MNMuseTube asked:

7.30.08: COMMODITY MARKETS TRANSPARENCY AND ACCOUNTABILITY ACT OF 2008 Peterson urging people to support his bill which attempts to “bring greater transparency and accountability to commodity markets”.

James K asked:


hi. if the cap and trade legislation passes and becomes law, won’t this create a new market for speculators with no interest in carbon credits other than as a commodity to buy and sale for profit? if so, couldnt that defeat the intended purpose of carbon credits? thanks! jim

Have you heard of futures trading? From day trading to positions trading, many people trade in the futures markets. There are also futures options where traders trade an option contract which is directly related to the underlying futures market.

What exactly are they trading? Future commodity trading is not like the stock market where people buy shares of a stock. You do not actual own anything. You are just speculating on what the price will be of a commodity in the future.

When you want to put on a futures trade, you must first put up margin money. This is in case the market moves against you; you will have enough capital to pay the loss to the brokerage firm.

Although speculators make up the bulk of futures traders, the markets were intended to protect farmers from losing everything. A farmer can hedge in the futures and protect any loss he will have in the cash market. A farmer can sell the futures in wheat. He can do this if he thinks the wheat market will fall before harvest. A bread manufacturer might buy the futures if he thinks the price will rise before harvest. Whatever happens to the wheat market, both will guarantee their price.

A speculator is interested only in trading to make a profit. If he thinks the market will rise, he will purchase the futures. If he thinks the market will fall, he will sell the futures. You do not have to own the contract first to sell it. You can first sell the futures contract.

There is risk in any type of trading. That is why some traders only buy futures options, so they know their risk is limited to what they paid for the option. Others who trade futures contracts use technical analysis like Fibonacci trading. They will only enter trades that have criteria from the chart analysis.

By: David Rivera

About the Author:

spydat3k asked:

two points in this video: 1) notice that she says: “its not like those buildings are going to fall” 2) the market is at the exact same spot it was in 2001, on September 11th money.cnn.com Financial markets never opened on Sept. 11, 2001, and remained closed for the next four trading sessions. When stocks began trading again on Sept. 17, the results were predictably gloomy. The Dow Jones industrial average plunged 684.71 points, its biggest one-day point loss in history. As the AP, Forbes and others reported, Fridays market closed within a tenth of a point of the closing figure on September 10, 2001: The Dow Jones industrial average is down 22 at 9605.41. That is nearly identical to the Dows finish of 9605.51 eight years ago, the day before the Sept. 11, 2001 terror attacks. www.forbes.com www.myfoxaustin.com agonist.org A case of financial espionage raises questions about Wall Streets proprietary trading practices and exactly what role they play in the market. The perpetrator of the espionage, Sergei Aleynikov, is a former computer programmer and equity specialist at Goldman Sachs. He is alleged to have downloaded secret software at Goldman that is used to direct large volume, rapid-fire trades to exchanges and commodity markets, often just before the close of regular trading. Stocks slip after 5-day advance Stocks slipped Friday, as falling oil prices dragged on the influential commodities sector. CNN’s Stephanie Elam reports.

With the increased volatility we experienced over the last 3 years (oil went from $10/bbl to 137 then back to 70, copper went to $4000/t before peaking at $8000/t) there is a natural increase in demand for risk management products and most importantly training on all the intricacies of hedging these risks.What is more, many companies with exposure to commodities are quite (if not very familiar) with these exposures as they are either a) pure commodities players or; b) have had these for a long time.

What is lacking (and hence the purpose of this course) is some training on how to hedge these risks in the derivative over-the-counter (OTC) markets. What do I mean? With the advent of futures (and the marketing push led by the major exchanges) there is a fair amount of material out there on how to hedge commodity risk with futures, and most exchanges even run basic courses on how to hedge with futures (aka their products). For example, the London Metals Exchange runs (fairly expensive) courses on risk management for metals. There isn’t though (not that I have seen anyway) any good, comprehensive course on how to hedge these risks in the OTC market that goes beyond the basic stuff “this is a forward, this is a swap, this is an option, etc.”.

Seven years into my career helping corporates hedge their commodity price risk OTC (which funnily enough is where most of the volume is traded, NOT futures) I am getting an increasing number of questions from clients on how these function and if I (or anyone else) can provide some training on them. Many financial institutions will sell and structure you the product, but very few will teach you how they work beyond the very basics that you need to purchase their product. Those who are not in the sector (i.e. not banks and major commodity trading houses) that have a similar level of sophistication, have had to spend many years learning this stuff “here and there.” There isn’t a course that can teach you all this in one go as there would be for interest rates or FX for examples.

So this is what motivates this course. A programme that in a few hours can give you a hands-on view of derivatives risk management in the commodities world. There will be some theory, but just the bare minimum required to understand the drivers of the product. Most of it will be a hand-on practitioners’ view of how to hedge price risk in the real world.

Let me introduce myself. After a degree in business administration and finance I traded exotic commodity derivatives for a major investment bank in London. I then moved onto to pursue a masters in mathematics and finance before going back to the banking world this time in a more sales and structuring client-facing role helping corporates (mostly in Europe and Asia) manage their commodity price risk. As the risk management and derivatives world becomes more and more complex (despite the reduced risk appetite due to the fall-out of CDOs) I firmly believe that the more quantitative ones’ background the better placed one will be to manage financial risks. At the moment I lead the commodities risk management effort for Southern Europe on behalf of a major European investment bank.

What topics will I be covering? The field is vast and time is precious. I suggest starting with the following:

Oil markets Base metal markets Counterparty risk implications

I am sure more topics will come up down the line but these are the ones where I am getting the most demand at the moment. Hope this helps. Happy reading!

By: Agustin Valecillos

About the Author:

asked:


A free Middle East ensures peace and security throughout the world. A free market and inevitable globalization makes peace a commodity that far out wieghs any profits that can be made from oil.
Oil will be a dwarf in all of the other prospects of a free marketplace throughout the world. Most importantly extremist such as Al-Quaeda, Ham mas, and Hezbholah will lose their economic base and there way of life (remember the Taliban?) will be an impossibility anywhere in the world.

monu asked:


5)If someone wants to be a broker, he/she always wants to cover all divisions of market like COMMODITY, FUTURES AND OPTIONS, MUTUAL FUNDS INTRADAY TRADING etc., In order to get /provide all the facilities to his/her customers/clients, what additional eligibilities and qualifications required. Are there some distinct and various different exams beyond NCFM n BCFM to achieve the same? If yes, what are they?
6)I heard that in order to increase LIMIT of a broker/sub-broker, he has to deposit some more .What is a limit (funds) of a broker, how is it defined
7)Why there is abrupt rise and fall in SENSEX and NIFTY between 9:55 to 10:00 AM when market opens? I see often that the fluctuation in Stock market in the morning when it opens is very high. Moreover I also tracks that every day the market opening level is far much distant from previous day close level. e.g.: Market (SENSEX) get closed at 15300 on 1st January and when it opens on 2nd Jan it shows a level of 15500 or 14850 at 9:00 AM

Peep asked:


Why have not the Americans, for conservation, implemented legislature to reduce fuel consumption from some needless vehicle markets? Demand-side motivation can improve some commodity-buffer.
Bam! I am saying demand-side citizens should be more motivated to conserve.