· 5 min read
How Commodity Markets React to Global Events
Commodities price physical supply and demand. That makes their reactions faster and less forgiving than equities.
A company can absorb a bad quarter. A barrel of oil cannot be produced retroactively. Because commodity prices clear a physical market, supply disruptions transmit into price quickly and often violently.
Inventories versus headlines
Scheduled inventory data gives a measurable surprise you can compare against expectations. Unscheduled supply headlines do not, and they routinely reverse the direction that inventory data had just justified.
Energy, metals and agriculture behave differently
Energy reacts to transport and geopolitical risk. Precious metals react to real yields and currency strength more than to their own supply. Agricultural commodities react to weather with a seasonal lag.
Why stops get skipped
Commodity futures gap between sessions and around scheduled releases. Assume your stop can be jumped, and set position size on that assumption rather than on the stop distance alone.
All articles
How Market News Can Create Trading Opportunities
News does not move prices by itself. What moves prices is the gap between what was expected and what was reported.
How to Read a Trade Setup
Read a setup in the order that protects you: stop first, then target, then thesis.
Understanding Entry, Stop Loss and Target
Three prices define a trade. Each one answers a different question, and mixing them up is expensive.