Welcome to Futures Trading Guide
 |
|
 |
|
 |
Commodity Futures Trading Firms Article
This is a selection made from among articles on Commodity Futures Trading Firms. For a permanent link to this article, or to bookmark it for future reading, click here.
Trading Commodity Futures Via The Internet
from:
Before online commodities and future trading became the high-rolling, high-stake investment ground that it is today, its early proprietors were farmers of the 1800’s.
These farmers would grow their crops and bring these to the market come harvest time in the hope of selling them. But the main concern then was that without an indicator, they could not efficiently gauge how much of their goods are needed therefore resulting either to shortages or excesses, both causing losses for the farmer.
With shortages causing loss of the opportunity to earn more and excesses causing meats and crops to rot and dairy products to spoil. Also, when a certain produce is out of season any product made from them would be priced so high due to its scarcity.
A central marketplace was subsequently created for farmers to take their harvests and sell them either for immediate or forward delivery. Immediate delivery is what is known now as the spot or cash market and forward delivery is now called futures market.
This concept helped stabilize prices for commodities that were out of season as well as served as an effective indicator of supply and demand therefore saving farmers thousands of dollars that would otherwise go to spoilage.
From forward contracts evolved commodities and futures contracts. Forward contracts are effectively agreements to buy now for payment and delivery at a specified date in the future, which is usually three months from the date of the contract.
These were originally only for food and agricultural products but now they have expanded to include financial instruments. Forward contracts have evolved and have been standardized into what we know today as futures contracts.
Basically, when dealing in online commodities or futures trading, a contract must have a seller (the producer) and a buyer (the consumer). If you purchase a futures contract, you are agreeing to buy a commodity that is not there yet for a specific price.
Although most futures contracts are based on an actual commodity, some futures contracts also are sold based on its future value based on stock market indices.
Unless you are a businessman who is into the trade of the actual commodity you purchased, you won't actually use the goods (if you’re the buyer) or actually provide the commodity (if you’re the seller) for which you're trading a futures contract.
Remember, buyers and sellers in the futures market primarily enter into futures contracts to minimize risk or speculate rather than to exchange physical goods.
On the other hand, online commodities differ from futures trading in that commodities trading may involve the physical delivery of the goods. In which case a receipt is issued in the favor of the buyer. This receipt enables the buyer to take the commodity from the warehouse.
Traders in online commodities and futures market can use different strategies to take advantage of rising and declining prices. The most common are known as going long, going short and spreads.
When an investor enters a contract by agreeing to buy and receive delivery of the commodity at a set price - it means that he or she is trying to earn from an anticipated future price increase, he or she is going long.
When he or she is looking to make a profit from declining price levels, this is going short. The speculator sells high now so he or she can repurchase the contract in the future at a lower price.
When one makes a spread, however, he or she is trying to benefit from the price difference between two separate contracts of the same commodity.
As an online commodities or futures trader, therefore, you should be armed with a firm grasp of how the market and contracts function.
Commodity Futures Trading Firms Specific links
Commodity Futures Trading Firms News
Asian shares gain on hopes for 2009 - International Herald Tribune
HONG KONG : Asian shares were gaining Monday with Japanese and Korean shares up after Wall Street started 2009 on a positive note. The Japanese Nikkei 225 average rose 1.5 percent Monday, on the first day of trading in the new year in Japan, after ...
Read more...CBOT to limit ag receipts held by non-grain firms - Reuters
CHICAGO, Jan 5 (Reuters) - The Chicago Board of Trade requested approval from its regulator, the Commodity Futures Trading Commission, to limit the number of grain shipping certificates and warehouse receipts that a non-grain firm can hold, an ...
Read more...Gold eases as dollar firms - Daily Times
LONDON: Gold eased in Europe on Friday, the first trading day of the New Year, as oil prices tumbled as much as eight percent and the dollar strengthened against the euro, cutting the metal’s appeal as a currency hedge. Spot gold was quoted at $872 ...
Read more...India truckers' strike pushes up commodity prices - Forbes
MUMBAI, Jan 6 (Reuters) - A nationwide strike by tens of thousands of Indian truckers entered its second day on Tuesday, pushing up prices of some commodities and threatening to choke supplies of fruits and vegetables. The truckers, who are calling ...
Read more...ICE Futures US Index Volume/Open Interest - Jan 7 - FXStreet.com
For 6-Jan-09 Commodity Contract Total Open Change Name Month Volume Interest CONTINUOUS COMMODITY INDEX(CI) CI SPOT 0 0 0 CI Jan09 7 836 -5 CI Feb09 19 15 5 CI Apr09 10 410 4 CI Jun09 0 400 0 Totals for CI : 36 1,661 4 REUTERS JEFFERIES CRB INDEX(CR ...
Read more...