Re: How to become a commodities trader
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pick the one who has least professional traders active and specialize in it? (I don't have a clue about where to get this data)
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i think it is far more important to understand the structure of the market. the # of pro traders doesn't tell you as much as the amount of hedging $ vs. speculative $.
you can look at the futures curve and look at its structure and get data on the total # of shorts that have been consistently and continually rolled. it'll be hard to tease anything useful out of this data so maybe a more common sense/asking pros or others approach is necessary.
your goal should be to pick the commodities where there are the most inefficiencies, not the least # of pro traders b/c the latter could indicate that the market is extremely efficient. what trading does necessitate is a solid grasp of supply and demand in that market.
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Also volatility is a big plus for every trader, but is it mandatory for the goods to have an uptrade in prices or does the good commodities trader earn money in both bull and bear markets? In other words, do the prices have to follow an up or down trend for traders to make money or can you time the market on times where the prices are flat and vary only due to "noise"?
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i would back up a step if i were you. it doesn't sound like you have a solid foundation in thinking about trading yet. for instance, the spot price can remain 100% flat for an entire year (virtually impossible) but you can still make a TON of money if the futures market is moving around significantly but not enough to pull the spot one way or another (or the futures market moves a ton and CAN'T pull the spot one way or another due to a lack of a lending market in the commodity thus preventing arbitrage from doing its job).
Barron
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