# Beginner's Guide to Trading in Commodities - Part 2 | #Learn2Trade Session 10

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I will take one of your sessions in candle As you need to see high low of the intraday duration while doing intraday trading Line is okay for end-of-the-day as closing price is more valuable But it’ll provide you incomplete information if you don’t check high, low of 15-minutes Do you agree to this? Yes, I remember asking you why do we only plot closing price as it was one of my concern That we won’t get the entire data by just tracking the closing price Closing price is good enough when you’re doing end of the day swing You also need to check high, low, open, close while doing intraday trading This layout is distorted with the 3 chart layout. Let me try another This is a 15-minute chart Let me name it first. I’ll name it commodity. This is my chart template of commodity I will sync it with intervals and time It will sync all the 3 charts It’s a 15-minute chart and it’s synced to help me see what’s happening clearly This is gold future MCX, this is gold international and this is rupee contract I also wanted to add a dollar chart. I’m unable to add it here

It needs effort as you need to plot the trend line in each instrument and then track it The trend line will change again as it changes along with the price What can we do instead of the trend line to catch the trend You must have learnt a concept in school called Moving Average Average is when you sum the amounts of few periods Moving average is a very powerful technical indicator which tells you how the average behaves at a new price point You can select the tenure. Whether you want to take a moving average of 4, 40, or 400 periods That’s on you to decide I’ll give you a template. Insert an indicator called moving average exponential Go to indicator, select a moving average to insert it. You can make it a favourite

I have inserted a moving average. A line has appeared. This is a 9-period moving average 9-period exponential moving average. What does it mean? Are the periods defined? They have defined it, we can change it as well. We will change it

Let’s change it to 21. I follow 21 periods as it’s a fibonacci number. I will discuss this later I have used 21. What does this mean? How do we define period? Does it mean a 15-minute period? The candle size is 15-minute which I have. The average of last 21 15-minute candles It’s computing the average of last 21 15-minute candles This is the average of close. I can see open’s average or high’s average but I have chosen close

It has plotted the average of 21 periods of the 15-minute candles The average will change with a formation of every new candle As with an addition of a new candle, the new will be added and the oldest will be removed Which leads to a change in average It’s plotting each new average here, hence this line has formed here This was 21 period, now let’s add a 55-period one as well Is there any logic behind 55 as well? It’s a fibonacci number Both 21 and 55 are fibonacci numbers. There are few select numbers that suit people 21 and 55 suit me, so I use it. But you can use any Maybe you chose 53 or 60 or 47. It’s all about comfort What is this moving average telling you? The 21-period moving average is down and the 55-period moving average is above it Think logically what is it trying to say That over a more period of time, there’s downtrend but not as much as in the shorter period of time It’s more in the downtrend in the shorter period of time Last sentence is correct. There is down trend in the shorter time frame As 21-day moving average is beneath the 55-day moving average As long as the 21-day is beneath the 55-day moving average, it’s in down trend This is true for any instrument. You can use it on nifty as well If the 21-day moving average is beneath the 55-day moving average, then it’s in the down trend If 21-day moving average is above the 55-day moving average, it means that it’s preparing to Come in the short-term uptrend from the down trend This is to identify a trend It’s not a confirmation tool that the trend is negative I’ll do the same in all. Let me insert the indicators

It will take some time to create a template but once you select it and save it, it becomes easy I’ve used 21 and 55 You will get 2 moving average if you click it twice. 21, 55 You must be thinking that why are you just selecting 21 and 55 It suits me, you choose whatever suits you Try with 21, 55. Maybe it suits you as well I have added it. I’ll save the template by clicking here. My template is also saved Now you tell me can you see a downtrend in gold MCX? Can you see a downtrend in USDINR? Is the top line 21? Yes, blue is 21 and the other colour is 55. I’ve selected this for all You can see a downtrend here as well. It means that the price is going down

Rupee is becoming strong In the gold US, it’s still in the down trend as blue is beneath the grey showing down trend And dollar is in up trend The relationship is such that if dollar is strong, gold will be weak and rupee will be strong Means rupee will go down, so MCX gold will also go down I’ll repeat it. If US dollar is strong, then gold will be weak in US dollar terms If a currency is denoted with an instrument it will result in the instrument getting weak if the currency becomes strong In rupee terms, if the value of rupee is going down, then consumption becomes expensive Same concept. If the dollar weakens or gets stronger, the price of the dollar denominated instruments go opposite An indirect relationship. It works on everything.

If you notice that whenever, dollar gets strong, the financial assets gets weaker world wide As all the instruments are dollar denominated Dollar is getting strong, the gold in dollar terms is weak Rupee is getting strong, it is going down. Generally, that’s not the case As if the dollar gets strong, rupee will weaken, but here the rupee is going down, means that rupee is also strong How can this happen then? It’s possible. These are short term movements, so there can be situations Where the market is not working logically If you see it holistically, then dollar is strong, gold is weak, rupee is strong, the chances of MCX being weak is very high MCX’s price = gold in dollar terms * rupee If the gold is weak in dollar terms and rupee is also going down, there are good chances of MCX gold to be weak If this is looking weakish, what will you do? I’ll trade by selling You will look for an opportunity to sell it. We had discussed about buying and selling as per demand zone and supply zone You need to sell whenever it’s going beyond the demand zone with a small stop loss You need to sell whenever it’s nearing the supply zone with a small stop loss Why are you selling? As the overall picture asks you to sell When you’re doing intraday trading, understand the major trends of the instruments through the 15-minute chart And when you feel that the trend of gold or any other instrument are in sync with the trend of other instruments Then you need to strategize how to participate as per the trend This is the most simple way to trade in gold. There is no fundamental, no logical reasoning