econoutlook asked:

The first in a multi-part series on commodity trading. The history of commodity markets is detailed. For more information, be sure to check out www

John S. asked:


As a personal investor, I’ve dealt more with options and commodities but have recently been looking at currencies & foreign exchange. What I don’t like about options is that they are a “wasting asset” that can expire worthless if not exercised whereas with commodities and foreign exchange, you have a position in an asset that won’t automatically expire.

It is interesting that with foreign exchange, you can trade on margin at rates of 100 to 1 whereas with pure equities, it is usually no more than 4 to 1.

If you are an experienced investor or financial advisor, I would appreciate hearing your perspective as to the pros and cons of trading in these three markets, i.e. FX, options, and commodities.

daniel d asked:


I would like to get into brokerage, and am currently going to start school to finish my B.A in finance. Am I headed in the correct direction? I am also interested in commodities and future securities. What is a recomeded degree program that will help me break into the lucrative field of brokerage and help me get into a good firm?

Have you ever heard investors mention speculating in futures of the commodity market and wondered what it they are talking about? While most of us are familiar with investing in stocks, commodities can be an interesting way to have your money make money for you.

But first, you might ask what is a commodity? commodities are goods we are each one portion is the same as the other. For examplee, oil is a commodity because one barrel of oil is the same as the next. Wheat is also a commodity each bushel of wheat is identical to every other bushel of wheat and anyone purchasing them could care less whether they get bushel number one or bushel number two. Gold is another example of a commodity. 1 ounce of gold is the same as the next.

There are some differences in some commodities to external forces such as shipping costs or differences in composition. For example, not all oil sells for the same cost because they may come from different sources were shipping is a consideration. Also they may trade on different markets where the pricing is different.

There are two ways that commodities are traded, in spot markets, or as futures.

Spot markets, refer to trades that take place literally on the spot. The commodity is traded right then and there, usually for cash but also could be for some other product or good. For example, if you want to buy an ounce of silver, you can go right down to the jeweler give him some cash and it will give you so. This is spot trading.

Of course, spot trading can be done in larger volume as well. Some traders exchange millions of ounces of silver or thousands of barrels of oil and then sometime later the actual goods are delivered.

When traders talk about futures or options it is not the actual good that is traded for rather a contract to buy or sell that particular commodity for a particular price a certain date in the future. This is how most commodities trading is done. This type of trading can have huge profits and also huge losses as it involves speculating on the future which can be full of risk and uncertainty.

this type of trading has been around in its present form since the late 18th century . Around this time farming became more modernized which allowed commodity trading to be profitable. Although this is an age-old way of making money, the basics remain the same today as they were in the late 1700’s.

For example, wheat takes many months to grow. So at the beginning of the planning, the market price when the wheat is ready and speculated on. So if a farmer plants meet in May which will be delivered in September, the price at that time may be four dollars a bushel. If in June the price begins to fall, and the farmer feels the price will continue following, he may offer a contract on this week for the current price (lower than $4.00). Now if someone thinks that the price will go up over four dollars, then this contract will look like a pretty good deal and they may take them up on it.

Since no one knows for sure what that price will be, an actual prices based on such unpredictable things such as weather, this whole process Is called speculation. so now when September rolls around, the farmer delivers his wheat for the agreed on price. Now if the price has actually gone up to over four dollars and the speculator has made a profit. But, if in fact, it is fallen to wander the agreed-upon price he has lost money.

So there you have it, the basics of commodity trading.



By: Lee Dobbins

About the Author:

commodity trading

With the threat of recession looming large, GDP growth looking anemic and inflation is touching new height every fortnight, should you consider investing your hard earned cash into the stock market? Or more importantly, is trading a wise choice considering such a stormy climate? If you looking for a new way of investment, look no further than online commodity trading and you can earn rich rewards depending on your investment, knowledge, risk taking ability amongst other things.

How do you do commodity trading?

Simple, you choose any good online commodity trading software and start investing. Yes, it is really that simple. However, you must ensure that you are aware of the techniques, terminology etc involved in trading commodities. Today, online commodity trading is a convenient and easy way to reap profits from an industry that is fast becoming very appealing to almost everyone. With online commodity trading software you can not just watch how the commodities you have invested in grow, but also analyze new trends, devise strategies, amongst other features.

What commodities to invest in?

With food and crude prices touching an all time high, the current market sure may not look as attractive to an outsider, but ask the futures traders who find it a challenging task to make money when the going gets tough. So, if you invest in crude, oil, gas you can benefit from the skyrocketing prices that are expected to further intensify as the quest for newer oil sources gets impetus. So also, if you have heard of the latest food crisis, investing in agriculture stocks will help you make money as the price of food prices soar.

What Commodity companies can you consider investing in?

While there are many commodity leaders, there are some companies that show promise. Of course, you should only invest in them if you have done your own research and should never go on advice alone. For online commodity trading in agriculture, especially seeds etc, Monsanto is a world renowned leader. The company spends much time and effort in innovating ways for agrarians to increase their produce. And because food grain demand is on fire now, Monsanto is reaping rich dividends with this rise in demand.

Another company that manufactures chemicals and produces seeds for various food grains is Syngenta. With its innovative ways, Syngenta has managed to help farmers increase their crop yield. Also, the company is witnessing a tremendous growth in sales and annual earnings due to the rising prices of these commodities. Both Monsanto and Syngenta are good stock choices for a serious commodity trader.

What are the other commodity trading options?

After food, the next most favorite sector for commodity traders is energy. Alternate sources of energy are hot investments in a world driven by global warming threat. However, before you invest you must be completely sure of your choice and be able to back it up with analytical data. Also, Mosaic, Potash, Agrium are other companies witnessing an increasing interest leading to high gains in sales and earnings. These fertilizer companies will benefit from the rising prices of food



By: Eric J Ken

About the Author:

Caffeinated Content

alphabetsoup asked:


If free trade rules, why the tens of billions to keep commodity products with artificially inflated values afloat in the U.S.?

Joe asked:


Durbin got a huge donation when he got approval for the Chicago Merchantile Exhanchange to buy the NYMEX exchange. That was a “victory” for the city of Chicago and its economy.

A few months ago, Durbin said that the CFTC (Commodities & Futures Trading Commission) was doing a great job of protecting America.

Now the Dems have put him in charge of investigating the “speculation” in oil.

This means that Durbin will PROTECT the US exchanges, the jobs in Chicago, and his friends who gave him big donations.

Durbin is “forcing” the CFTC to hire 100 more people to investigate “oil speculation.” Well, the Republicans GLADLY took his lead in doing this — which will do absolutely nothing. The Republicans put Durbin’s request for 100 more investigators in their own bills. They agree with him. They WANT those people hired because Durbin will make sure that his friends at the commodities exchanges are protected and NOTHING will happen other than to allow Dems to say “we’re serious.”
Yep, **** Durbin is the DEMOCRAT senator from Illinois. Illinois has the major futures exchanges. LOL
Oh… Durbin is top notch Dem. He’s the majority Whip!
Durbin has refused to allow his fellow Dems to raise margin requirements to “fight speculation” in oil trading. LOL
Would it be funny to see the Dem get rid of all of the trading jobs in Chicago and send the city into a major depression as the jobs go overseas to Arab countries?

Well, he is way to smart for that. He’ll protect those jobs and that industry, which gives him huge donations.

ervin_parker asked:


Feds Probe Possible Oil Price Manipulation
Federal regulators are six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation.

The morning news is reporting the CFTC (Commodities Futures Trading Commission) has been investigating speculatalors.

What if anything do you thing this will have on the price of oil? And have you noticed the price of crude oil has been dropping and yet the price at the pump has remained constant?

http://www.topix.net/us/2008/05/feds-probe-possible-oil-price-manipulation

http://business.blogs.cnn.com/2008/05/21/whos-to-blame-for-high-oil-prices/

This morning’s oil price is $124.67 a barrel

http://www.indianagazette.com/index.php?option=com_content&task=view&id=28223&Itemid=124

mapsons u asked:


I am Shuhan newly appointed Export Officer of a handicraft trading company in Dhaka, Bangladesh. Our main commodity is handicraft.My duty is to search buyers from America or European markets & procure order.Actually I have no previous experience. I have got this job only for my better command on English both written & spoken. My provisionary period is only 3 months. Please Show me a easy way to search buyers. For your information, this company has given me a computer with internet connection. Please advice.

If you’re looking to get into commodities trading, you should first understand what it means. Commodities are products that are bought, sold and usually not processed. Some examples of commodities are financial investments and agricultural products. Foreign currencies are also in that group.

A lot of products that used to trade locally have now expanded into the global market. Thanks to technology, more money can be made by the global expansion. Many countries, including the United States, have become one big melting pot for global trading.

When commodities first evolved, not a lot of people were using them. When people found out that it was better to take a risk on this as opposed to stocks and bonds, more people jumped on board. Now anyone can get involved in commodities trading.

When you’re involved in a commodity transaction, it is set up through futures contracts. Futures contracts are purchased and/or sold on the date specified for the future. A price is put in place and the transaction is completed at a later time.

There are also contracts called spot contracts. These are contracts that are used for transferred commodities. They get shifted when a contract is created then instead of a future date. This type of contract can be used for a future contract after a specific time period. The type of commodities investing can vary.

When you invest in commodities, you don’t have to endure a lot of risks. That’s why people like to invest in them. When you get an increase in commodities, it can offset any losses you may have. The risks in commodities are minimal because you’re investing in different things. When you have contracts for later dates, you don’t encounter a lot of risks.

There is not a problem when you’re watching how your commodities work out. Even when stocks and other stuff aren’t going so good, you can at least count on your commodities to hang tough. Unlike stocks, you can tell how well commodities are going to do. You should never compare stocks and bond with commodities because they are two different entities. Plus, stocks and bonds are more volatile because of their uncertainty in the daily market.

If you’re not familiar with investing in commodities, you should find someone who is knowledgeable in it. Commodity trading advisors can assist you on what to do in the market. They will also let you know when it’s time to get rid of that commodity.

When choosing an advisor, look at what you what to accomplish. After you’ve done that, find someone who would be able to help you with your goals. You don’t necessarily have to go to a brick and mortar facility. Since people are so busy these days, it might be better if you contact them by phone or e-mail first. Then you can set up a time to meet, if necessary.

You can do other things besides trading in commodities. You can also make investments using a diverse package of funds.

With commodities, you are less likely to lose money than you would if you were strictly investing in stocks and bonds. That’s why it’s important to diversify your money if you’re planning on creating a nice financial portfolio.



By: Gary Giardina

About the Author:

commodity trading