Monday, January 13, 2014

How to trade low volume ETF

Most commodity holdings are under the umbrella of an asset like crude oil or natural gas. Traders know that, energy products are among the most popular in the commodity world, but showing value towards these investments can have some adverse effects on their portfolio.  Energy products are quite often highly correlated to the movement of general markets, meaning that they will move closely in line with something like the S&P 500. One of the main reasons that commodity trades are needed in a portfolio is the low correlation and diversification benefits that these investments offer.  An energy heavy portfolio will likely only increase your losses on bad days which may not be enough to be erased by days in the black.
How to trade low volume Concerns over demand from China have weighed on iron ore prices for some time, and the world's largest producers of the raw material ended May 2012 in the red. But some say sentiment could improve in the second half of this year. It's not clear if sentiment alone, however, can prop up the sector. Annalists steel raw materials  weaker Chinese underlying demand, coupled with plentiful supply and ample stocks drove the iron ore market downward in May, as falling steel prices in China weighed heavily on sentiment in the iron ore market. In a recent Commodities Compendium on iron ore, trading analysts noted that the persistent supply struggles, coupled with grade degradation at existing assets, "highlight the challenges in bringing incremental iron ore supply to market and a need to discount heavily potential future growth."