Tuesday, October 4, 2011

Commodity Demo Account - Overview

Do you know why online futures company offer commodities demo account? Well, everyone works to earn money, either as an income for today's living or to be save as insurance for their pension time. However, the expense for daily living sometimes far greater than the income, that makes it harder to save enough money for the future. Another option is by putting some of your money to investments. A lot of online forex and futures trading website offers good opportunities for you to invest money in their company, usually with trial account to give you firsthand experience in investing in their company.

In the demo account, first you have to fill your personal information, and then you will receive confirmation email regarding your application. After you have confirmed the email, you will then be taken to your homepage account to see with your own eyes how the trading works. It is like gambling when you want to invest your money in futures and foreign exchange, you have to have knowledge in what will you put your money into, and you have to make quick decisions.


It does not matter which online trading companies you want to join for commodity demo account, it is always better to try it yourself all the facilities they offered, since there is no certainties in trading, you can win and you can also lose your money, so if you are offered these kind of account, do not hesitate to try, then you can decide whether you want to invest in trading or not.

Commodity Demo Account - Overview

Monday, October 3, 2011

Power Investing in Commodity Mutual Funds

Unless you have the time to do the proper research, one of the best and safest ways to invest in commodities is through a commodity mutual fund.

Commodity mutual funds are a great way to diversify your investment portfolio, in a way that complements stocks and bonds.


You can not only make a significant amount of money by doing this, but you can also hedge against losses because commodities tend to move in the opposite direction of stocks. Not always, but it is a general rule you can count on most of the time.

There are a variety of commodity mutual funds to invest in, and here are a few to understand and consider.

First of all there is the fund that holds the actual physical commodity it has invested in.

These types of funds will take ownership of things like gold and silver, and then issue units against them.

Another type of commodity mutual fund is one that buys futures contracts, where owning the specific commodity isn't a part of the picture.

These funds are operationally tracking funds, which track an underlying index, which of course is tracking the actual price movement of the commodities themselves.

Another thing to understand with these types of funds are they hold debt like US Treasury bonds, with which they can use to pay expenses if they choose to.

Another way of investing in a commodity mutual fund is through a fund set up specifically to invest in the stock of a company producing a commodity. They could be mining or agricultural companies, etc. Most investors understand this, but it is still a very good way of partaking in the commodity market.

So it's really not that difficult to understand, and if you follow the markets or choose a fund with a quality fund manager to manage the fund, you have really good chances at beating the stock market.

One must be able to live with the wide swings at times though, which is why I talked earlier about it not being for the weak at heart.

Even commodity mutual funds can move in large swings, and that should be understood so we don't just move in and out of commodities at a whim, and lose the value of sticking with it.

We always must remember to include a stop when we're investing in commodities, and need to put a stop loss in place to manage the risk we're taking on.

It's important to understand the basic way investing in commodities is done, as it helps us to ask the right questions of fund managers, which can put a healthy check and balance in place, so they don't think they can do anything they want without you checking up on them.

People across all professions admit that those taking the most interest in what they're involved in get the most attention, and it does counter the idea of just doing whatever they want. That's a good thing when its your money and future at stake.

Power Investing in Commodity Mutual Funds

Sunday, October 2, 2011

Commodity Trading Involves High Risk With High Reward

Commodity trading is the buying and selling of contracts of items that we use everyday. It is the trading of primary or raw products. Some of the items traded in the commodities market include such common, everyday items as: soy beans, cotton, orange juice, cocoa, sugar, wheat, corn, barley, pork bellies, milk, feedstuffs, fruits, vegetables, other grains, other beans, hay, other livestock, meats, poultry, and eggs. Energy items that are traded on the commodity markets include oil, natural gas, electricity, and gasoline. The commodity speculators in the energy market were blamed for the recent price increase in the cost of gasoline at the pump.

Buying and selling commodities is very similar to buying stocks and bonds on the stock market but with much more risk. Since it is much more volatile, commodity trading is very speculative, involves a high degree of risk, and is designed only for sophisticated investors who are able to bear the loss of more than their entire investment. It is not for the investor with a weak stomach! However, commodity trading is a battle between return and risk. Because of the leverage involved, you can achieve a higher rate of return than from most other forms of investment, but at a higher risk.


Commodities trade on different markets than typical stocks. For example, most people are familiar with NASDAQ or NYSE (New York Stock Exchange) for trading stocks and bonds. But commodities are traded on the world market. A few of these places are the Chicago Board of Trade (CBOT), the New York Board of Trade (NYBOT) (these two exchanges trade much of the grain and agricultural commodities), the Chicago Mercantile Exchange (for livestock and meat), the New York Mercantile Exchange (NYMEX) for energy, and the London Metal Exchange for precious metals like gold and silver.

Since it is so risky and speculative, many investors shy away from investing in commodities. However, it can be a very lucrative way to make money if you have the stomach for its wild ups and downs.

Commodity Trading Involves High Risk With High Reward

Saturday, October 1, 2011

Commodity ETF - Your Best Options and Strategies

It's no secret that there is a boom going on in the commodities market right now. The best way to profit from this boom is through Commodity ETF ownership.

With the rapid growth of ETF vehicles over the past few years, there are many options open to investors wishing to gain exposure to commodities. Below is a listing of many ways to add commodities exposure to your portfolio:


DBC - Commodity Index Fund DBA - Agriculture Fund DBB - Base Metals Fund DBE - Energy Fund DBO - Oil Fund DBP - Precious Metals Fund DBS - Silver Fund DGL - Gold Fund PHO - Water Resources

As you can see, there are ETF funds for specific segments within the commodity group. You also have the option of owning a broader Commodity ETF in DBC.

There are many strategies and tactics for profiting from the commodities market. Almost any strategy can be followed using the Commodity ETFs listed above.

Learn the basics of these funds before buying. Spend a little time researching these commodity etf funds further and you're sure to find one that suits your investment needs.

Investing through ETFs has many benefits. ETF fund holdings are diversified within the industry in which it invests (like a mutual fund). The most beneficial difference between ETFs and mutual funds is that ETFs are much cheaper to own (~.5% compared to ~1.5%) and they can be bought and sold at anytime (like a stock). For this reason, many investors are beginning to use ETFs as their primary investment vehicle.

Don't let the commodity boom pass you buy. Commodity ETF funds make it easy on the average investor to profit.

Commodity ETF - Your Best Options and Strategies

Friday, September 30, 2011

Commodity Futures Trading Using Fuzzy Logic and Market Synchronization Clues, PART 2

There's nothing better than fuzzy logic for determining when a commodity market has begun a new trend and is starting to synchronize. Read on to find out exactly what this is all about...

Observation From Trading Notes:


"After an e-mini futures top forms over 1-2 days with big contracts and multiple tops, look for the last rally to labor up all day AFTER a sharp and fast down opening with poor A-D line. Key: It will spike or touch the 5 min chart channel one last time. This is the best place to short."

This is another familiar e-mini futures pattern. In this case it's a big set up for a big move. There are always some kind of preparations for a big move. Your job is to identify them. These are patterns that will repeat every 5-10 days or so. The anemic rally is the key. It's like the market is running out of gas and getting tired. That last stretch to tap the channel in a weakened state is an e-mini short trade you should jump on. It is a "high probability" trade.

If you stalk this trade, focused and patient, you will find your share of these kinds of set ups. Notice they are not rigid, computer system type patterns. Making sense of them requires the fuzzy logic of the brain that is looking at many indications and patterns at once. You will get to the point where you can simply feel you've been there before in a general way and know that this means a short sale.

There's no computer program that can do the same integration at this time. There will be someday, but for now the extraordinary commodity futures traders, the superstars who earn $millions+ a year, are mostly discretionary (fuzzy logic) people using computers to do the raw number crunching - the grunt work.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Commodity Futures Trading Using Fuzzy Logic and Market Synchronization Clues, PART 2

Wednesday, September 28, 2011

Commodity Trading - Trading Oil

Traditionally, commodity trading in petroleum products was a place where only the elite, super traders dared to venture. With barrels holding 42 gallons each and a contract minimum of 1,000 barrels, delivering oil was a task best left to the professionals. However, the petroleum trading landscape has undergone some dramatic changes over recent years.

For decades oil prices were stable, then in the mid 1970s the industry exploded. Technological advances and the political landscape contributed to the uncertainty, lack of stability, shortages and rising prices. Nearly 30 years later, prices have skyrocket to more than per barrel and the forecasters predict that in mid to late 2007 when it is expected to experience a slight decline for the next two years.


However, there are no certainties when it comes to oil prices, but there are a few large scale factors that can minimize the risk by offering a reasonably accurate projection.

As demands continue to rise, other countries like India and China are also experiencing technological and cultural changes. The trend seems to be in an upswing with no indication of slowing, reversing or of being reversible.

India is riding in on the coattails of its western neighbors in regards to technology and business methods and is emerging in the 21st century. This brings with it an increased demand for energy, mainly oil based, so that homes, office buildings and manufacturing plants can be erected. Rural economy is getting a facelift in many areas as this movement brings with it such exponential growth which, in turn, increases the demand.

Demand is not the only piece of the puzzle, though. As India's purchasing power to obtain those goods increases, other growth is showing up as well. India has a wealth of inexpensive, highly educated work force which is being sought out for outsourcing of Information Technology, electronics manufacturing, communications and more. This is continued to grow and expand for at least another decade. One indication of this growth is the rapid growth of broadband throughout India.

China is a technological mega country with the largest mobile phone use in the world and a close second for the largest internet population. Energy is in demand throughout the world, but in China it is expected to rise steadily for at least the next decade.

Although China is perceived to be a Communist nation, social forces are causing it effectiveness to decline. As of yet, it is impossible to predict whether the repression will increase or decrease, but it is inevitable that the flow of information will not be stopped and it will reach the people one way or another, despite any government's attempts to block it.

The social changes within China seem to be somewhat proportionate to the increase in business there. Demand for energy is on the rise and new infrastructure, buildings and manufacturing plants are cropping up on a consistent basis. These businesses and growth all require energy, mainly oil based energy.

Demand continues to rise yet simultaneously supply rates are dropping off or have stalled. Temporary losses, such as with refineries, that occur as the result of disasters may be recovered in a matter of months, up to a year. However, North Sea oil production, which saw its peak in 2000, has seen a gradual decline. Until the time that political changes come around, releasing the massive reserves that are known to be in Alaska, it is not expected that there will be new discoveries of sources that will be utilized. Not many new sources are expected to be realized throughout the globe.

As technology leans in the direction of developing new forms of energy, there is no expectation that any of these sources will appear on the market for a period in excess of ten years. Fuel cell powered cars, which only account for 7% of gasoline use, are not expected to make an appearance for quite a few years.

Existing political pressures in the United States are hindering any hope of a change in the current situation. Waste disposal is one of the primary problems on the political forefront that shows no promise of a solution anytime soon. However, there are new forms of oil trading mechanisms that are evolving that allow the average investor to partake in a market that was at one time exclusive.

For example, e-mini futures on the CME allow for trading contracts that are half the traditional size of 500 barrels. Futures and options on the NYMEX remain at the 1,000 barrel size, yet they require less that 5% investment. These moves place these trades within the grasp of all types of investors. Commodities pools and funds such as those that are offered by Pimco and Oppenheimer allow investing lower amounts which are increasing their popularity.

This time in the marketplace can offer even the average investor a favorable risk and reward balance in oil commodity trading.

Commodity Trading - Trading Oil

Tuesday, September 27, 2011

History Of The Commodity Market

The commodities market is both a wholesale and retail market. The term commodity is a generic term for all natural resources used in the industry for the production of finished or semi-finished products, either as components or as energy entering cycle of production or delivery of the product. These markets are exchanged between other copper, gold, wheat, cotton and oil.

The players in this market are producers (farmers, mining companies, industrial ), financial institutions (banks, asset managers, institutional investors, hedge funds, etc.), corporations (as issuers in the primary market, or as investors), and individuals. Since the early 1980s, there was a strong development of derivatives (forwards, futures, options, warrants, swaps) so that today the bulk of trade takes place via these products. Generally, the commodities market, like other markets elsewhere, transactions take place either on organized markets or on the OTC market, also called OTC (Over-the -counter market).


Organized markets, which are grants and futures markets are markets in which transactions are standardized (in terms of quantity, quality, maturity for merchandising, etc.) and there is no counterparty risk (that is to say, failure of the counterparty) due to the existence of a clearing house that comes between any buyer and seller and check their creditworthiness with daily margin calls. In contrast, the OTC market is a market where the buyer entered into the transaction directly with the seller. The transactions are less standardized, but also better fit the specific needs of operators.

The commodities market is now almost entirely paperless (more as paper) and electronic (very few transactions "open outcry"). Trade is mainly conducted via the CME Group, which contains the CBOT (Chicago Board of Trade), CME (Chicago Mercantile Exchange), NYMEX (New York Mercantile Exchange) and COMEX (New York Commodity Exchange). It is currently the largest trading exchange futures (contracts) with the widest choice of commodity contracts. LME (London Metal Exchange) and ICE (Intercontinental Exchange), formerly NYSE, are the other two major stock exchanges trading commodities.

History Of The Commodity Market