Trading Commodity Futures

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By www.ProfitableTradingTips.com 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.

Transcript of Trading Commodity Futures

Page 1: Trading Commodity Futures

Bywww.ProfitableTradingTips.com

Trading Commodity Futures

Page 3: Trading Commodity Futures

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.

Page 4: Trading Commodity Futures

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Page 5: Trading Commodity Futures

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.

Page 6: Trading Commodity Futures

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.

Page 8: Trading Commodity Futures

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.

Page 10: Trading Commodity Futures

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.

Page 11: Trading Commodity Futures

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

Gold futures go up when the economy weakens and down when the economy is strong.

Page 14: Trading Commodity Futures

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

Traders jump in and out of the gold market based upon their analysis of prices.

Page 15: Trading Commodity Futures

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.

Page 16: Trading Commodity Futures

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.

Page 17: Trading Commodity Futures

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.

Page 18: Trading Commodity Futures

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

Page 19: Trading Commodity Futures

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.

Page 20: Trading Commodity Futures

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

Page 21: Trading Commodity Futures

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.

Page 24: Trading Commodity Futures

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.

Page 25: Trading Commodity Futures

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.

Page 26: Trading Commodity Futures

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.

Page 27: Trading Commodity Futures

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

Knowing the fundamentals of a commodity is essential to futures trading.

Page 28: Trading Commodity Futures

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.

Page 29: Trading Commodity Futures

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.