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Trading Online Commodities Article
This is a selection made from among articles on Trading Online Commodities. For a permanent link to this article, or to bookmark it for future reading, click here.
MAKING ONLINE COMMODITY AND FUTURE TRADING WORK FOR YOU
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Before online commodities and future trading became the high-rolling, high-stake investment ground that it is today, its early proprietors were farmers of the 1800’s.
These farmers would grow their crops and bring these to the market come harvest time in the hope of selling them. But the main concern then was that without an indicator, they could not efficiently gauge how much of their goods are needed therefore resulting either to shortages or excesses, both causing losses for the farmer.
With shortages causing loss of the opportunity to earn more and excesses causing meats and crops to rot and dairy products to spoil. Also, when a certain produce is out of season any product made from them would be priced so high due to its scarcity.
A central marketplace was subsequently created for farmers to take their harvests and sell them either for immediate or forward delivery. Immediate delivery is what is known now as the spot or cash market and forward delivery is now called futures market.
This concept helped stabilize prices for commodities that were out of season as well as served as an effective indicator of supply and demand therefore saving farmers thousands of dollars that would otherwise go to spoilage.
From forward contracts evolved commodities and futures contracts. Forward contracts are effectively agreements to buy now for payment and delivery at a specified date in the future, which is usually three months from the date of the contract.
These were originally only for food and agricultural products but now they have expanded to include financial instruments. Forward contracts have evolved and have been standardized into what we know today as futures contracts.
Basically, when dealing in online commodities or futures trading, a contract must have a seller (the producer) and a buyer (the consumer). If you purchase a futures contract, you are agreeing to buy a commodity that is not there yet for a specific price.
Although most futures contracts are based on an actual commodity, some futures contracts also are sold based on its future value based on stock market indices.
Unless you are a businessman who is into the trade of the actual commodity you purchased, you won't actually use the goods (if you’re the buyer) or actually provide the commodity (if you’re the seller) for which you're trading a futures contract.
Remember, buyers and sellers in the futures market primarily enter into futures contracts to minimize risk or speculate rather than to exchange physical goods.
On the other hand, online commodities differ from futures trading in that commodities trading may involve the physical delivery of the goods. In which case a receipt is issued in the favor of the buyer. This receipt enables the buyer to take the commodity from the warehouse.
Traders in online commodities and futures market can use different strategies to take advantage of rising and declining prices. The most common are known as going long, going short and spreads.
When an investor enters a contract by agreeing to buy and receive delivery of the commodity at a set price - it means that he or she is trying to earn from an anticipated future price increase, he or she is going long.
When he or she is looking to make a profit from declining price levels, this is going short. The speculator sells high now so he or she can repurchase the contract in the future at a lower price.
When one makes a spread, however, he or she is trying to benefit from the price difference between two separate contracts of the same commodity.
As an online commodities or futures trader, therefore, you should be armed with a firm grasp of how the market and contracts function.
Trading Online Commodities Specific links
Trading Online Commodities News
Commodity and Ingredient Hedging Now Offers CPE Credits - MarketWatch
Commodity and Ingredient Hedging Now Offers CPE Credits MarketWatch - CIH works with over 200 domestic and international clients that produce, trade, consume, or import agricultural commodities. CIH consultants have various ... |
Livestock Highlights: Ham Prices, Margin Requirements - CattleNetwork.com
Livestock Highlights: Ham Prices, Margin Requirements CattleNetwork.com, KS - ... used by commodity and stock exchanges to determine margin requirements - the capital or securities held in reserve to cover the risk of trading futures, ... CME Group to Host a Four-Part Online Series for Careers in the ... DJ CME Livestock Outlook: Most Cattle Weak; Hogs Mixed |
Gold, most other commodities retreat - Forbes
 Boston Globe (registration) | Gold, most other commodities retreat Forbes, NY - In other Nymex trading, gasoline futures fell 3.78 cents to settle at $1.1368 a gallon. Heating oil fell 3.31 cents to settle at $1.7579 a gallon. ... Video: Wall Street Ends Turbulent Week Sharply Lower Asian markets trade lower on economic worries Equity Markets Lower Ahead Of CPI Data |
Stocks Open Flat in Early Trading - Washington Post
 KARK | Stocks Open Flat in Early Trading Washington Post, United States - That was the single largest decline on record as demand for commodities came to a "virtual halt as the global economy skidded into recession," Joseph ... HP Calms Markets at Open Unable to Hold Gains, Markets Slip |
TradeCapture Expands Global Presence by Opening Rome Office - MarketWatch
TradeCapture Expands Global Presence by Opening Rome Office MarketWatch - Since 1997, TradeCapture has been delivering robust enterprise-wide trading and risk management systems for multi-commodity marketplaces throughout the ... |