Purchase Commodities
www.CandleStickForums.com Purchase Commodities Traders will often purchase commodities because of the potential for wide commodity price variation. Especially in agricultural commodities, prices can fluctuate fifty percent or more in a year. Producers and processors of commodities will often engage in hedging commodities in order to guarantee a stable price structure for their business operations. The hedging by producers and processors of commodities provides a base market in which the trader can profit in commodities trading. In order to purchase commodities, traders will post a margin. Margin requirements to purchase commodities include the maintenance margin which is what the trader must maintain in his account in order to trade. A performance bond margin is monies deposited by both buyer and sells of commodity futures contracts to guarantee performance of the contract. This is essentially a security deposit. To purchase commodities the trader will want to track return on investment. Return on margin is typically used as a measure of success for those who purchase commodities. This is the gain or loss in trading compared to money invested. It should be noted that this is not return on money per commodity purchased or sold but return on the amount of money dedicated to the margin account in order to purchase commodity futures and sell commodity futures. To learn to effectively trade commodities a good place to start is Commodity and Futures Training. Because of the potential for rapid changes in commodity futures price there is the potential for substantial commodity futures profits. When a trader decides to purchase commodities he or she will decide on the commodity and the delivery date. Commodity delivery dates can be next month, next year, or several years hence depending upon the commodity traded. However, the trader need not hold the commodity contract for its duration. He or she can make the opposite trade to exit the contract. That is the trader can sell the same commodity with the same delivery date. If market fundamentals change or technical factors lead to a substantial market change the trader can exit the trade with a profit long before the contract expires. Traders will follow both fundamental and technical analysis in order to profitably anticipate commodity price movement. The use of Candlestick analysis can help the trader see potentially profitable market patterns and market trends allowing them to purchase commodities and sell commodities in a timely and profitable fashion.
Recommended
Recommended
More Related Content
Viewers also liked
Viewers also liked (16)
Similar to Purchase Commodities
Similar to Purchase Commodities (20)
More from InvestingTips
More from InvestingTips (20)
Recently uploaded
Recently uploaded (20)
Purchase Commodities
- 2. www.CandleStickForums.com Traders will often purchase commodities because of the potential for wide commodity price variation.
- 3. www.CandleStickForums.com Especially in agricultural commodities, prices can fluctuate fifty percent or more in a year.
- 4. www.CandleStickForums.com Producers and processors of commodities will often engage in hedging commodities in order to guarantee a stable price structure for their business operations.
- 5. www.CandleStickForums.com The hedging by producers and processors of commodities provides a base market in which the trader can profit in commodities trading.
- 6. www.CandleStickForums.com In order to purchase commodities, traders will post a margin.
- 7. www.CandleStickForums.com Margin requirements to purchase commodities include the maintenance margin which is what the trader must maintain in his account in order to trade.
- 8. www.CandleStickForums.com A performance bond margin is monies deposited by both buyer and sells of commodity futures contracts to guarantee performance of the contract. This is essentially a security deposit.
- 9. www.CandleStickForums.com To purchase commodities the trader will want to track return on investment.
- 10. www.CandleStickForums.com Return on margin is typically used as a measure of success for those who purchase commodities.
- 11. www.CandleStickForums.com This is the gain or loss in trading compared to money invested.
- 12. www.CandleStickForums.com It should be noted that this is not return on money per commodity purchased or sold but return on the amount of money dedicated to the margin account in order to purchase commodity futures and sell commodity futures.
- 13. www.CandleStickForums.com To learn to effectively trade commodities a good place to start is Commodity and Futures Training.
- 14. www.CandleStickForums.com Because of the potential for rapid changes in commodity futures price there is the potential for substantial commodity futures profits.
- 15. www.CandleStickForums.com When a trader decides to purchase commodities he or she will decide on the commodity and the delivery date.
- 16. www.CandleStickForums.com Commodity delivery dates can be next month, next year, or several years hence depending upon the commodity traded.
- 17. www.CandleStickForums.com However, the trader need not hold the commodity contract for its duration.
- 18. www.CandleStickForums.com He or she can make the opposite trade to exit the contract.
- 19. www.CandleStickForums.com That is the trader can sell the same commodity with the same delivery date.
- 20. www.CandleStickForums.com If market fundamentals change or technical factors lead to a substantial market change the trader can exit the trade with a profit long before the contract expires.
- 21. www.CandleStickForums.com Traders will follow both fundamental and technical analysis in order to profitably anticipate commodity price movement.
- 22. www.CandleStickForums.com The use of Candlestick analysis can help the trader see potentially profitable market patterns and market trends allowing them to purchase commodities and sell commodities in a timely and profitable fashion.
- 23. www.CandleStickForums.com Candlestick basics have been around for centuries.
- 24. www.CandleStickForums.com They were developed by commodity traders in the rice market in Japan in the days of the Samurai.
- 25. www.CandleStickForums.com Just as in days past a trader can spot a Candlestick pattern indicating that the price of the commodity will likely go up or down in the very near future.
- 26. www.CandleStickForums.com Candlestick pattern formations let the market tell the trader what it will do.
- 27. www.CandleStickForums.com This is because market patterns tend to be repetitive.
- 28. www.CandleStickForums.com Reading the first part of the pattern helps predict the second part of the pattern.
- 29. www.CandleStickForums.com This can lead to handsome profits for the trader who uses Candlestick patterns to guide in the purchase of commodities.