What are Commodity Futures

What are Commodity Futures

In My Opinion, Possibly the Greatest Business on Earth

One thing you should thoroughly understand is the depth and magnitude of the futures market. The Stock Market is small when compared to the Futures Market. The industry has grown and matured, it has broadened the scope of its offerings, and it has assumed an indispensable role in our economy. Even though many people still refer to this industry as commodities, the tides are changing as more business is transacted in non-traditional commodities than ever before.
Despite the growth in non-commodity futures, no discussion of futures would be complete without a discussion of the underlying products that define this industry: commodities. In the most basic sense, commodities are loosely defined as natural resources, chemicals and physical products you can touch, taste, smell, grow, mine, consume or deliver.
Before the advent of futures trading in the United States, much of our economy was based in agriculture or providing services to agriculture. The industrial revolution, which ushered in a new era of technological efficiencies to the world, also changed our understanding of agriculture. Through advances in science and technology, farmers were able to grow or raise more products at a faster rate with less capital. Agricultural output not only kept pace with the phenomenal growth in population, but also improved our standard of living. Improved productivity changed focus to a new breed of agricultural services focusing more on storage, transportation, and distribution. Today, our economy is just as dependent on agriculture as it was 100 years ago.
In addition to agricultural products, the commodities industry also covers two other types of products: metals and energy. The most popular contracts for commodity trading cover several broad categories: metals, energy, grains, livestock, and food and fiber. Commodities are not paper assets, they are physical products that are produced and consumed at a price based on the forces of supply and demand.
Physical commodity futures prices - more than non-physical commodity futures - are determined by basic principles of economics, namely supply, demand and inflation.

If you want the opportunity to make a lot of money, you don't have to strain your brain trying to come up with a new invention. Instead, learn how to trade commodities in international markets that provide the products that billions of people around the world already use every day. And yes, you'll learn how to do that following my directions. Trading commodities may sound overwhelming but it is something that anyone can learn with just a little effort.

I tell my grand-kids if they would buy something today and sell it tomorrow for a profit they will never be broke another day of their life. But in order to do that you must find a product that is always in demand. Commodity futures are just such a product you can buy when the supply is high and sale when the supply is low, all in the comfort of your home with the click of the mouse.

To have a general idea about what the commodity futures is, there is the need to remember one thing about it. Commodity futures are a kind of agreement in the way of buying or selling a certain commodity, at a certain price, on a certain date set in the future. That is why it’s called futures trading. Businesses will come and go but commodity futures such as corn, wheat, rice, oil, gasoline, copper, and all of the many other commodities will be in demand as long as man is alive.

The obvious reason people do commodity trading is to generate income, of course. Like most things the object is to buy low and sell high. But in the commodity futures market you can also sell high and then later buy low. That’s what is known as short selling or going short the market. And there is never a shortage of buyers and sellers.

Some of the most popular commodities used for trading are, oil, gold, natural gases, gasoline, heating oil, silver. platinum, copper, agriculture products such corn, soybeans, wheat, rice, oats, and livestock. Then you have what are known as the “softs” things like cotton, coffee and sugar, cocoa.

Commodity trading prices are always about supply and demand. And because of the vast about of internet information about supply and demand amateurs like us have an almost level playing field with the big boys. Which is one of the reasons so many amateur traders are enamored by the Commodities Market.

Investors use up to fifty main commodities markets worldwide, to trade. The method of future contracts is considered to be the oldest way to invest and all commodity futures are secured by physical assets. The commodities market has the possibility of including both physical trading and the trading of derivatives also know as commodity options. Today, most commodity trading is done online, leaving behind the old fashioned phone calling of the broker.  It is understandable why this method is so much preferred, it is very comfortable and the trader can always control his purchases by simply getting on his or her computer and trade anytime day or night.

Commodity trading like stock trading has many similarities. Such as following the trend or in other words which way the market is moving. All markets move in one of three ways. They go up, go down or go sideways. As a swing trader you can make money in two of those three ways. You can profit when the market goes up or when it goes down, but when it is going sideways we simply get out and sit on the sidelines and look for another market.