Commodity Trading: A Means to Gain

Posted by divengrabber on December 8, 2010 under Business | Be the First to Comment

Money is tight in this day and age, and sometimes it can only come in the form of assets that you may own. Land, property, stock, these are all forms by which you many may be determined in, and at times these securities can be enough for you. Unfortunately, enough in this world will never mean that you are secure to brave the future. Commodities will never always be the same value in ten years, if you’re lucky, the value of your asset may rise in the years to come, if not, you just might be facing a severely devalued piece of land. This is why while it’s still early; you have to think about commodity trading.

This is because you have the options open to you. These trading plans can help you prepare for the future by gaining good amounts of money now.

You may ask how this is possible. To shorten it, while your commodity still has a decent value to it, you have to take advantage of its value by gaining a few more commodities that you are sure to gain over the time being. Much like share trading, you can exchange your asset contract for promising securities you expect will rise in the future. This can land you in a very god place.

However, in order to feel completely secure, you must have professionals set up and plan your trades. With the help of sites like igmarkets.com, you can be sure to gain the money you seek. And while you’re at it, check out forex, and find out the benefits of that method.

An Initiation To Commodity Futures Trading

Posted by cspr on June 14, 2010 under Futures and Commodities | 8 Comments to Read

How It All Began

Commodity futures trading, as we know it today, came about for the first time in Japan in the 17th century, where rice was traded in future contracts. It was a period when farmers and buyers came together and decided to commit to each other future prices negotiated on suitable terms in exchange of grain for money. For example, a dealer would agree to buy a ton of rice at the end of the next month for a certain price from a farmer. This would be ideal for both parties, as the farmer would know how much he would get for his rice in advance, and the buyer could plan to raise the money he needed for the purchase. Contracts such as these became more and more popular and common, and were even used as collateral for taking loans. If the buyer could not take delivery of the rice, he could sell the contract to someone else. On the other hand, if the farmer could not deliver the goods, then he could hand over the contract to another farmer. Thus began commodity futures trading, as we know it today.

What Are Commodity Futures?

Today, most of the futures commodity trading exchanges are set up in a similar way. Members of the exchange do the actual trading on the floor. Stock stands for equity in a public company, and can be held as long as you want, whereas commodity futures trading contracts have a specified life. In the past, people used commodity futures trading methods generally to hedge risks and fluctuation in prices, or to take advantage of them, and not for actually buying into the commodity. The idea is that a contract requires delivery of the commodity within a certain predefined time period unless it becomes null and void. The person buying the commodity futures trading contract agrees to buy the specified commodity at a fixed price on a certain date. The person selling the commodity futures trading contract agrees to sell the commodity at a certain price on a certain date. As time goes on, the contract price fluctuates, and this brings about profit and loss in the trade. It is to be noted, however that, the delivery generally doesn’t take place. The contract is usually liquidated before its expiry. The entire trade is based on the idea that there will be no delivery, but we can speculate on the price of the underlying commodity at a future time to make money. Commodity futures trading is done all over the world now.

Different Types Of Commodities

There are many types of commodities that are traded in the international market. These can be very broadly categorized into the following:

• Precious metals like Gold, Platinum, Silver, etc.,
• Metals such as Aluminum, Copper, Steel, etc.,
• Agricultural products like Rice, Corn, Oils, Cotton, Wheat, etc.,
• Soft commodities such as Cocoa, Coffee, Tea, Sugar, etc.,
• Livestock like porkbellies, cattle, etc.,
• Energy commodities like Crude oil, Gasoline, Gas, etc.

Commodities Futures ? the Best Contracts to Trade

Posted by cspr on under Futures and Commodities | Be the First to Comment

Here we look at the best contracts to trade, for long-term trend followers – and how to blend these commodities and futures contracts, to obtain good diversification – and great profit potential. We also reveal the one commodity contract, which any trader should be looking to trade.

One of the great advantages of commodity futures trading is the wide variety of un-correlated groups that you can trade.

The main trading groups are:

. Currencies

. Interest Rates

. Stock Indices

. Grains

. Meats

. Energies

. Metals

. Food and Fibre

The big moves only come a few times a year – and of course, in futures and commodities, it’s the big moves that make the big profits.

Single Groups or Diversification?

In futures, and commodity trading, this depends on the risk / reward you want – and the amount of capital you have.

If you trade just one or two groups, then your commodity and futures trading risk / reward in will be higher

The Best Contracts to Trade

We have outlined the best futures and commodities contracts below – based upon the following criteria:

. Liquidity, and investor participation

. Long term trends, over the last 30 years.

Currencies

A great market for long-term trend followers – all currencies exhibit long-term trends – as they reflect the underlying health of the economy.

A good place to start is the Dollar Index, which can be less volatile than the individual currencies – and is suited to long term position traders.

Interest Rates

Another great group – interest rates – considered “boring”, by many commodity futures traders – but they’re not! They have great long-term trends – with the best contracts being the T Bond and T Notes.

Stock Indices

The S & P is the one, most commodity & futures traders look at – but there are plenty of others. Good markets to trade include the DAX, NASDAQ and Dow Jones.

Energies

Energies are the biggest physical commodity group in the world – in terms of volume. The energies group exhibits good, long-term trends all the time.

All traders should start with Crude Oil, but for traders who really want to taste some action, check out Natural Gas – when trends come here, they’re huge! A word of caution on this market – it’s only for futures commodity traders with deep pockets – and strong nerves.

Adding Diversity

The above commodity futures are all suitable for trading as individual groups – however with the contracts listed below, we’d only trade as part of a diversified portfolio – due to lower liquidity, and limit moves.

Metals

The main focus for speculators is on, Copper, Gold and Silver – however the White Metals of Platinum, and Palladium, have produced some of the best trends of recent years.

These rare metals are precious metals – but double up as industrial metals as well. Although trading volumes are thin, volatility and limit moves are frequent – for traders with deep pockets, these metals offer outstanding long-term trends.

Grains and Meats

Grains and Meats were big contracts for speculators in years gone by – but they have lost some of their shine. Speculators now trade more financials – however, Pork Bellies, Live Hogs, Feeder Cattle, and Live Cattle, still offer commodity futures traders great trends.

The grains are similar and the Soybean complex – Wheat, and Corn, are the markets to look at.

Food and Fibre

The markets to look at are Orange Juice, Coffee, Cocoa and Cotton. Cotton is probably the best market for long-term trend followers – but this is very much a personal choice.

Successfully Blending a Portfolio

Today, many traders simply focus on the financials (and currencies are the best group to trade) – however as you can see from the above, that commodity futures traders, have plenty of contracts from which to choose.

With the global economy expanding fast, there’s one contract that looks a great long-term buy – the contract to buy, and hold, for huge gains. It’s the CRB index – which is a basket of commodities – and it looks set to soar – because, commodities go up, based upon the huge demand from countries, such as India and China – check it out!