Trading Myths

One of the biggest myths about physical commodity trading is that success comes from predicting price direction.

In reality, many traders spend far more time thinking about trade structure than about the price. Whether that's QPs, logistics timing, financing costs, or storage. These factors often determine whether a trade makes money long before the price has even moved.

Even traders speculating on the price of a trade that get it right can still lose money if they fail to fully understand the structure of the trade. Not understanding where risk transfers between Incoterms, or a QP switching due to a vessel delay can cause huge operational exposures.

Meanwhile, traders with no view on the outright price of a market can generate consistent returns by ensuring their trade structures are correct.

This is why understanding the mechanics of physical trading matters so much. And is why it's a them I explore in The Physical Trade, where the focus is less on price prediction and more on how the business actually functions.