Trading Commodity Futures

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Trading Commodity Futures

http://profitabletradingtips.com/profitable-trading-tips/trading-commodity-futures

We wrote recently about Winning with Commodities. What one trades are commodity futures. For example, when a trader expects the price of gold to rise he can buy gold bullion or shares in an exchange traded fund that tracks the price of gold bullion. And by trading commodity futures on gold bullion he can lock in a price to buy or sell gold at a later date. Trading commodity futures is a common practice by both the producers and buyers of commodities such as wheat, corn, soybeans or live cattle. They do this in order to hedge their risk in case of a price change. And speculators trading commodity futures buy and sell futures on the same commodities in search of profits.

Basics of Commodity Trading

The basics of any commodity have to do with supply and demand and how these affect current price. Gold futures go up when the economy weakens and down when the economy is strong. Gold bugs hoard gold as a hedge against inflation. In trading gold a trader bases his trades on both fundamentals and short term market sentiment. Traders jump in and out of the gold market based upon their analysis of prices. When there is a drought in the American Corn Belt, Brazil or Ukraine wheat, corn and soybean prices go up as traders expect a production shortfall. When there are ideal growing conditions in the major grain producing regions of the world the prices of corn, wheat and soybeans tend to fall as a market glut is expected. When there is another threat of war in the Middle East the price of oil rises. Those trading commodity futures on oil will expect to see higher prices in the short term but a return to normal in a year or so. The introduction of fracking technology has greatly increased oil and gas supplies in the USA and is expected to keep prices low and stable for years. Nevertheless, chaos in other oil producing regions of the world tends to drive prices in the short term. Traders buy and sell futures contracts on oil and other products based on their analysis of where the market will be in a few months or years.

Short Term Market Sentiment

Markets are never totally efficient in the short term. So, there is profit to be made in trading commodity futures when either good or bad news hits the markets for precious metals, energy products or agricultural products.

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Trading Commodity Futures

  1. 1. By www.ProfitableTradingTips.com Trading Commodity Futures
  2. 2. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures We wrote recently about Winning with Commodities. What one trades are commodity futures.
  3. 3. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures For example, when a trader expects the price of gold to rise he can buy gold bullion or shares in an exchange traded fund that tracks the price of gold bullion.
  4. 4. Before We Continue… Click the links below to get your FREE training materials. Free Weekly Investing Webinars Don’t miss these free training events! http://www.profitableinvestingtips.com/free-webinar Forex Conspiracy Report Read every word of this report! http://www.forexconspiracyreport.com
  5. 5. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures And by trading commodity futures on gold bullion he can lock in a price to buy or sell gold at a later date.
  6. 6. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Trading commodity futures is a common practice by both the producers and buyers of commodities such as wheat, corn, soybeans or live cattle.
  7. 7. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures They do this in order to hedge their risk in case of a price change.
  8. 8. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures And speculators trading commodity futures buy and sell futures on the same commodities in search of profits.
  9. 9. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Basics of Commodity Trading
  10. 10. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures The basics of any commodity have to do with supply and demand and how these affect current price.
  11. 11. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Gold futures go up when the economy weakens and down when the economy is strong.
  12. 12. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Gold bugs hoard gold as a hedge against inflation.
  13. 13. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures In trading gold a trader bases his trades on both fundamentals and short term market sentiment.
  14. 14. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Traders jump in and out of the gold market based upon their analysis of prices.
  15. 15. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures When there is a drought in the American Corn Belt, Brazil or Ukraine wheat, corn and soybean prices go up as traders expect a production shortfall.
  16. 16. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures When there are ideal growing conditions in the major grain producing regions of the world the prices of corn, wheat and soybeans tend to fall as a market glut is expected.
  17. 17. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures When there is another threat of war in the Middle East the price of oil rises.
  18. 18. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Those trading commodity futures on oil will expect to see higher prices in the short term but a return to normal in a year or so
  19. 19. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures The introduction of fracking technology has greatly increased oil and gas supplies in the USA and is expected to keep prices low and stable for years.
  20. 20. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Nevertheless, chaos in other oil producing regions of the world tends to drive prices in the short term
  21. 21. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Traders buy and sell futures contracts on oil and other products based on their analysis of where the market will be in a few months or years.
  22. 22. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Short Term Market Sentiment
  23. 23. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Markets are never totally efficient in the short term.
  24. 24. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures So, there is profit to be made in trading commodity futures when either good or bad news hits the markets for precious metals, energy products or agricultural products.
  25. 25. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Although the fundamentals of any commodity are available to all traders the tactics used by each will differ.
  26. 26. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Thus trading commodities is a daily, hour by hour, minute by minute job as the trader watches and searches for opportunities in his market.
  27. 27. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Knowing the fundamentals of a commodity is essential to futures trading.
  28. 28. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Skill in the use technical indicators and the ability to be there when changes happen leads to profits in trading commodity futures.
  29. 29. http://profitabletradingtips.com/profitable- trading-tips/trading-commodity-futures Whether you prefer a heavily statistically based trading tool or something as basic and easy to read as Japanese Candlesticks you can take advantage of short term market sentiment in trading commodity futures.

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