Commodity ETF trading strategy

I like to use this simple and profitable commodity etf trading strategy. ETFs trading is an important part of my personal trading. I also advise to use exchange traded funds to my clients and friends as they are really good trading vehicle especially for swing trading strategy. They are good for mid-term position trades for multiple weeks or months as well.

Commodities are an important part of business life for a lot of companies and also consumers are confronted with their price when they want fill they car’s tank – to show one example. The whole world is now using different commodities, from live cattle to oil, to accomplish economic goals.

Basics of my trading strategy for commodity exchange traded funds

The basic idea of this strategy is to use relative strength analysis between general CRB commodity index or fund with symbol DBC and a specific commodity group.

You can use group ETFs like the precious metals fund, base metals ETFs, Energy ETFs, agriculture commodity exchange traded funds. Or you can use specific individual tickers like are gold, silver or Oil fund and trade them, accordingly.

The first step – Use broad commodity fund with symbol DBC as the base index for relative strength. Here is the chart:

The second point – you will use charts of group ETFs to select ones with most relative strength for longs and with most relative weakness for shorts.

Here are charts for group ETFs – each one for specific group of commodities.

Agriculture fund:

Energy fund:

Precious metals fund:

When you compare situation on the charts above you could see some important points:

1. Commodities are in strong uptrend. You would prefer to be long some commodity exchange traded funds.
2. The most strength is in DBE and DBP. It tells you to find trade setup in Energy ETFs or Precious metals fund. There is a much bigger chance for a continuation of the rising move than in agriculture fund DBA

You can go deeper and look for more specific exchange traded fund to trade withing the strongest group. Like Gold or Silver ETF in Precious metals group.