{"id":16512,"date":"2026-03-13T09:51:52","date_gmt":"2026-03-13T09:51:52","guid":{"rendered":"https:\/\/navia.co.in\/blog\/?p=16512"},"modified":"2026-03-13T10:05:24","modified_gmt":"2026-03-13T10:05:24","slug":"introduction-to-trend-following-in-commodities","status":"publish","type":"post","link":"https:\/\/navia.co.in\/blog\/introduction-to-trend-following-in-commodities\/","title":{"rendered":"Introduction to Trend Following in Commodities"},"content":{"rendered":"<ul><li><a class=\"aioseo-toc-item\" href=\"#aioseo-understanding-the-commodity-landscape-in-india-3\">Understanding the Commodity Landscape in India<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#aioseo-the-trend-of-commodity-prices-why-they-move-so-strongly-17\">The Trend of Commodity Prices: Why They Move So Strongly<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#aioseo-what-is-trend-following-21\">What is Trend Following?<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#aioseo-how-to-build-a-trend-following-system-25\">How to Build a Trend Following System?<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#aioseo-conclusion-28\">Conclusion<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#aioseo-frequently-asked-questions-35\">Frequently Asked Questions<\/a><\/li><\/ul>\n\n\n<p>In the world of investing, few things&nbsp;are as psychologically&nbsp;challenging, yet widely studied in trading methodologies.&nbsp;Most investors are taught to \u201cbuy low and sell high\u201d but trend followers&nbsp;operate&nbsp;on a&nbsp;different philosophy; \u201center positions in the direction of an existing trend\u201d.&nbsp;In the Indian financial landscape this strategy has found its commonly applied in <a href=\"https:\/\/navia.co.in\/open-commodities-trading-account\" title=\"\">commodities<\/a> markets.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Unlike equities which often rely on quarterly earnings and corporate&nbsp;governance,&nbsp;commodities move based on the raw,&nbsp;undeniable laws of supply and demand.&nbsp;In this blog, we will explore the&nbsp;<strong>trend of commodity prices<\/strong>, the structure of the Indian market and how traders analyze price momentum.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-091aec179750ea9e6fd43aec10f7b39c\" id=\"aioseo-understanding-the-commodity-landscape-in-india-3\" style=\"color:#023368\">Understanding the Commodity Landscape in India&nbsp;<\/h2>\n\n\n\n<p>Before diving into the strategy, it is necessary to understand the playing field. India has a regulated ecosystem for commodity trading. So,&nbsp;let see&nbsp;<strong>how many commodities are traded in India<\/strong>;&nbsp;<\/p>\n\n\n\n<p>India\u2019s primary commodity exchanges like <a href=\"https:\/\/www.mcxindia.com\/\" title=\"\">MCX<\/a> (Multi Commodity Exchange) and <a href=\"https:\/\/www.ncdex.com\/\" title=\"\">NCDEX<\/a> (National Commodity &amp; Derivatives Exchange) offer a diverse range of products.&nbsp;The commodities traded in India is depends on the exchange, but they&nbsp;generally fall&nbsp;into four major categories, they are;&nbsp;<\/p>\n\n\n\n<p>\ud83d\udd38 Bullion: Gold and Silver&nbsp;<\/p>\n\n\n\n<p>\ud83d\udd38 Energy: Crude Oil and Natural Gas&nbsp;<\/p>\n\n\n\n<p>\ud83d\udd38 Base Metals: Copper, Aluminum, Zinc, and Lead&nbsp;<\/p>\n\n\n\n<p>\ud83d\udd38 Agri-Commodities: Cotton, Mentha Oil, Guar Seed, and various spices&nbsp;<\/p>\n\n\n\n<p>We saw the major categories, now you have the doubt of which authority regulates commodity trading in India?&nbsp;It\u2019s&nbsp;a common question for new entrants. The answer is the market is not&nbsp;controlled by any single entity but is strictly regulated by the&nbsp;<strong><a href=\"https:\/\/www.sebi.gov.in\/\" title=\"\">Securities and Exchange Board of India<\/a> (SEBI).&nbsp;<\/strong>SEBI ensures fair price discovery, transparent trading&nbsp;practices,&nbsp;and risk management across all exchanges.&nbsp;<\/p>\n\n\n\n<p>In short, the exchanges provide the platform, but the actual prices are driven by global supply chains, geopolitical events, and domestic consumption. &nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<a href=\"https:\/\/open.navia.co.in\/index-navia.php?utm_source=organic&#038;utm_medium=blog\" target=\"_blank\" style=\"display:flex; width:100%;\" ><img decoding=\"async\" src=\"https:\/\/d1l8l3rp33cdzs.cloudfront.net\/images\/naviacee\/Open-free-demat-account%20%28blog%29%20%281%29.gif\" width=\"80%\" \nheight=\"auto\"  style=\"border-radius:10px; margin:5px auto;\"\/><\/a>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-9ec4d2756c6bf3cdb07cb091ad69df0d\" id=\"aioseo-the-trend-of-commodity-prices-why-they-move-so-strongly-17\" style=\"color:#023368\">The Trend of Commodity Prices: Why They Move So Strongly&nbsp;<\/h2>\n\n\n\n<p>The&nbsp;<strong>trend of commodity prices&nbsp;<\/strong>is often analyzed using trend-following approaches because raw materials&nbsp;often undergo \u201cextended price movements in one direction.\u201d These&nbsp;aren\u2019t&nbsp;just random fluctuations; they are the result of deep-seated economic shifts.&nbsp;&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Seasonality&nbsp;<\/td><td>Natural gas often spikes in the winter due to heating demand, while agricultural products trend based on harvest cycles.&nbsp;&nbsp;<\/td><\/tr><tr><td>Geopolitics&nbsp;<\/td><td>Crude oil is&nbsp;famous for&nbsp;massive rallies when supply routes are&nbsp;disrupted,&nbsp;or global production is cut.&nbsp;<\/td><\/tr><tr><td>Economic Cycles&nbsp;<\/td><td>Gold often enters long-term uptrends during \u201crisk-off\u201d periods when investors flee from volatile stock markets.&nbsp;&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>These factors take time to play out; a commodity price trend can&nbsp;last&nbsp;week, months, or&nbsp;maybe multiple&nbsp;quarters.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-bb56d44fc5f8f753dc5d79337c4184d4\" id=\"aioseo-what-is-trend-following-21\" style=\"color:#023368\">What is Trend Following?&nbsp;<\/h2>\n\n\n\n<p>The trend following is a systematic <a href=\"https:\/\/navia.co.in\/blog\/category\/trading\/\" title=\"\">trading<\/a> approach where the traders confirm the current direction of the market and identify trends and observe price movements during those trends.&nbsp;So, the main goal is, you&nbsp;aren\u2019t&nbsp;trying to predict the exact bottom or the perfect top, instead&nbsp;you aim to participate in part of the price movement.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Let\u2019s&nbsp;see the three core&nbsp;principles&nbsp;of trend following;&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Price is the Primary Signal&nbsp;<\/td><td>You&nbsp;don&#8217;t&nbsp;need to be a meteorologist to trade wheat or a geopolitical expert to trade oil. Some trend following approaches involve taking positions in the direction of price movement. <\/td><\/tr><tr><td>Losses are Controlled Early&nbsp;<\/td><td>Trend followers accept that markets only trend about 30% of the time. They are happy to take frequent small losses (stops) while waiting for that one massive trend to&nbsp;emerge.&nbsp;<\/td><\/tr><tr><td>Profits are Allowed to Run&nbsp;<\/td><td>The biggest mistake beginners make is cutting their winners too early. In&nbsp;commodity trend following, trend-following strategies may involve multiple small losses and occasional larger price movements.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-d925a7a8f6a1b307e0af75cf204d2169\" id=\"aioseo-how-to-build-a-trend-following-system-25\" style=\"color:#023368\">How to Build a Trend Following System?&nbsp;<\/h2>\n\n\n\n<p>A complete system requires three things; Entry, Exit, and <a href=\"https:\/\/navia.co.in\/blog\/mastering-position-sizing-why-key-trading-success\/\" title=\"\">Position Sizing<\/a>. Here you can see more about the aspects&nbsp;(for educational&nbsp;purposes&nbsp;only).&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Entry&nbsp;<\/td><td>Don\u2019t&nbsp;jump in just because you feel a trend. Use a trigger.&nbsp;Some traders monitor price levels such as recent highs when analyzing trends. <\/td><\/tr><tr><td>Exit&nbsp;&nbsp;<\/td><td>You must have an exit plan before you enter.&nbsp;Some traders use reference levels such as recent price points when managing risk. <\/td><\/tr><tr><td>Position Sizing&nbsp;<\/td><td>In commodities, volatility plays&nbsp;an important role. If you are trading a highly volatile asset, your position size should be smaller than if you were trading a more stable asset. It ensures a position sizing may help manage overall trading risk. <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-24224169929af97cf6f4962b1b4114b0\" id=\"aioseo-conclusion-28\" style=\"color:#023368\">Conclusion&nbsp;<\/h2>\n\n\n\n<p>Trend following in commodities&nbsp;isn\u2019t&nbsp;about having a crystal&nbsp;ball;&nbsp;it\u2019s&nbsp;about having a set of rules and the discipline to follow&nbsp;them.&nbsp;By focusing on the&nbsp;<strong>trend of <a href=\"https:\/\/navia.co.in\/open-commodities-trading-account\" title=\"\">commodity<\/a> prices&nbsp;<\/strong>rather than predicting&nbsp;the future, you analyze market movements influenced by broader economic factors. <\/p>\n\n\n\n<p>Whether you are trading gold, crude oil, or zinc, remember the secret&nbsp;remains&nbsp;the same,&nbsp;risk management and disciplined trading practices are often emphasized in trend-following approaches. <\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>Do You Find This Interesting?<\/strong><\/p>\n\n\n\n<div class=\"wp-block-group is-nowrap is-layout-flex wp-container-core-group-is-layout-ad2f72ca wp-block-group-is-layout-flex\">\n<p>We\u2019d Love to Hear from you-<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/form.typeform.com\/to\/bpQ8ZlDc\"><img decoding=\"async\" width=\"300\" height=\"64\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/02\/Yes-No-Button-1.png\" alt=\"feedback yes or no button\" class=\"wp-image-8901\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/02\/Yes-No-Button-1.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/02\/Yes-No-Button-1-150x32.png 150w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/figure>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-1dcdefddd740c3cda0c5c2f633bbff42\" id=\"aioseo-frequently-asked-questions-35\" style=\"color:#023368\">Frequently Asked Questions&nbsp;<\/h2>\n\n\n<div class=\"wp-block-ub-content-toggle wp-block-ub-content-toggle-block\" id=\"ub-content-toggle-block-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" data-mobilecollapse=\"true\" data-desktopcollapse=\"true\" data-preventcollapse=\"false\" data-showonlyone=\"false\">\n<div class=\"wp-block-ub-content-toggle-accordion\" style=\"border-color: #f1f1f1; \" id=\"ub-content-toggle-panel-block-\">\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-title-wrap\" style=\"background-color: #f1f1f1;\" aria-controls=\"ub-content-toggle-panel-0-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" tabindex=\"0\">\n\t\t\t<p class=\"wp-block-ub-content-toggle-accordion-title ub-content-toggle-title-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" style=\"color: #000000; \"><strong>Are commodity prices going up or down?<\/strong>\u00a0<\/p>\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-toggle-wrap right\" style=\"color: #000000;\"><span class=\"wp-block-ub-content-toggle-accordion-state-indicator wp-block-ub-chevron-down\"><\/span><\/div>\n\t\t<\/div>\n\t\t\t<div role=\"region\" aria-expanded=\"false\" class=\"wp-block-ub-content-toggle-accordion-content-wrap ub-hide\" id=\"ub-content-toggle-panel-0-31f35975-c5e1-4888-8ff5-78e4b0d119fe\">\n\n<p>Projections from the S&amp;P Goldman Sachs Commodity Index indicate expected changes based on available forcasts for the raw materials sector, with\u00a0an anticipated\u00a0contraction of 1.7% throughout 2025 followed by a further marginal dip of 0.9% across 2026.\u00a0<\/p>\n\n<\/div>\n\t\t<\/div>\n\n<div class=\"wp-block-ub-content-toggle-accordion\" style=\"border-color: #f1f1f1; \" id=\"ub-content-toggle-panel-block-\">\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-title-wrap\" style=\"background-color: #f1f1f1;\" aria-controls=\"ub-content-toggle-panel-1-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" tabindex=\"0\">\n\t\t\t<p class=\"wp-block-ub-content-toggle-accordion-title ub-content-toggle-title-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" style=\"color: #000000; \"><strong>How to know\u00a0commodity\u00a0market trend?<\/strong>\u00a0<\/p>\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-toggle-wrap right\" style=\"color: #000000;\"><span class=\"wp-block-ub-content-toggle-accordion-state-indicator wp-block-ub-chevron-down\"><\/span><\/div>\n\t\t<\/div>\n\t\t\t<div role=\"region\" aria-expanded=\"false\" class=\"wp-block-ub-content-toggle-accordion-content-wrap ub-hide\" id=\"ub-content-toggle-panel-1-31f35975-c5e1-4888-8ff5-78e4b0d119fe\">\n\n<p>Top-tier market participants prioritize direct price action as their commonly used indicator for observing trend emerges. Rather than relying on external noise, they\u00a0utilize\u00a0commodity price fluctuations to project market trajectories, formulate macroeconomic outlooks, and\u00a0validate\u00a0underlying asset worth. Their operational framework\u00a0remains\u00a0elegantly straightforward: some market participants monitor upward price trends\u00a0and\u00a0pivots\u00a0short positions as a downward slide begins.\u00a0<\/p>\n\n<\/div>\n\t\t<\/div>\n\n<div class=\"wp-block-ub-content-toggle-accordion\" style=\"border-color: #f1f1f1; \" id=\"ub-content-toggle-panel-block-\">\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-title-wrap\" style=\"background-color: #f1f1f1;\" aria-controls=\"ub-content-toggle-panel-2-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" tabindex=\"0\">\n\t\t\t<p class=\"wp-block-ub-content-toggle-accordion-title ub-content-toggle-title-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" style=\"color: #000000; \"><strong>What are the top 3 commodities?<\/strong>\u00a0<\/p>\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-toggle-wrap right\" style=\"color: #000000;\"><span class=\"wp-block-ub-content-toggle-accordion-state-indicator wp-block-ub-chevron-down\"><\/span><\/div>\n\t\t<\/div>\n\t\t\t<div role=\"region\" aria-expanded=\"false\" class=\"wp-block-ub-content-toggle-accordion-content-wrap ub-hide\" id=\"ub-content-toggle-panel-2-31f35975-c5e1-4888-8ff5-78e4b0d119fe\">\n\n<p>Dominating the global financial landscape, Energy and Precious Metals, specifically Crude Oil, Gold, and Natural Gas, function as the primary engines of economic liquidity and strategic hedging, while essential Agricultural staples like corn and soy serve as the secondary pillar of international trade volume.\u00a0<\/p>\n\n<\/div>\n\t\t<\/div>\n\n<div class=\"wp-block-ub-content-toggle-accordion\" style=\"border-color: #f1f1f1; \" id=\"ub-content-toggle-panel-block-\">\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-title-wrap\" style=\"background-color: #f1f1f1;\" aria-controls=\"ub-content-toggle-panel-3-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" tabindex=\"0\">\n\t\t\t<p class=\"wp-block-ub-content-toggle-accordion-title ub-content-toggle-title-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" style=\"color: #000000; \"><strong>What is the best time to trade in MCX?<\/strong>\u00a0<\/p>\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-toggle-wrap right\" style=\"color: #000000;\"><span class=\"wp-block-ub-content-toggle-accordion-state-indicator wp-block-ub-chevron-down\"><\/span><\/div>\n\t\t<\/div>\n\t\t\t<div role=\"region\" aria-expanded=\"false\" class=\"wp-block-ub-content-toggle-accordion-content-wrap ub-hide\" id=\"ub-content-toggle-panel-3-31f35975-c5e1-4888-8ff5-78e4b0d119fe\">\n\n<p>Market activity may vary across different trading sessions by balancing global participation with current price fluctuations and trade volume. While the early phase,\u00a0spanning 9:00 AM until 5:00 PM,\u00a0is typically characterized by consistent and predictable trends, it offers a more structured environment for those\u00a0seeking\u00a0to avoid erratic swings.\u00a0<\/p>\n\n<\/div>\n\t\t<\/div>\n\n<div class=\"wp-block-ub-content-toggle-accordion\" style=\"border-color: #f1f1f1; \" id=\"ub-content-toggle-panel-block-\">\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-title-wrap\" style=\"background-color: #f1f1f1;\" aria-controls=\"ub-content-toggle-panel-4-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" tabindex=\"0\">\n\t\t\t<p class=\"wp-block-ub-content-toggle-accordion-title ub-content-toggle-title-31f35975-c5e1-4888-8ff5-78e4b0d119fe\" style=\"color: #000000; \"><strong>What is the safest commodity to invest in?<\/strong>\u00a0<\/p>\n\t\t\t<div class=\"wp-block-ub-content-toggle-accordion-toggle-wrap right\" style=\"color: #000000;\"><span class=\"wp-block-ub-content-toggle-accordion-state-indicator wp-block-ub-chevron-down\"><\/span><\/div>\n\t\t<\/div>\n\t\t\t<div role=\"region\" aria-expanded=\"false\" class=\"wp-block-ub-content-toggle-accordion-content-wrap ub-hide\" id=\"ub-content-toggle-panel-4-31f35975-c5e1-4888-8ff5-78e4b0d119fe\">\n\n<p>In the face of 2026&#8217;s shifting global power dynamics and financial instability, bullion\u00a0maintains\u00a0its status as the often viewed as a defensive asset class, serving as a reliable anchor for capital preservation when traditional markets falter.\u00a0<\/p>\n\n<\/div>\n\t\t<\/div>\n<\/div>\n\n\n<p><strong>DISCLAIMER:<\/strong>&nbsp;<strong>Investment in securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Full disclaimer:&nbsp;<a href=\"https:\/\/bit.ly\/naviadisclaimer\">https:\/\/bit.ly\/naviadisclaimer<\/a><\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the world of investing, few things&nbsp;are as psychologically&nbsp;challenging, yet widely studied in trading methodologies.&nbsp;Most investors are taught to \u201cbuy low and sell high\u201d but trend followers&nbsp;operate&nbsp;on a&nbsp;different philosophy; \u201center positions in the direction of an existing trend\u201d.&nbsp;In the Indian financial landscape this strategy has found its commonly applied in commodities markets.&nbsp;&nbsp; Unlike equities which [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":16524,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[465],"tags":[722,11,7,21,22,53,32],"class_list":["post-16512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commodity-trading","tag-commodities","tag-financial-goals","tag-indian-stock-markets","tag-investments","tag-investor","tag-marketperformance","tag-wealth-creation"],"featured_image_src":"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2026\/03\/AnIntroductiont.jpeg","author_info":{"display_name":"Navia Markets","author_link":"https:\/\/navia.co.in\/blog\/author\/tradeplusonline\/"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/16512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/comments?post=16512"}],"version-history":[{"count":10,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/16512\/revisions"}],"predecessor-version":[{"id":16526,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/16512\/revisions\/16526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/media\/16524"}],"wp:attachment":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/media?parent=16512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/categories?post=16512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/tags?post=16512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}