Futures Commodities Trading Break Down / May 2022
Futures Commodities
Trading Break Down
You may be wondering what futures and commodities are, but if you're in the market to better understand trading stocks, this is the blog post series for you. In this article, we'll break down what these investments are and how they work, thus allowing you to understand more about your investment options, so please keep reading!
Your future is now!
The markets are constantly changing, and that's why you have to stay on your toes. Of course, you might need a different strategy depending on how the market is going at any given moment in time, but as with all investments, it pays off if you're smart about what you're doing!
Trading futures can be effective for day traders to long-term investors who want more control over their investment choices.
Traders in the futures market rely on an understanding of their assets and technical analysis for their demands.
As a trader, you may trade futures to profit from price changes on commodities like gold or oil. Unlike stocks and shares, which represent part ownership of the company they are sold at, futures contracts are agreements between two parties:
One party agrees to purchase a specific quantity of something from another party for which they will pay them X amount of money by date Y (such as July 1st). It could be said that there is no tangible value exchanged during this type of transaction but rather two people agreeing upon what price should happen once certain conditions take place - whether it has anything physically attached or if it's just done electronically through their brokerage's online platform.
As long as both people fulfill their obligation before the expiration date arrives (usually around three months), both will be successful with this type of contract! A futures contract is a legally binding agreement to buy or sell goods and comes in two sectors, Commodities and Financials!
In which, you can go long or short! A long position profits if prices rise but lose as they fall below that point in the original contract period. The temporary position makes money when prices decline.
Commodities are an essential thing in our lives.
Commodities help power us through life and maintain balance worldwide while also having a critical financial value to many people's livelihoods. From beans that feed animals or grains grown for bread, it all comes back to commodities! Countries can never have too much energy when we need (crude oil), metals with their intrinsic properties of beauty and strength (gold silver platinum), agriculture, feed families, and providing jobs - not just food but fiber like cotton for clothes-, these things keep economies running smoothly.
Honestly, Without them, we would be lost at sea on an island where nothing grows because there was no water from rainfall, so lack of foliage sectors raw materials underlie our trade system. These include energy, metals, agriculture, and financial assets such as interest rates or foreign exchange markets.
As mentioned, commodity traders help to set prices for these goods through supply-and-demand trading mechanisms with other commodity traders around the world on a large number of exchanges which operate 24 hours per day in different time zones (New York's NYMEX market is open early morning when Tokyo's will be closed).
Their work (and soon to be yours) helps keep global commerce going by providing investors who buy commodities futures contracts protection against fluctuations in oil supplies or currency values.
For clarity, you can see two comprehensive categories of commodities below for better understanding:
COMMODITY
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Energy (crude oil, natural gas)
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Metals (silver, gold, platinum)
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Agriculture (livestock, grains)
FINANCIAL
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Equity indices (NASDAQ, S&P 500, Russell 2000)
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Interest rates (treasury bonds, treasury bills, Eurodollars)
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Forex (foreign exchange of currencies)
Where is my crystal ball?
The future is an unknown, but by deciphering the symbols in front of us, we can see things coming. One way to do this is through Technical Analysis, where a trader studies charts and indicators to anticipate what's likely going on with prices for that asset. But it doesn't stop there: Fundamental analysis also helps traders take stock of current events as they happen so that predictions about how those companies will perform are more reliable than ever before!
Foretelling the future is fraught with uncertainty, but it doesn't have to be if you know the most telling signs and patterns. By understanding how these tell-tale indicators work in conjunction with one another, traders can anticipate where a particular asset will go next—and make well-informed decisions about when to enter or exit trades accordingly!
When putting all the puzzle pieces together, you too will have a crystal ball.
You can trade based on
your work schedule!
Futures traders can trade 24 hours a day, six days a week- even after regular trading hours. This is very appealing to people with busy schedules that it is difficult for them to enter the market during traditional times.
In addition, futures investors have access to margin borrowing and leveraged trades, increasing their potential profits and their risk exposure levels.
* Margin rates for futures vary depending on your broker's investment requirements; understand these before you invest in anything!
*NOTE: Leverage allows an investor or trader higher profit margins, but they are more exposed to any losses should things take a turn against them! If the trade goes south, you will be responsible.
Futures trading is a high-risk investment. The margin requirements at the entry point are relatively low, so you can be "leveraged" or "geared" to make more significant investments for lower initial costs and higher returns with minimal risk. A small price change may result in substantial variations in your account balance--either positive gains or losses--depending on whether prices rise (which would increase your total equity) or fall simultaneously (in which case you could lose all funds).
We advise our Kingdom Wealth Community Heiress and Hiers to start with simulated trading to learn what strategy works best for them. Practice does make perfect.
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RISK DISCLOSURE:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. No representation is being made that any account will, or is likely to achieve profits or losses similar to those discussed within this site, support and texts. Our course(s), products and services should be used as learning aids only and should not be used to invest real money. If you decide to invest real money, all trading decisions should be your own.
TESTIMONIAL DISCLOSURE:
Testimonials appearing on this website may not be representative of other clients or customers and are not a guarantee of future performance or success.
HYPOTHETICAL PERFORMANCE DISCLOSURE:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses is material points, which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect trading results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
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