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Commodity Futures By www.ProfitableTradingTips.com

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Commodity Futures

By www.ProfitableTradingTips.com

In the world of online trading, one trades, stocks, currencies, and

commodities.

http://profitabletradingtips.com/trading-investing/commodity-futures

Commodities are certainly bought and sold directly but commodity

futures are a different matter and fall into the world of the online

trader.

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The point of commodity futures is to stabilize prices and give

producers and buyers of commodities an opportunity to

hedge their investment risk.

http://profitabletradingtips.com/trading-investing/commodity-futures

Commodity futures can be traded directly or by way of options

http://profitabletradingtips.com/trading-investing/commodity-futures

Precious metals such as gold bullion, agricultural products such as wheat, or energy products such

as crude oil are all available as commodities futures.

http://profitabletradingtips.com/trading-investing/commodity-futures

The following is a list of United States Futures exchanges:

http://profitabletradingtips.com/trading-investing/commodity-futures

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.

http://profitabletradingtips.com/trading-investing/commodity-futures

Kansas City Board of Trade (KCBT)

Minneapolis Grain Exchange (MGEX)

Nadex (formerly HedgeStreet)NASDAQ OMX Futures Exchange

(NFX)

http://profitabletradingtips.com/trading-investing/commodity-futures

New York Mercantile Exchange (NYMEX) and (COMEX)

NYSE Liffe USOneChicago, LLC (Single-stock futures (SSF's) and Futures on

ETFs)

http://profitabletradingtips.com/trading-investing/commodity-futures

Commodity is the generic term for any marketable item that people produce, dig up, or refine for in order to sell to satisfy demand.

http://profitabletradingtips.com/trading-investing/commodity-futures

Trading of commodity futures is possible because tradable

commodities are standardized.

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For example, one can buy or sell a futures contract for a specific

grade of crude oil.

http://profitabletradingtips.com/trading-investing/commodity-futures

Refined gold bullion is standardized as are pork bellies, varieties of corn, soybeans, and

much, much, more.

http://profitabletradingtips.com/trading-investing/commodity-futures

Thus a soybean contract can be satisfied by crops from Brazil or

Iowa

http://profitabletradingtips.com/trading-investing/commodity-futures

A corn contract can be satisfied by shipments from Nebraska or the

Ukraine.

http://profitabletradingtips.com/trading-investing/commodity-futures

For the commodity futures trader it may make little difference who is

going to eventually sell or pay for a specific contracted lot of a

commodity.

http://profitabletradingtips.com/trading-investing/commodity-futures

The trader will most commonly exit his contract by making an

opposite trade one he has made a profit or minimized a loss.

http://profitabletradingtips.com/trading-investing/commodity-futures

The price of a bushel of corn, ounce of gold, or barrel of oil is

determined by market forces, supply and demand.

http://profitabletradingtips.com/trading-investing/commodity-futures

Commodity prices have to do with what is on hand, what is in transit,

and what is likely to be available in the foreseeable future.

http://profitabletradingtips.com/trading-investing/commodity-futures

For example, known oil reserves have the effect of reducing today’s

oil prices

http://profitabletradingtips.com/trading-investing/commodity-futures

Excellent weather raises crop forecasts and depresses the price

of corn, soybeans, or wheat.

http://profitabletradingtips.com/trading-investing/commodity-futures

The threat of war and disruption of crude oil transport raises the price

of oil.

http://profitabletradingtips.com/trading-investing/commodity-futures

On the other hand a worldwide recession reduces the demand for

oil and thus lowers prices.

http://profitabletradingtips.com/trading-investing/commodity-futures

When one adds futures to the equation one needs to consider

what the state of supply and demand will be in a month, year,

five years, or ten years,

http://profitabletradingtips.com/trading-investing/commodity-futures

depending on how far out futures contracts are available for a given

commodity.

http://profitabletradingtips.com/trading-investing/commodity-futures

In trading commodity futures traders keep all this in mind and

then engage in technical analysis of market pricing in order to profit

from short term market movement.

http://profitabletradingtips.com/trading-investing/commodity-futures