Learn more about the coming energy and commodity crisis and its consequences for the way we will live and work at Learn to Trade Commodities
The physical demand for commodities continues to be strong as world demand for all sorts of commodities, from metals to oil to grains remains high. While demand in the US seems to be declining due to a soft US economy what takes place in the US market is not as important now as it was a decade ago. The rapid growth of the economies in places like China, India, Brazil, and Russia, are keeping the upward pressure on commodity demand.
While we are probably less than half way along in a commodity bull market trading commodity futures and options trading is not suitable for everyone. Commodity futures are highly speculative. If you decide to go after the high returns available from trading commodities you should only use investment capital that you can afford to expose to such investment activity. That is trade only with capital that you can afford to lose. Commodity futures are derivative, short-maturity claims on real assets. Many commodities have pronounced price/volatility seasonality as well as being subject to rapid fluuations in daily prices. If you have a heart condition do not attempt to trade commodities.
Commodity futures spread trading offers an exciting path for potential profits often overlooked by futures traders. However, if you think you are going to make a fast fortune trading spreads or any other futures product in the commodity casino, why not just donate your money to your favorite charity instead of handing it over to the "pit vipers" on the trading floor? When you trade commodities you are up against some of the smartest, most ruthless traders in the world. You need to be well prepared to trade commodities at a profit.
While the Commodity Futures Trading Commission ( CFTC ) is responsible for insuring market integrity and protecting market participants against manipulation, abusive trade practices, and fraud the CFTC will not protect you from sudden and at times drastic changes in price levels. Your favorite commodity may still be in a roaring bull market but if you are over leveraged a sharp correction within the trend could still wipe you out.
Traders are often unprepared to deal with a string of losses in spite of the fact that this is part of every trading system. They often begin with less trading capital than is realistically required in order to survive a period of draw down. To attempt to improve their trading systems commodity traders can test their skills going back to past periods and stepping through daily and weekly price charts one day at a time. Each day forward charts update and the trader can see how well they did and how well their tools and strategies did in anticipating market movement.
Investing in the futures market and or stock market is risky and with futures you can lose more then your initial investment. Skilled investment management professionals have been using managed futures for more than 20 years with positive results. With practically a zero correlation with stocks, one of the most attractive features of managed futures is its ability to add profound diversification to an overall investment portfolio. Still it remains a risky business that requires a lot of skill and self discipline if one is to trade at a profit.
The oil market has been the big mover over the past year or so. Oil traders and hedge funds began to purchase extra oil at current prices. The surge in demand, linked to perceived trends in the futures market, generated an upward pressure on current prices. Oil is priced in dollars, which makes it more affordable for foreigners paying with stronger currencies. While oil speculators may have played some role in pushing oil prices higher the US government and its policies that lead to a weak US Dollar is much more responsible for high oil prices than the speculators who are merely following the bull market trend.
Since most oil market transactions are priced in US Dollars as the Dollar falls it supports higher prices for oil and all other Dollar denominated commodities as well as finished imported goods. Unfortunately, most US congressmen and the executive branch of the US government would rather point fingers at oil company executives and at oil market traders than take a realistic view that it is their own misguided policies that have unleashed the inflation monster on the world's commodity markets.
It is a highly interesting although dangerous time to be trading commodity markets. That is not to say that the skilled, well capitalized trader will shy away from commodity markets under present highly volatile market conditions. They will not. Experienced successful traders will probably do very well in markets that have a bullish basis that will likely last for many years. They will use the sharp corrections within the trend to reestablish positions or to put on additional positions at better prices and ride out the mega trend to outstanding profits.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Commodity Trading - Commodity Exchanges
- Commodity Trading - Commodities In Your Portfolio
- The Failure of Asset allocation & Commodity Trading
- Commodity Trading: Understanding the Basics of This Money Making Alternative
- The Fundamentals of Commodity Trading
- Commodity Trading, It Can Be For You
- Trading Commodities - Commodity Types
- Advantages of Commodity Trading Online




Investors Occasionally Use Good Luck Charms Such As Mayan Worry Dolls To Attract Big Financial Gains!
By: Father Time | 22/11/2009Some folks think of investing as a type of gambling, and they also feel they need some "good luck" when handling investments! Why not use a Good Luck Charm, such as the Mayan Indian Worry Dolls to help you invest?
InTrust Advisors - Reaching Client Objectives Using Exchange-Traded Funds
By: Toan Dinh | 22/11/2009In especially volatile economic times, the drive to invest money wisely becomes more poignant.
The Great Geopolitical Battle Over Energy Transit Routes
By: Jayeshvasava | 22/11/2009As we all live in the present, it is very hard to fully assess the future implications of decisions supported or made by political and business leaders. An extraordinary game of geo-strategy is under way to lock in long-term agreements, notably in the energy sector.
Techniques For Reducing Investment Risk
By: John Vespasian | 22/11/2009After suffering the negative results of wrong financial decisions, many individuals are reluctant to place any money in the stock market. Are those fears justified? Making mistakes is inevitable in any human endeavour. A wise man must be willing to accept occasional errors and use them as stepping-stones for building a better future for himself.
Stop Worrying, Take Action, and Start Making Money
By: John Vespasian | 22/11/2009Adopting a rational investment philosophy involves giving up unrealistic expectations and concentrating on what is feasible. You cannot prevent inflation or deflation from taking place, but if you play your cards well, you can make money from them.
Most Preferred Paid Subscription Site Indian Stock Market
By: narendra nainani | 22/11/2009Nifty Future November was quoting at 13.8 points premium.Nifty Call Option November 5000 was very active
Most Successful Intra Day Stock Future Tips Provider India
By: narendra nainani | 22/11/2009Resistance for DOW is at 10450 and NASDAQ 2190.
Learn How to Successfully Trade Penny Stocks
By: Bryan Burbank | 21/11/2009You can successfully trade penny stocks but it is important that you have information before you begin. It is possible to lose money in the stock market so the more knowledge you have the better you will do. You can make money with penny stocks because they give you a lot of trading leverage.
Debt Consolidation Information That May Help Free You From the Debt Trap
By: Gerald Greene | 25/09/2008 | Debt ConsolidationDebt consolidation is a debt repayment plan that eases your payments by reducing your interest rates and erasing your late fees. The use of a repayment plan involves working with all of your current creditors to expedite the repayment process and save on interest charges.
What the Heck is Caralluma Fimbriata?
By: Gerald Greene | 16/09/2008 | Weight LossWhile Caralluma Fimbriata does not directly ease back pain the loss of weight, especially a protruding stomach (pot belly) can be a tremendous help in taking a load off of back muscles and in reducing back pain.
Is Your Online or Traditional College Fully Accredited?
By: Gerald Greene | 15/09/2008 | Online EducationIt is highly important to make sure that the college or university that you choose is fully accredited before signing on for their courses.
Is An Online College Education For You?
By: Gerald Greene | 03/09/2008 | Online EducationOnline college education is here to stay. With the cost of on campus study skyrocketing all across the nation for many students online study becomes an attractive alternative way to obtain a college degree.
Will an Online College Degree Work for You?
By: Gerald Greene | 03/09/2008 | Online EducationEarning an online bachelors degree education may well be the best option for many students who are willing to give up the social aspects of college life.
Health Insurance Challenge for America. Can You Afford Coverage?
By: Gerald Greene | 31/08/2008 | HealthThe challenge facing American with health care and health care insurance is that the costs have gone beyond the reach of many millions of Americans. The candidate who can meet the challenge of creating a workable health care plan in America should have a major edge in reaching the Whitehouse.
Where to Look for Outstanding Investments
By: Gerald Greene | 19/08/2008 | InvestingIt's not only that the largest wealth transfer shift in the history of the world is taking place it's the speed at which it is occurring that is unsettling from a Western point of view.