Welcome to Futures Trading Guide
 |
|
 |
|
 |
Trend Trading Futures Article
This is a selection made from among articles on Trend Trading Futures. 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.
Trend Trading Futures Specific links
Trend Trading Futures News
Bogus Trend of the Week: Dudes With Cats - Slate
John McCain's stock has been falling steadily since Sept. 15 at Intrade , where you can purchase futures contracts pegged to the outcome of the presidential race. Similar results can be found at the Iowa Electronic Markets , an "educational" venture ...
Read more...Most CME Hogs Trend Lower; Feb Bellies Limit Dn - FXStreet.com
1304 EDT [Dow Jones] - CME hogs are mostly lower on waning buyer confidence and live cattle market fallout. Spreaders also sell deferred-months and buy forward contracts. And, the global economic crisis continues to weigh heavy on trader psyche. Oct ...
Read more...U.S. corn, soy slide over 4 pct on economic worries - Forbes
SEOUL, Oct 6 (Reuters) - U.S. corn futures tumbled more than 4 percent to a 10-month low and soy slid 5 percent to an 11-month trough on Monday as financial markets and oil prices slumped, raising concerns that a weak global economy may further erode ...
Read more...MCX Gold prices, volumes drop - Commodity Online
The US bailout package coupled with the meltdown in the global financial markets are beginning to hit Gold. Gold prices slipped on Monday in futures trading on reduced buying by traders on the back of a weak global trend. Gold for December contract ...
Read more...Gold Dec contract up by 2.41% at MCX - Commodity Online
Gold futures today on MCX gained marginal momentum in the evening trading session despite some downward trend in the intraday session due to the global financial crisis. Gold for December expiry contract soared up by 2.41 percent to Rs 13150 per ten ...
Read more...