by Stephen Bigalow
Understanding Commodities Markets
With a rich history and an exciting future, trading in the commodities markets will continue to be very popular. For those who are already involved in commodity trading, it can be an exciting adventure. For those who are thinking about getting in, now is a great time to learn how to invest. For both the newcomer and the experienced trader, a little understanding about commodities markets is always helpful.
Commodities Markets In The US
Today's commodities markets in the United States trace their origins to futures trading in Chicago, IL in the early 1800s. Because of its location at the base of the Great Lakes and its close proximity to the farms of the Midwest, Chicago was a natural center for transportation, distribution and trading commodities. Overages and shortages of agricultural products caused extreme changes in price. An exchange was needed that would bring together a market to find potential buyers and sellers of a commodity instead of making people bear the burden of finding their own. In 1848, the Chicago Board of Trade (CBOT), the world's first futures market was formed. Trading was originally in futures and the first contract was written on March 13, 1851.
General Futures Exchange Information
Unlike in the past, you will not actually go to the commodities markets to do business with the futures exchanges. You will invest through your broker who will take your commodity orders to the exchange floor for you. Your contact with a broker can either come from telephone contact to relay orders or electronic commodities trading in the Internet. While there are futures exchanges throughout the world, the best known markets in the US are in Minneapolis, Kansas City, New York and Chicago.
Regardless of which method is used, the basic concept is the same; the investor submits his or her futures options market order and based on the information contained in the futures contract, a purchase or a sale is made on behalf of the investor by a commodity broker. As you probably remember, this legally binding agreement gives the purchaser the right, not the obligation, to buy or sell the underlying asset. While the commodities themselves might be different, the commodities markets are the same.
Commodities Markets
While the world of the Internet has eliminated some of the magic of the commodities markets, the actually floor trading is still fascinating. Most commodities markets are divided into pits where the brokers stand facing the center. Each is dedicated to commodities trading that are specific for that pit. For example, the Chicago Board of Trade has large pits for soybeans, T-bonds and corn futures in addition to many others. The COMEX in New York is home to more that one futures exchange. There you will likely find pits for such commodities as heating oil, gold, cotton, coffee and orange juice.
Another consistent feature of commodities markets is that like trading in the stock market, the people that are on the floor must be members of that particular exchange. By paying dues and assessments, these members help to support the exchange. For non-members, it is necessary to find a member broker to do your commodity investing.
The commodity market provides the place to trade and has all of the related support facilities, such as phones and price-reporting and dissemination systems. The commodity market does not set prices or buy and sell for itself. It does, however, have an extensive operation for monitoring the actions of those involved to ensure to the US government that strict trading rules exist and are being followed.
Conclusion
From their humble beginnings in Chicago in the 1800s, commodities markets have become sophisticated places for successful traders to invest in futures and options. Combined with online futures trading, commodities markets are prepared to take investors from the past into the future.
About the Author
http://www.candlestickforum.com/PPF/Parameters/1_21_/candlestick.asp A site dedicated to stock market investing using Japanese Candlesticks
Tuesday, August 21, 2007
The Beauty Of Online Stock Trading
Online stock trading differs from the term "online trading" in that online stock trading refers to the online trading of only stocks and stock options. Online trading in general can refer to online trading of stocks, stock options, futures, futures options, etc.
Today's best online stock trading platforms give traders "information at their fingertips". Many will include quotes, charting, and even portfolio management. Useful stats include, portfolio by sector, portfolio by position, value by sector, value by position, and more.
When I first started online stock trading on of my favorite features was being able to see my account equity in real-time. Knowing exactly how much was in my account at any minute gave me a feeling of more control. Some of the account statistics available to you include net worth breakdown, profit & loss summary, commission and fee summary, profit/commissions ratio, etc.
Another great online stock trading feature is the ability to "park" orders. This is also one of my personal favorites. Parking and order simply means that you enter the order and save the order for later use. This is helpful because you can plan ahead and you don't have to enter and execute your orders at the same time or at the last minute. You will find the ability to prepare for your trading day both useful and empowering. This fits in nicely with those who trade according to the "Plan your trade and trade your plan philosophy"
Online stock trading gives you a great deal of control by having all your trading information integrated into on nice, neat package. Many platforms give you so many useful bells and whistles that you may not know where to start. Make sure that your online trading platform works for you and not the other way around.
Keep it simple and leverage your online trading platform to keep you focused, disciplined, and organized.
Today's best online stock trading platforms give traders "information at their fingertips". Many will include quotes, charting, and even portfolio management. Useful stats include, portfolio by sector, portfolio by position, value by sector, value by position, and more.
When I first started online stock trading on of my favorite features was being able to see my account equity in real-time. Knowing exactly how much was in my account at any minute gave me a feeling of more control. Some of the account statistics available to you include net worth breakdown, profit & loss summary, commission and fee summary, profit/commissions ratio, etc.
Another great online stock trading feature is the ability to "park" orders. This is also one of my personal favorites. Parking and order simply means that you enter the order and save the order for later use. This is helpful because you can plan ahead and you don't have to enter and execute your orders at the same time or at the last minute. You will find the ability to prepare for your trading day both useful and empowering. This fits in nicely with those who trade according to the "Plan your trade and trade your plan philosophy"
Online stock trading gives you a great deal of control by having all your trading information integrated into on nice, neat package. Many platforms give you so many useful bells and whistles that you may not know where to start. Make sure that your online trading platform works for you and not the other way around.
Keep it simple and leverage your online trading platform to keep you focused, disciplined, and organized.
How to Find a Commodity Futures Broker
Are you interested in futures investing? If you are, you will want to get into futures trading, as it a great way to make money with the trading of commodities. If you are interested in trading futures, it is advised that you use the services of a commodity futures broker, particularly if you consider yourself to be an inexperienced trader. Doing business with a commodity futures broker can give you peace of mind, as many can assist you along every step of the way.
If you don t already have a commodity futures broker that you would like to do business with, you will need to find one. When finding a commodity futures broker to do business with, you will find that you have a number of different options. A few of the many ways that you can go about finding a commodity futures broker are outlined below.
When it comes to finding a commodity futures broker, there are many individuals, particularly beginners, who turn to their local phone book. In the business directory of your phone book, you may be able to find the business listings for a few commodity future brokers. In all honesty, the number of local brokers available will all depend on the size of your city. What you may not realize, especially if you are a beginner, is that you don t necessarily have to do business with a local commodity futures broker. In fact, you may even find it better to do business with a commodity futures broker that operates on a national level.
Another way that you can go about finding a commodity futures broker is by using the internet. When using the internet, you have the ability to use online phone books, online business directories, or standard internet searches. While all of these three approaches will give you results, you may want to perform a standard internet search, as it likely to return more results. Speaking of results, those results may include the online websites for commodity futures brokers.
The above mentioned approaches can be used to find a commodity futures broker, but you want to do more than just find a broker, you will want to choose one. If you are a beginner, the commodity futures broker that you choose to do business with may have huge impact on your futures trading success. That is why it is advised that you thoroughly research and examine all of commodity futures brokers that you come across. You will want to work with a broker that has an outstanding record, knowledge and training, as well as good customer service skills.
In short, there are a number of different ways that you can go about finding a commodity futures broker. When it comes time to choose a commodity futures broker, you will want to choose the broker who best fits your needs or your expectations.
If you don t already have a commodity futures broker that you would like to do business with, you will need to find one. When finding a commodity futures broker to do business with, you will find that you have a number of different options. A few of the many ways that you can go about finding a commodity futures broker are outlined below.
When it comes to finding a commodity futures broker, there are many individuals, particularly beginners, who turn to their local phone book. In the business directory of your phone book, you may be able to find the business listings for a few commodity future brokers. In all honesty, the number of local brokers available will all depend on the size of your city. What you may not realize, especially if you are a beginner, is that you don t necessarily have to do business with a local commodity futures broker. In fact, you may even find it better to do business with a commodity futures broker that operates on a national level.
Another way that you can go about finding a commodity futures broker is by using the internet. When using the internet, you have the ability to use online phone books, online business directories, or standard internet searches. While all of these three approaches will give you results, you may want to perform a standard internet search, as it likely to return more results. Speaking of results, those results may include the online websites for commodity futures brokers.
The above mentioned approaches can be used to find a commodity futures broker, but you want to do more than just find a broker, you will want to choose one. If you are a beginner, the commodity futures broker that you choose to do business with may have huge impact on your futures trading success. That is why it is advised that you thoroughly research and examine all of commodity futures brokers that you come across. You will want to work with a broker that has an outstanding record, knowledge and training, as well as good customer service skills.
In short, there are a number of different ways that you can go about finding a commodity futures broker. When it comes time to choose a commodity futures broker, you will want to choose the broker who best fits your needs or your expectations.
Commodity Prices - Protecting Your Investment
by Stephen Bigalow
Commodity Prices - Protecting Your Investment
So much of what is written about commodity trading has to do with investment strategy; what you should buy, how much you should pay, or which tropical island you should buy with all of your profits. While the positive side of investing cannot be emphasized enough, an important part of your trading plan is knowing what to do when things don't go so well. Commodity prices and how they can change require you find ways to protect your investments.
Two of the best ways to protect your investments against commodity price changes are limit orders and stop loss orders. These are both protective orders that help you keep your money, not give it away to changes in commodity prices.
Limit Order
A limit order is a futures trading order that instructs your broker that when an underlying asset reaches a certain price or better, he or she should execute the order and purchase the desired asset at the best commodity price available. If the price of a commodity does not drop to the requested level, your order is not filled.
For example, if the price of corn futures is at $5.00 dollars per bushel and you place a limit order at $4.50, your order will not fill unless the price drops to $4.50. If the commodity price falls from $4.75 to $4.40, your order will be filled at $4.40. Conversely, if the commodity price only falls to $4.55, your broker will not fill the order. This type of market order helps protect your money by getting you the commodity price you want and not filling if your price isn't reached.
Stop Loss Order
A stop loss order is a commodities trading order that instructs your broker that if an asset you are holding drops to a certain level, he or she should sell it. Once the price has been reached, the commodity broker will implement the trade, regardless of the current commodity price. If the price never falls to the agreed amount, the order will not be executed.
As an example, if you enter a stop loss order to leave a crude oil position you are holding when the price drops to $55 a barrel, your oil futures have these possible scenarios:
* If the price of oil drops to $55, your commodity broker will enter a market order to sell your position, getting the best available price.
* If the price of oil drops to $55 but then quickly drops to $54, that may be the price you get. Remember, once the price touches $55, your broker will place a market order but that space of time can allow the price to temporarily drop more.
* If the price of oil drops to $55 but then quickly rebounds to $56, the trade will be initiated ever though the amount is back above your target for the commodity price. It is likely you will get the $56 but your futures option will still get executed.
How These Orders Help Protect You
Commodity prices in the futures markets have the potential to move quickly. If you are holding a futures contract, it is easy for things to get volatile and your position can become compromised without your even knowing. By using limit orders, you can enter a position at the commodity price you choose, not pay more because you can't monitor its movement; your broker can do the work of watching the commodity price for you.
Stop loss orders don't protect you before you make a trade; they protect you AFTER you enter a position. If you are not sitting by the computer watching commodity prices, a negative move could occur before you can move to stop it. By having a stop loss order, you can watch your positions without being in front of your computer.
Conclusion
Stop loss orders and limit orders can help the investor to form part of a strong stop loss strategy. While there is plenty written about profits when commodity prices rise, it's good to know you have a plan in place in case commodity prices fall.
About the Author
http://www.candlestickforum.com/PPF/Parameters/1_21_/candlestick.asp A site dedicated to stock market investing using Japanese Candlesticks
Commodity Prices - Protecting Your Investment
So much of what is written about commodity trading has to do with investment strategy; what you should buy, how much you should pay, or which tropical island you should buy with all of your profits. While the positive side of investing cannot be emphasized enough, an important part of your trading plan is knowing what to do when things don't go so well. Commodity prices and how they can change require you find ways to protect your investments.
Two of the best ways to protect your investments against commodity price changes are limit orders and stop loss orders. These are both protective orders that help you keep your money, not give it away to changes in commodity prices.
Limit Order
A limit order is a futures trading order that instructs your broker that when an underlying asset reaches a certain price or better, he or she should execute the order and purchase the desired asset at the best commodity price available. If the price of a commodity does not drop to the requested level, your order is not filled.
For example, if the price of corn futures is at $5.00 dollars per bushel and you place a limit order at $4.50, your order will not fill unless the price drops to $4.50. If the commodity price falls from $4.75 to $4.40, your order will be filled at $4.40. Conversely, if the commodity price only falls to $4.55, your broker will not fill the order. This type of market order helps protect your money by getting you the commodity price you want and not filling if your price isn't reached.
Stop Loss Order
A stop loss order is a commodities trading order that instructs your broker that if an asset you are holding drops to a certain level, he or she should sell it. Once the price has been reached, the commodity broker will implement the trade, regardless of the current commodity price. If the price never falls to the agreed amount, the order will not be executed.
As an example, if you enter a stop loss order to leave a crude oil position you are holding when the price drops to $55 a barrel, your oil futures have these possible scenarios:
* If the price of oil drops to $55, your commodity broker will enter a market order to sell your position, getting the best available price.
* If the price of oil drops to $55 but then quickly drops to $54, that may be the price you get. Remember, once the price touches $55, your broker will place a market order but that space of time can allow the price to temporarily drop more.
* If the price of oil drops to $55 but then quickly rebounds to $56, the trade will be initiated ever though the amount is back above your target for the commodity price. It is likely you will get the $56 but your futures option will still get executed.
How These Orders Help Protect You
Commodity prices in the futures markets have the potential to move quickly. If you are holding a futures contract, it is easy for things to get volatile and your position can become compromised without your even knowing. By using limit orders, you can enter a position at the commodity price you choose, not pay more because you can't monitor its movement; your broker can do the work of watching the commodity price for you.
Stop loss orders don't protect you before you make a trade; they protect you AFTER you enter a position. If you are not sitting by the computer watching commodity prices, a negative move could occur before you can move to stop it. By having a stop loss order, you can watch your positions without being in front of your computer.
Conclusion
Stop loss orders and limit orders can help the investor to form part of a strong stop loss strategy. While there is plenty written about profits when commodity prices rise, it's good to know you have a plan in place in case commodity prices fall.
About the Author
http://www.candlestickforum.com/PPF/Parameters/1_21_/candlestick.asp A site dedicated to stock market investing using Japanese Candlesticks
Discount Futures Brokers - How They Can Save You Money
Are you interested in using the services of a futures broker, to assist you with futures trading? If you are, you may be wondering what type of futures broker you should use. While the decision is honestly yours to make, you are advised to take the time to examine discount futures brokers, as they may be able to save you a considerable amount of money.
Before examining the many benefits to doing business with a discount futures broker, you may be wondering exactly what one in. In most cases, discount futures brokers are brokers that have low, discounted, or competitive fees. When you use the assistance of a futures broker, you must pay to use their services. Different futures brokers charge different fees, but many are now starting to offer discounted rates; thus, giving them the title of a discount futures broker.
Now that you know what discount futures brokers are, you may be wondering exactly how they can help save you money, as well possibly even increase your profits. When using discount futures brokers, traders, just like you, are able to save money on their broker fees. Depending on the discount available, this can be quite a considerable amount. Simply put, the less that you have to spend on a futures trading broker, the more money you are able to save, when it comes to futures trading. The money that you save can actually be considered a profit, as it is an expense that you were able to avoid paying.
Although discount futures brokers can save many futures traders money, many are wondering about the level of service that they will receive and you may be as well. As with the amount of discount you are able to receive, the level of service will also vary. Discount futures brokers do not necessarily mean poor service or communication that is hard to make, but you need to be cautious of who you choose to do business with. Discount futures brokers are a viable option, as long as you thoroughly examine all of the futures discount brokers that you are interested in doing business with. Choose a discount futures broker that has an outstanding reputation and a good customer service department. Although saving money is nice, you often have to look beyond the money saved.
In addition to saving money by working with discount futures brokers, you and other traders can also save money by carefully choosing which account you choose to setup. Many brokers, even discount futures brokers, give you a number of options to choose from. Opting for a cheaper trading account, like a broker assisted account or an online trading account may reduce the amount of money you have to pay in broker fees, especially when compared to full-service accounts.
Before examining the many benefits to doing business with a discount futures broker, you may be wondering exactly what one in. In most cases, discount futures brokers are brokers that have low, discounted, or competitive fees. When you use the assistance of a futures broker, you must pay to use their services. Different futures brokers charge different fees, but many are now starting to offer discounted rates; thus, giving them the title of a discount futures broker.
Now that you know what discount futures brokers are, you may be wondering exactly how they can help save you money, as well possibly even increase your profits. When using discount futures brokers, traders, just like you, are able to save money on their broker fees. Depending on the discount available, this can be quite a considerable amount. Simply put, the less that you have to spend on a futures trading broker, the more money you are able to save, when it comes to futures trading. The money that you save can actually be considered a profit, as it is an expense that you were able to avoid paying.
Although discount futures brokers can save many futures traders money, many are wondering about the level of service that they will receive and you may be as well. As with the amount of discount you are able to receive, the level of service will also vary. Discount futures brokers do not necessarily mean poor service or communication that is hard to make, but you need to be cautious of who you choose to do business with. Discount futures brokers are a viable option, as long as you thoroughly examine all of the futures discount brokers that you are interested in doing business with. Choose a discount futures broker that has an outstanding reputation and a good customer service department. Although saving money is nice, you often have to look beyond the money saved.
In addition to saving money by working with discount futures brokers, you and other traders can also save money by carefully choosing which account you choose to setup. Many brokers, even discount futures brokers, give you a number of options to choose from. Opting for a cheaper trading account, like a broker assisted account or an online trading account may reduce the amount of money you have to pay in broker fees, especially when compared to full-service accounts.
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