Market Sentiment For Commodities

Using Market Sentiment For Commodities

Wed May 19 2021 19:20
Market sentiment is used by different market traders in different trading markets. Whether you trade commodity futures or not, market sentiment is vital to you. Undoubtedly, there are trading indicators and some other trading signals that help you in live trading. But market sentiment is also one of the best trading tools you can use. 

Before investing in any trading market, you need to analyze the financial instrument. There are various financial instruments that are traded by a commodity trader.

All these different investment instruments have different volatility and liquidity associated with them. The commodity prices move with the help of many factors in the commodity market. The commodity exchange market also has a market sentiment and its effects. 

Here you will learn how to use market sentiment in the futures market or commodity trading. Whether you are trading agricultural commodities, ETFs, derivative products or futures and options. 

All of these trading instruments can be traded with Market Sentiment. You can add market sentiment to your trading strategy and make it one of the best trading strategies. 

Why should traders use market sentiment for commodities? 

Someone who trades commodities can use market sentiment without any problem. Trading commodities can be profitable compared to currencies when it comes to market sentiment. Market sentiment helps you trade commodities or stocks with more profitability. 

The profitability of trading depends on the accuracy of trading decisions. The same is true for the futures market. Unlike forex, commodities have a little stability in the market. Therefore, market sentiment can be easily used to predict the market movement. 

How to predict the market sentiment for commodities? 

Before you start trading commodity futures in the market, you need to know how the market will move. You can buy or sell commodities at a profit and pay less trading commissions. 

From oil futures to gold futures, you need to know all the trading instruments available. A commodity broker will always tell you which futures options are good to invest in. But still, you need to know how the market moves and how it is predicted. 

Below is one of the best ways to predict market movements. Undoubtedly, supply and demand is the most important influencing factor. But there are the following factors that can be used to predict the commodity markets. 

Trade Analysis 

Trading analysis is important for all traders. Trading analysis provides an overview of the market movement. Based on this overview, one can also predict the market sentiment and movement. 

Trading analysis and its analysis reports can be used as an indicative factor. Below are the three main types of analysis and trading methods that you can use in the commodity market. 

Fundamental analysis 

Fundamental analysis is used by commodity traders. Futures prices can be analyzed using fundamental analysis. This is because fundamentals always show positive reactions when analyzing financial futures. 

Technical analysis 

Technical trading is also a good option for traders involved in online futures trading. Whether you are trading index futures or you want to trade energies, soft commodities, crude oil futures and more. All of these can be analyzed technically. 

Market Sentiment 

Market sentiment can also be used as a trading indicator. This trading indicator is used by traders and can be more effective than the others. But it is not a good option for trading commodities. However, you can still use market sentiment for your commodity trading account. 

Important commodities that move with the sentiment 

The platform you use for trading commodities, options and more offers you many financial instruments. But here are some important commodities that move with market sentiment. Market sentiment and the market are correlated. 

The market moves with the sentiment and sometimes the sentiment moves with the market. Below are the major commodities that you can trade with market sentiment. 


Futures on gold can be successfully traded using market sentiment. The gold market is one of the most stable and growing markets. Even during a financial crisis, gold can give you nice profits. Therefore, it is safe to trade gold based on market sentiment. 


The second most traded commodity in the precious metals category is silver. After the gold market, most investments are made in the silver market. Whether you trade futures contracts or silver ETFs, you will find that it moves with the mood. 

Crude Oil 

Demand and supply are the main factors that move crude oil. But the oil market can also be moved by market sentiment. Whenever market sentiment tends to move towards demand, crude oil rises. And the opposite happens in reverse circumstances. 

Agricultural products 

Agricultural products are also a part of the commodity market that moves quickly and can bring profits to market traders. These products are also influenced by supply and demand, but market sentiment still plays a role. 

Trading commodities with market sentiment 

Now let's talk about how to trade commodities with market sentiment in mind. There can be different market sentiments out there. The first thing you need to do is to identify the right market sentiment for your trading account. Below are some of the common market sentiments. 

Common market sentiments 

There are three market sentiments. But most experienced traders will only tell you about the two market sentiments. However, we believe that you need to be aware of the third and most complex market sentiment. Knowing all three will always add value to your trading experience and trading knowledge. 

Bullish Sentiment 

When the entire market is showing a bullish reaction, meaning that the market has a high level of buy or sell signals, it means bullish sentiment. When the market is in an uptrend, traders refer to it as a bullish sentiment. 

Bearish sentiment 

Bearish sentiment is the opposite of bullish sentiment. When there is a downward movement and almost no buy or sell signal is generated by the indicators, it means bearish sentiment. 

Complex sentiment 

Complex market sentiment is said to be when you have difficulty in identifying which trading signal is being given, bearish or bullish? In such a situation, you need to analyze deeper to identify the sentiment. 

Selecting a trade action 

After identifying the right trading sentiment, you need to select a trading action. Remember that your trading action will determine whether you will lose money or make a profit. So, it is recommended to choose carefully. 

Trade against the sentiment 

The first option is to trade against the overall market sentiment. If the overall market sentiment encourages you to buy a financial asset, then do not buy it and go against the market sentiment. 

Go with the market makers 

The second option is quite simple for beginners. You need to go with the market makers or the other successful traders

Summary - Market sentiment for commodities 

Market sentiment for commodities plays an important role in making profits. Trading profitability depends on many factors and market sentiment is one of them. Your trading experience will show how accurately you can recognize the market sentiment. You can identify the market sentiment and then use that sentiment to take trading action. 
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