Buying Commodities

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Buying Commodities

If you are interested in buying commodities there are a number of things to do before opening an online trading account.
The obvious ones are to research online trading software and take an online trading course such as Commodity and Futures Training.

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Buying Commodities

  1. 1. Buying Commodities By www.CandlestickForums.com
  2. 2. If you are interested in buying commodities there are anumber of things to do before opening an online trading account. www.CandlestickForums.com
  3. 3. The obvious ones are to research online tradingsoftware and take an online trading course such as Commodity and Futures Training. www.CandlestickForums.com
  4. 4. Aspiring traders will also want to have a fast internet connection and computerhardware with the capacity tohandle lots of data in a hurry. www.CandlestickForums.com
  5. 5. A Windows 2003 server is typically sufficient. www.CandlestickForums.com
  6. 6. As a general rule of thumb the trader will want at least 4 GBof memory and a dual core 3.2 GHz processor or two Quad- core 2.6 GHz processors. www.CandlestickForums.com
  7. 7. Then the system will need two network cards, one pointed towards the system and the other pointed towards the exchange. www.CandlestickForums.com
  8. 8. A hard drive with 30GB ormore memory capacity will beneeded to store the software and log files. www.CandlestickForums.com
  9. 9. Once the trader has thehardware set up, the software installed, and has taken the first online class the work starts. www.CandlestickForums.com
  10. 10. To engage in successful onlinecommodity trading the trader needs to develop a trading strategy for buying commodities. www.CandlestickForums.com
  11. 11. A commodity is a thing that isbought, sold, and, commonly, consumed. www.CandlestickForums.com
  12. 12. Buying commodities like cornfutures and oil futures is done for two reasons. www.CandlestickForums.com
  13. 13. Producers and processors ofthese commodities engage in hedging in the commodities markets in order to reduce investment risk. www.CandlestickForums.com
  14. 14. Other traders buying commodities and sellingcommodities do so in order to profit from recurrentcommodity price fluctuations. www.CandlestickForums.com
  15. 15. Gold futures are different inthat industrial use is a small aspect of the value of this precious metal. www.CandlestickForums.com
  16. 16. Gold prices fluctuate with the state of the economy and concerns about inflation. www.CandlestickForums.com
  17. 17. However, when buyingcommodities the trader is concerned about price. www.CandlestickForums.com
  18. 18. . How the commodity is usedis only important so far as that information affects commodity supply and demand. www.CandlestickForums.com
  19. 19. Buying commodities is profitable in so far as thetrader is able to anticipaterises in commodity prices. www.CandlestickForums.com
  20. 20. The trader will buy futures onthe commodity and then sell once the price has risen. www.CandlestickForums.com
  21. 21. If the price is likely to head down then the commodity trader will want to sell commodities instead ofbuying and then buy when the price has gone down. www.CandlestickForums.com
  22. 22. The point of this discussion is that a commodities trader needs tolearn the fundamental analysis of the commodity he trades andneeds to use his trading softwareto do continual technical analysis in order to profit. www.CandlestickForums.com
  23. 23. Developing a commodity trading system is of utmost importance which is why aformal start to learning about buying commodities is important. www.CandlestickForums.com
  24. 24. An alternative to buyingcommodities is buying calls or buying puts on futures contracts. www.CandlestickForums.com
  25. 25. Unlike buying commodities, buying options does notconfer an obligation to buy the commodity. www.CandlestickForums.com
  26. 26. The trader buys the right to either buy or sell thecommodity future in question. www.CandlestickForums.com
  27. 27. He or she need only exercise the options contract if the price moves in the right direction. www.CandlestickForums.com
  28. 28. Although the options trader pays a premium for buying options he does not lose money based uponunexpected price movement when buying commodities. www.CandlestickForums.com

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