commodity futures profits

Commodity Futures Profits

Bywww.CandlestickForums.com

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Commodity futures profits depend upon accurate fundamental analysis of the

commodity in question and timely technical analysis of commodity price

movement.

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Because history repeats itself in commodity futures, traders can use time honored Candlestick analysis tools such

as Candlestick charts and Candlestick pattern formations to predict the

continuance of a price trend or a market reversal.



Traders can use options trading in commodities also in order to have the option but not the obligation to buy or sell commodity futures if an anticipated

price move happens.



Commodity and futures training will help the beginner at commodity trading to learn the skills necessary to reliably

earn commodity futures profits.



Commodity traders can buy and sell everything from gold futures and natural gas futures to corn futures and interest

rate futures.



Each commodity has its own specific fundamentals but all of them have

predictable price movements when the trader uses technical analysis tools, whether computer aided technical

analysis software or a pencil for a hand drawn graph.



Understanding the technical indicators that predict price movements can lead

to handsome commodity futures profits on any commodities exchange.



Commodity futures profits have little to do with the current price of a

commodity, the spot price. They have to with predicting the commodity price on

a future date, as much as eight years away in the case of oil futures.



Traders agree to buy or sell a standardized quantity of a commodity on a given future date, the settlement

date.



Most commonly traders will exit their position a day or two before the

settlement date as they are speculating in the commodity market and are not

producers or buyers of the commodity in question.



On the other hand, producers and buyers of commodities such as gold,

corn, live cattle, and the like, do, in fact, buy and sell the actual commodity.



These people are hedging when they trade commodities. Although they may well make commodity futures profits

they primarily are interested in having a fixed price for at least part of their

production or what they will need to buy.



A gold mining operation will commonly sell commodity futures (gold) for a year

in advance.



This will guarantee that some portion of their production will earn a guaranteed

income.



A milling company may buy futures on Durham wheat to guarantee a supply at

a reasonable price for making pasta.



Commodity futures profits can also be gained from trading options on

commodity futures.



This seems more complicated but it is simply buying calls or buying puts,

selling calls or selling puts, on commodity options contracts.



The trader who buys an option will need to pay a premium and the trader who

sells will gain a premium.



The buyer will have to option but not the obligation to buy (call) or sell (put) a futures contract if the price movement

of the future is favorable.



In buying options it is possible to make nice commodity futures profits without the risk of owning a contract outright

when the market takes a big swing contrary to the traderfs expectations.�



In selling options the risk is similar to trading commodity futures directly, except that the trader will gain the

premium.

