Shortages on Key commodities have brought on wars throughout history such as in World War II, when Japan ventured into foreign lands to secure Crude Oil and rubber, while oversupply can have a devastating impact on a region by devaluing the prices of core commodities. Energy commodities such as Crude Oil are closely watched by countries, corporations and consumers. Various commodities play an important the global economy and savvy commodities investors can turn economic events into opportunities. The might of empires can be seen as somewhat proportionate to their ability to create and manage complex trading systems and facilitate commodity trades, as these serve as the wheels of commerce, economic development and taxation for treasuries. Commodity trading over and in the world’s exchanges require agreed-upon standards so that trades can be executed without visual inspection.
Trading and investing in commodities can be very different from investing in securities such as stocks and bonds. Global economic development, technological advances and market demands for commodities influence the prices of staples such as crude oil, aluminum, copper, sugar and corn. Basic economic principles follow the commodities markets: lower supply equals higher prices.
Investing directly in specific commodities can be a risky proposition, if not just speculative without the required, knowledge, experience, diligence and rationale involved.
Investors losing money in the stock market can create nice returns by trading precious metals. Commodities can become risky investment propositions because they can be affected by eventualities that are hard to call.
For example, agriculture grains have a very active trading market and can be volatile during Summer months or periods of weather transitions.
With commodities playing a Key role in the global economic markets and affecting the lives of most people on Earth, there are multitudes of commodity and futures exchanges around the world.
Without futures and hedging, volatility in commodities could cause bankruptcies for businesses that require predictability in managing their expenses. Investing in commodities can quickly degenerate into pure speculation when a trader makes uninformed decisions. However, by using commodity futures or hedging, investors and business planners can secure insurance against volatile prices.
We at HeffX are technical traders, if you want to participate in the commodities markets, learning technical trading methods is advisable and prudent.
Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994.
Trade FX, Equities and Options with the World's Leading Platform , call our trade desk 631 482 0376, or contact us to get started. Information and opinions contained on this page are for educational purposes only and do not constitute trading recommendations. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. The article opens with an overview of options on futures trading strategies split into bullish market strategies, bearish market strategies, neutral market strategies, and special market strategies. Industry experts and pundits would like you to believe commodity futures trading is only for the wealthy and sophisticated.
Thus, commodity exchanges are used by manufacturers and service providers as part of their budgeting process, and the ability to normalize expenses through the use of forward contracts reduces a lot of cash flow-related issues.
Population growth, combined with limited agriculture commodities supply, can provide opportunities to ride agriculture price increases. When markets are unusually volatile or Bearish, commodities can also increase in price and become a place to park cash.
The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition. However, a number of savvy traders use the commodity markets to hedge inflation and energy woes as well as prepare for the ever-increasing fiscal volatility we are facing in the New Millennium. This little known area of the commodities market is ideal for people who have a steady income and want to earn a second income trading a small amount of capital.
You should be aware of all the risks associated with foreign exchange and futures trading, and seek advice from an independent financial advisor if you have any doubts. You have to find a way to keep your spending from increasing just because you are making a bundle trading.
Many new traders build up a large trading account in a short time, starting with a hardly any capital in the commodities market.
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