Basic Commodity Information

Basic Commodity Information

By
www.CandlestickForums.com

If you are interested in trading
commodities you will need some basic
commodity information and then
Commodity and Futures Training.


Commodities are traded
on commodities marketssuch as the
New York Mercantile Exchange and the
Chicago Board of trade, both part of the
COMEX group.


Traded commodities include agriculture
products, fossil fuels, metals, and
financial instruments.


Commodity futures trading allows
commodity producers and buyers to
hedge their positions and allows traders
to speculate in the commodities
markets.


Starting with basic commodity
information traders can use technical
analysis tools such as Candlestick chart
analysis to anticipate the futures
markets in commodities and earn
substantial profits.


Markets


Commodity trading takes place on a
formal commodity market where
commodities are traded in standard lot
sizes.


Traders post a bond in order to trade
and pay fees for the privilege. In general
traders buy and sell futures contracts.


These contracts specify that one
individual will buy and one will sell a
specific quantity of the commodity on a
given date.


Traders can alsotrade options on
commodity futures. Options trading of
commodities offers the option to buy or
sell but not the obligation, unlike pure
futures trading.


An individual buying calls or buying
puts on commodities incurs the cost of
the premium but does not lock himself
or herself in to buying or selling copper
futures, corn futures, or live cattle.


Commodities


Commodities that are traded are ones
that tend to vary in price. Basic
commodity information is that without
price variance there would be no reason
to buy or sell futures.


Grain, dairy products, livestock, forest
products, precious metals, industrial
metals, environmental credits and
financial instruments can all be traded
on one commodities exchange or the
other.


Traders interested in trading a
commodity will want to pick a
commodity that they understand as well
as one which they are willing to track
with Candlestick charting techniques.


Hedging vs. Speculating


The original purpose of commodities
markets going back to rice trading in
ancient Japan and tulip bulb trading in
Holland was to hedge market risk.


It was in the 17th century Japanese rice
markets that Candlestick basics were
developed.


Today commodity producers such as
gold mining companies still buy and sell
futures on their commodity in order to
guarantee a profit even if the market
drops substantially.


Likewise, buyers of commodities such as
a food processing company that buys
cattle may buy futures in order insure a
given price just in case the market goes
up.


Hedging in this way is a type of
insurance against financial disaster.


Because of the variance in the
commodity markets traders will
speculate on the market.


You do not need to sell or buy the
commodity in order to trade. Many
traders simply exit their positions shortly
before the contract expiration date.


Fundamental vs. Technical Analysis


Taking Commodity and Futures
Training is a wise move if you are
interested in trading commodities. You
will need to understand
both fundamental analysis of
commodities andtechnical analysis.


You will need to choose which tools to
use, such as Candlestick chart
formations, in order to accurately
predict market movements.


Commodity trading can be quite
profitable but requires basic commodity
information, training, and discipline.


Basic Commodity Information

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