Commodities Trading

download Commodities Trading

of 39

Embed Size (px)

description

http://profitabletradingtips.com/trading-investing/commodities-trading Commodities Trading As currencies fall in value commodities appear to rise. In fact, commodities such as gold, oil, and agriculture products simply retain their value in the face of inflation and currency devaluation. Those engaged in commodities trading know that fact. Traders engaged in commodities trading also know that supply and demand, the fundamentals, are basic to commodity prices. Those who wish to profit from commodities trading learn technical analysis. This is the analysis of past price movement with the purpose of predicting future price movement. One trades commodities in a futures market. Traders enter into contracts to buy or sell specified quantities of a given commodity on a specified future date. To profit from commodities trading one needs a firm grasp of the fundamentals that determine pricing and a clear sense of how the market reacts to changes in information. Commodity Futures Futures are standardized contracts between two parties to buy or sell a specific, standardized, amount of virtually anything. The price is agreed upon at the time of the contract and holds until the date of delivery. Most futures traders do not actually sell or buy commodities as they simply exit the contract by making the opposite trade prior to the delivery date. Although the price set in the futures contract for corn, beef, oil, gold, or other commodities is set the value of the contract varies and that is where the profit lies in commodities trading. In today’s world online commodities trading is common. Traders follow the news pertinent to the value of gold, cattle, or wheat. They follow pricing patterns in order to understand evolving market sentiment. Depending on the perceived changes in supply and demand the value of a commodity futures contract will rise or fall. In commodities trading one can buy or sell a contract for crude oil that is not deliverable for a decade but still make profits today. The trader simply seeks to enter and exit the trade at the most profitable times. Many traders use options in commodity trading. In doing so, they limit their risk and often leverage their investment capital. Futures Markets The following is a list of United States Futures exchanges: CBOE Futures Exchange (CFE) Chicago Mercantile Exchange (CME) Chicago Board of Trade (CBOT) Chicago Climate Exchange (CCE) ELX Futures (Electronic Liquidity Exchange) ICE Futures U.S. Kansas City Board of Trade (KCBT) Minneapolis Grain Exchange (MGEX) Nadex (formerly HedgeStreet) NASDAQ OMX Futures Exchange (NFX) New York Mercantile Exchange (NYMEX) and (COMEX) NYSE Liffe US OneChicago, LLC (Single-stock futures (SSF’s) and Futures on ETFs) The CME group owns CME, CBOT, NYMEX, and COMEX. Predicting the Future Will there be a drought in Eurasia, Brazil, or North America? These are the world bread baskets f

Transcript of Commodities Trading

Commodities Trading

Commodities TradingBywww.ProfitableTradingTips.com

As currencies fall in value commodities appear to rise. www.ProfitableTradingTips.com

In fact, commodities such as gold, oil, and agriculture products simply retain their value in the face of inflation and currency devaluation. www.ProfitableTradingTips.com

Those engaged in commodities trading know that fact. www.ProfitableTradingTips.com

Traders engaged in commodities trading also know that supply and demand, the fundamentals, are basic to commodity prices.www.ProfitableTradingTips.com

Those who wish to profit from commodities trading learn technical analysis. www.ProfitableTradingTips.com

This is the analysis of past price movement with the purpose of predicting future price movement. www.ProfitableTradingTips.com

One trades commodities in a futures market. www.ProfitableTradingTips.com

Traders enter into contracts to buy or sell specified quantities of a given commodity on a specified future date. www.ProfitableTradingTips.com

To profit from commodities trading one needs a firm grasp of the fundamentals that determine pricing www.ProfitableTradingTips.com

and a clear sense of how the market reacts to changes in information.

www.ProfitableTradingTips.com

Commodity Futures

www.ProfitableTradingTips.com

Futures are standardized contracts between two parties to buy or sell a specific, standardized, amount of virtually anything. www.ProfitableTradingTips.com

The price is agreed upon at the time of the contract and holds until the date of delivery.www.ProfitableTradingTips.com

Most futures traders do not actually sell or buy commodities as they simply exit the contract www.ProfitableTradingTips.com

by making the opposite trade prior to the delivery date.www.ProfitableTradingTips.com

Although the price set in the futures contract for corn, beef, oil, gold, or other commodities is set www.ProfitableTradingTips.com

the value of the contract varies and that is where the profit lies in commodities trading. www.ProfitableTradingTips.com

In todays world online commodities trading is common. www.ProfitableTradingTips.com

Traders follow the news pertinent to the value of gold, cattle, or wheat. www.ProfitableTradingTips.com

They follow pricing patterns in order to understand evolving market sentiment. www.ProfitableTradingTips.com

Depending on the perceived changes in supply and demand the value of a commodity futures contract will rise or fall. www.ProfitableTradingTips.com

In commodities trading one can buy or sell a contract for crude oil that is not deliverable for a decade but still make profits today. www.ProfitableTradingTips.com

The trader simply seeks to enter and exit the trade at the most profitable times. www.ProfitableTradingTips.com

Many traders use options in commodity trading. www.ProfitableTradingTips.com

In doing so, they limit their risk and often leverage their investment capital.www.ProfitableTradingTips.com

Futures Markets

www.ProfitableTradingTips.com

The following is a list of United States Futures exchanges:

www.ProfitableTradingTips.com

CBOE Futures Exchange (CFE)Chicago Mercantile Exchange (CME)Chicago Board of Trade (CBOT)Chicago Climate Exchange (CCE)ELX Futures (Electronic Liquidity Exchange)ICE Futures U.S.Kansas City Board of Trade (KCBT)Minneapolis Grain Exchange (MGEX)Nadex (formerly HedgeStreet)NASDAQ OMX Futures Exchange (NFX)New York Mercantile Exchange (NYMEX) and (COMEX)NYSE Liffe USOneChicago, LLC (Single-stock futures (SSF's) and Futures on ETFs)

www.ProfitableTradingTips.com

The CME group owns CME, CBOT, NYMEX, and COMEX.

www.ProfitableTradingTips.com

Predicting the Future

www.ProfitableTradingTips.com

Will there be a drought in Eurasia, Brazil, or North America? www.ProfitableTradingTips.com

These are the world bread baskets for wheat, corn, and soybeans. www.ProfitableTradingTips.com

Will overly strong monsoon rains or a persistent drought affect the rice harvests in Southern Asia? www.ProfitableTradingTips.com

Commodities trading in these foodstuffs requires a clear sense of what will affect supply and demand. www.ProfitableTradingTips.com

Gold goes up when currencies falter or war threatenswww.ProfitableTradingTips.com

and oil goes up when there is unrest in the Middle East or a hurricane approaching the Gulf of Mexico. www.ProfitableTradingTips.com

In commodities trading, traders keep an eye on the facts and the other eye on how the market is reacting. www.ProfitableTradingTips.com

Timing the market as a day trader in commodities trading is also important, especially important news breaks.www.ProfitableTradingTips.com