basics of commodity trading

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http://www.candlestickforums.com/ Basics of Commodity Trading To trade commodities successfully traders ought to start by learning the basics of commodity trading. Trading commodities is really commodities futures trading. Producers and processors of commodities buy and sell futures contracts for delivery on a specific date during any of the next months or years. Producers and processors are typically hedging their investment risk and helping to provide a stable market for the commodity in question. Speculators can trade the samecommodity futures contracts by buying and selling futures or they can buy options and sell options on futures contracts. Commodity and futures training is a good place to start learning the basics of commodity trading. For those interested options trading in commodities markets, Options Training with Stephen Bigalow will provide basic knowledge as well as the deeper insight gained from experience trading options in commodity futures.

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  • 1. Basics of Commodity Trading By www.CandlestickForums.com
  • 2. To trade commoditiessuccessfully traders ought tostart by learning the basics of commodity trading. Trading commodities is reallycommodities futures trading. www.CandlestickForums.com
  • 3. Producers and processors ofcommodities buy and sell futures contracts for delivery on a specific date during any of the next months or years. www.CandlestickForums.com
  • 4. Producers and processors are typically hedging theirinvestment risk and helping toprovide a stable market for the commodity in question. www.CandlestickForums.com
  • 5. Speculators can trade the samecommodity futurescontracts by buying and sellingfutures or they can buy options and sell options on futures contracts. www.CandlestickForums.com
  • 6. Commodity and futurestraining is a good place tostart learning the basics of commodity trading. www.CandlestickForums.com
  • 7. For those interested options trading incommodities markets, www.CandlestickForums.com
  • 8. Options Training with Stephen Bigalow will provide basicknowledge as well as the deeper insight gained from experience trading options in commodity futures. www.CandlestickForums.com
  • 9. Commodity futures as an asset class differfrom stocks or long term bonds. www.CandlestickForums.com
  • 10. A standard futures contractfor corn futures, oil futures, or gold futures is a claim or a promise relating to a standardized quantity of a tangible asset. www.CandlestickForums.com
  • 11. The claim for delivery orpromise to deliver is on the contract expiration date. www.CandlestickForums.com
  • 12. As a matter of fact, traders seldom hold a contract through to expiration but rather execute the opposite trade on the samecommodity and expiration date in order to exit the trade. www.CandlestickForums.com
  • 13. Because a futures contract has an expiration date it is not a claim upon the assets of a corporation. www.CandlestickForums.com
  • 14. Supply and demand oftencause pronounced commodity priceshifts. www.CandlestickForums.com
  • 15. Agricultural commodities areespecially prone to large fluctuations in price as variation in weather conditions and amounts of crops planted or cattle culled from herds affect supply. www.CandlestickForums.com
  • 16. The basics of commodity trading are that a trader in commodities is not concerned with competence of management, a margin of safety, ordiversifying a stock portfolio into various market sectors. www.CandlestickForums.com
  • 17. He or she is concerned with drought in Argentina or Russia, the opening ofmarkets in Asia, or, in the case of gold,the seemingly continual devaluation of the US dollar. www.CandlestickForums.com
  • 18. The basics of commodity trading are that some commodities canbe stored, like gold, oil, and corn. www.CandlestickForums.com
  • 19. Some commodities, such asmilk, have a short shelf life. www.CandlestickForums.com
  • 20. Knowing the basics ofcommodity trading for a givenset of commodities is essential for trading them. www.CandlestickForums.com
  • 21. Traders should know that thedecisions of large producers andbuyers of commodities typically drive the markets in various commodities. www.CandlestickForums.com
  • 22. Therefore, not all fluctuation incommodity prices is based uponthe fundamentals of production and demand. www.CandlestickForums.com
  • 23. It is also based on anticipation of market factors by large buyers and sellers. www.CandlestickForums.com
  • 24. Thus, successful commodities trading requires the ability to anticipate the actions of othertraders, the commodities market. www.CandlestickForums.com
  • 25. Using technical analysis tools such as Candlestick chartpatterns helps the trader see where the market is going. www.CandlestickForums.com
  • 26. This is because trading patterns in commodity prices tend to repeat themselves. www.CandlestickForums.com
  • 27. Knowing the basic Candlestickanalysis patterns helps the smarttrader with useful knowledge to successfully trade and profit from trading commodities. www.CandlestickForums.com