Many traders believe that commodities require special strategies — that you can’t trade gold, oil, or wheat the same way you’d trade forex pairs or stock indices. While it’s true that commodities have unique characteristics, the idea that they demand entirely separate strategies is a myth when taken too far. The reality is: core trading principles apply across all asset classes, but commodities do require adaptations in risk management, timing, and analysis to reflect their distinct behaviour.

This article explains what makes commodities unique, which strategies carry over from other markets, and how to adjust your trading approach for these powerful, volatile instruments.

Why people believe commodities need special strategies

1. Commodities behave differently
Their price action can be more volatile, gappy, or seasonal — especially during geopolitical or weather-driven events.

2. Futures-based pricing adds complexity
Most commodity pricing originates from the futures market, which introduces factors like expiry, rollover, and contango.

3. News drivers are different
Commodities react to different catalysts — such as OPEC decisions, harvest data, or inventory reports — unlike interest rate or earnings-driven assets.

4. Correlations can mislead traders
Gold doesn’t always move opposite the dollar. Oil isn’t always about supply. These relationships are more dynamic than many assume.

5. Institutions dominate commodity flows
Large players (hedge funds, commercial hedgers, governments) can create sharp moves that seem disconnected from retail logic.

The truth: you can apply core strategies with smart adaptations

1. Price action and technical structure still apply

• Support/resistance, trendlines, breakouts, and candlestick patterns all work — especially on liquid commodities like gold, oil, and copper.
• Commodity markets often react cleanly to technical zones due to their institutional nature.

2. Risk management must adjust to volatility

• Commodities like oil or natural gas can move multiple percent per day, requiring smaller position sizes or wider stops.
• Volatility is normal — not a reason to abandon your system, but a reason to scale sizing appropriately.

3. Seasonality adds an edge

• Many commodities (grains, softs, energy) follow seasonal patterns that can enhance timing and context.
• You don’t need a unique strategy — but knowing when a market tends to rise or fall improves performance.

4. Fundamentals play a bigger role

• Understanding supply/demand shifts, inventory data, and geopolitical risk can significantly strengthen your setups.
• A technical strategy combined with macro awareness is often more powerful than technicals alone.

5. Strategy must reflect contract behaviour

• Some commodities roll monthly, while others have thin liquidity at certain expiries.
• If you’re trading ETFs or CFDs, be aware of what they’re tracking (e.g. front-month futures vs spot price).

Which strategies work well on commodities?

• Trend-following: Strong in metals and energy markets, especially during macro themes
• Breakout trading: Crude oil and natural gas often reward breakout setups during inventory days or OPEC announcements
• Mean-reversion: Works well in range-bound commodities like soybeans or cocoa during low-volatility periods
• Seasonal bias with confirmation: Use historical patterns as context, then apply your technical system
• Macro-aligned swing trading: Combine inflation, interest rate expectations, and demand trends with technical entries on gold or copper

Commodity-specific considerations to watch

Conclusion

No — commodities don’t require “special” strategies, but they do require informed adjustments. The same frameworks you use for forex, indices, or stocks can work on gold, oil, and wheat — as long as you tailor them to the unique rhythms and risks of the commodity market. Mastery isn’t about inventing a new system — it’s about adapting what works to the environment you’re trading.

To learn how to trade commodities confidently — using proven strategies adapted to their structure and volatility — enrol in our Trading Courses at Traders MBA, where we turn raw markets into refined performance.