buying commodities

Buying Commodities

Bywww.CandlestickForums.com

http://www.candlestickforums.com/

If you are interested in buying commodities there are a

number of things to do before opening an online trading

account.

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The obvious ones are to research online trading

software and take an online trading course such as

Commodity and Futures Training.



Aspiring traders will also want to have a fast internet

connection and computer hardware with the capacity to handle lots of data in a hurry.



A Windows 2003 server is typically sufficient.



As a general rule of thumb the trader will want at least 4 GB

of memory and a dual core 3.2 GHz processor or two Quad-

core 2.6 GHz processors.



Then the system will need two network cards, one pointed towards the system and the other pointed towards the

exchange.



A hard drive with 30GB or more memory capacity will be needed to store the software

and log files.



Once the trader has the hardware set up, the software

installed, and has taken the first online class the work

starts.



To engage in successful online commodity trading the trader

needs to develop a trading strategy for buying

commodities.



A commodity is a thing that is bought, sold, and, commonly,

consumed.



Buying commodities like corn futures and oil futures is done

for two reasons.



Producers and processors of these commodities engage in hedging in the commodities markets in order to reduce

investment risk.



Other traders buying commodities and selling

commodities do so in order to profit from recurrent

commodity price fluctuations.



Gold futures are different in that industrial use is a small aspect of the value of this

precious metal.



Gold prices fluctuate with the state of the economy and concerns about inflation.



However, when buying commodities the trader is concerned about price.



. How the commodity is used is only important so far as that

information affects commodity supply and

demand.



Buying commodities is profitable in so far as the

trader is able to anticipate rises in commodity prices.



The trader will buy futures on the commodity and then sell

once the price has risen.



If the price is likely to head down then the commodity

trader will want to sell commodities instead of

buying and then buy when the price has gone down.



The point of this discussion is that a commodities trader needs to learn the fundamental analysis of the commodity he trades and needs to use his trading software to do continual technical analysis

in order to profit.



Developing a commodity trading system is of utmost importance which is why a

formal start to learning about buying commodities is

important.



An alternative to buying commodities is buying calls or

buying puts on futures contracts.



Unlike buying commodities, buying options does not

confer an obligation to buy the commodity.



The trader buys the right to either buy or sell the

commodity future in question.



He or she need only exercise the options contract if the

price moves in the right direction.



Although the options trader pays a premium for buying options he does not lose

money based upon unexpected price movement when buying commodities.



buying commodities

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