| Trading Commodity Futures
|
Commodities refer to
a range of exchange traded commodities like metals, energy commodities,
grains, oil seeds, etc. Click here to
have the specifications of various commodities.
Most investors trade
in commodity futures and options to earn money. Futures contracts will
eliminate the need to take physical delivery of commodities, if positions
are closed out before First Notice
Day / Last Trading Day, eliminating unnecessary delivery burdens.
Where are the commodities markets
located?
Below is a list of
some of the commodity exchanges where futures contracts are traded.
|
City /
Country |
Name of
Exchange |
Commodities |
| New York /
USA |
New York
Mercantile Exchange (NYMEX & COMEX) |
Gold, Silver,
Copper, Aluminium, Platinum, Palladium, Crude Oil, Unleaded
Gasoline, Heating Oil, Natural Gas, Propane |
|
New York /
USA |
Coffee, Sugar
& Cocoa Exchange (CSCE) |
Coffee, Sugar,
Cocoa |
|
Chicago /
USA |
Chicago Board of
Trade (CBOT) |
Soybeans, Bean
Oil, Soy Meal, Corn, Wheat |
|
New York /
USA |
New York Cotton
Exchange (NYCE) |
Cotton, Orange
Juice |
|
London /
UK |
International
Petroleum Exchange (IPE) |
Brent Crude Oil,
Gas Oil |
|
London /
UK |
London Metal
Exchange (LME) |
Base
metals |
How do investors make money by
trading in commodity futures? Investors take
advantage of movements in commodity prices in order to gain profits. Below
is a general description of trading outright commodity futures contacts.
For instance, an
investor thinks that Crude Oil can go higher due to certain fundamental
or technical reasons, which he/she believes
will play a vital role in affecting the supply or demand of crude. He/she then
decides to buy one crude oil futures contract by placing an order through
the brokerage company that he/she is associated with. Let us assume that one crude oil futures contract was bought at a price of $29.10 / barrel, and the price rose
to $30.10 / barrel in a couple of days time. He/she then decides to sell
the futures contract at $30.10, which will fetch a profit of
$1000.
At another occasion,
an investor thinks that crude can go down soon. He/she then decides to
sell one crude oil futures contract. Let us assume the crude oil futures contract was sold at $30.10, and the price dropped to $29.10 in a few days time.
This will result in a
profit of $1000. In this way,
investors can make money both in a rising and a falling market.
What will happen if prices move
against existing positions?
Unlike other
conventional investments, financial markets are characterised by a higher
risk element. Investors adopt
various risk management techniques to limit losses as well as to protect
profits. Futures traders also use options contracts to control their
exposure to risk.
In other words, there exists a variety of trading strategies and
techniques which can be used to control one's exposure to unfavourable
price movements
Where can I get commodity price
quotes and market information?
Our clients can
receive real-time price quotes by phone 24 hours a day. Price quotes and
market information are made available on computer terminals at SFB's
office that are obtained from satellite-based quote vendors. In addition,
Internet based real time and daily price quotes are available on this
website for informational purposes.
Will SFB help beginners get
started trading?
Yes we do. Our
experienced brokers and analysts will be by your side every day limiting
your risks and maximising your opportunities. In addition, beginners will
receive training that are arranged as trading workshops. Contact SFB Research for beginners
package.
Also check out various investment options
that we are offering to beginners as well as to experienced
traders. How should I go about opening a
trading account?
Click here to request
account application materials.
Got a question?
It is likely that you will have many questions about investing in
financial markets. You will find answers in the FAQ Section.
Please be advised that apart from what has been
described above, investors use various other trading strategies
combining futures and options which are appropriate for different
market conditions. Click
here to go to Advanced Trading
Strategies. |
Also see: Specifications of
Commodity Futures
Advanced Trading
Strategies
Internet Based Price
Quotes & Charts
Historic Price
Charts
|
