Learn Commodities and Options » Learning http://learncommoditiesandoptions.com Thu, 12 Jan 2012 01:43:44 +0000 http://wordpress.org/?v=2.8.6 en hourly 1 Online Commodity Trading – Learning to Trade Futures http://learncommoditiesandoptions.com/learn-commodities/online-commodity-trading-learning-to-trade-futures/ http://learncommoditiesandoptions.com/learn-commodities/online-commodity-trading-learning-to-trade-futures/#comments Sun, 07 Jun 2009 15:47:28 +0000 Profit Hound http://learncommoditiesandoptions.com/learn-commodities/online-commodity-trading-learning-to-trade-futures/ What is a Futures Contract?
A futures contract is a commitment to buy a commodity with an inherent value at the date specified. It’s used by the people who produce those commodities to regularize their income streams and protect themselves from excessive market volatility. Examples of futures are oil futures, steel futures, agricultural futures like corn, soybeans, sugar and wheat, or pork bellies. Any kind of product that’s produced in large quantities with regular production cycles, lead times of more than a month, seasonable variations in availability and price, and near constant demand for the raw material can be the subject of a futures contract. Futures can be thought of as agreements to sell or buy commodities at a specified price in the future, regardless of the market conditions. If you need the commodity in question, you may buy futures to hedge against a future rise in price. If you sell the commodity in question, you’re buying futures to hedge against a decrease in price.

Buying and selling futures contracts allow people to buy and sell the commitments to buy products in respond to market pressures. Unlike stock portfolio or bond investing, you aren’t buying a chunk of a corporation or a debt commitment to be paid back with interest, you’re taking a gamble on the future price of a commodity. Futures trading is risky, as is any kind of investment, but some of the risk can be ameliorated by taking on a diversified portfolio.

What Makes For A Good Futures Trader?
The personality type that thrives in futures trading is that of the professional gambler, the person who is certain that their instincts on the way commodities will flow will beat the market trends. (It is possible to take buy-and-hold positions with futures, but that tends to be less lucrative and less volatile. In general, it’s also less sound than buy-and-hold strategies for stocks and bonds.). Backing up that instinct is a lot of technical analysis. Futures traders watch all the news – for example, news about the weather directly impacts growing seasons for commodities such as corn, soybeans and sugar. News about port regulations impacts futures relating to delivery of durable goods and oil from overseas. News about increases in production capability at refineries, or improvements in oil extraction techniques can change the price of oil – and often in counterintuitive directions!

There is a lot to learn to become a successful futures trader; you’ll want a mentor, and a couple of classes to learn the terminology, the regulations, and how to spot market trends (and how to divorce yourself from your own analysis, so that you don’t blind yourself to important trends because you’re in love with your own ideas.)

Interestingly, while futures are contracts meant to reduce risk between producers and purchasers of commodities, the trading of futures is a high volatility market. While there is risk, it can be (somewhat) ameliorated, and there are often trends that are easy to pick out that will help you avoid risk. The key to being successful as a futures trader is knowing when to NOT gamble, when to take what you’ve got and call it a day with a reasonable return on your investment.

]]> http://learncommoditiesandoptions.com/learn-commodities/online-commodity-trading-learning-to-trade-futures/feed/ 0 Learning Forex Trading – The Essentials of Foreign Exchange Trading http://learncommoditiesandoptions.com/learn-forex/learning-forex-trading-the-essentials-of-foreign-exchange-trading/ http://learncommoditiesandoptions.com/learn-forex/learning-forex-trading-the-essentials-of-foreign-exchange-trading/#comments Sun, 03 May 2009 02:34:42 +0000 Profit Hound http://learncommoditiesandoptions.com/learn-forex/learning-forex-trading-the-essentials-of-foreign-exchange-trading/ For investors, learning Forex trading presents an alternative investment choice to traditional stock market investing. While there are thousands of stocks to select from, there are only a few major currencies to trade (the Dollar, Yen, British Pound, Swiss Franc, and the Euro are the most popular). Forex trading also delivers a lot more leverage than stock trading, and the minimum investment is a lot lower. Add to that the ability to pick flexible trading hours. Forex trading goes on 24 hours a day, and you have the reason why so many stock traders have flocked to Forex trading.You should never get into Forex trading without a good Forex trading education, as there is a potential for loss if you don’t know what you’re doing. With the proper trading education, you can be on your way to making a tidy profit.The first part of learning Forex trading is understanding the market background. The foreign exchange market is always changing. With a proper forex trading teaching, you will learn how to monitor these changes and find beneficial situations.The next part of your Forex training is to learn about risk control and risk management. You first must learn self control, so as not to invest more than you are willing to lose. You will also learn how to exit losing trades before your losses exceed your limits. This is actually a part of your Forex training and is absolutely crucial to helping you learn the valuable and basic lessons of Forex trading.Another important part of learning Forex trading is to learn how to open and manage your Forex account. In fact, your Forex schooling might first begin after you’ve opened and started to practice on a demo account. This way you learn the ropes by practicing Forex trades with purely “play money.” There is no risk involved, but it is just as realistic as actual trading. This lesson should give you an end point to let you know when you are ready for trading real money.There are numerous ways to get a Forex trading education. The best place to get this trading education is online. Some websites will allow you open free demo accounts to practice your Forex trading. One of the best things to do is to get some advice from someone who is a current Forex trader. They can give you some down to earth insight on the subject of learning Forex trading.

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