developed on the first computer that was about as big as a city block, and had people walking around changing vacuum tubes 24x7.

VictorS >ANY SUGGESTIONS FOR WEBSITES PROVIDING TECHNICAL INFO ON COMMODITIES?

For sure Ross. Joe Ross will send you free lessons on how to use Technical Analysis in installments. You can get to the rest of his site by clicking Joe Ross's Trading Educators.-ooO-(GoldTrader)-Ooo-