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Commodity Trading
First
of all, we need to have a source of
price data.
The Wall Street Journal is a good source for commodity price
listings. Yes, we prefer to analyze charts rather than numbers. This is both, an art and a science. The day's high and low, the opening and closing prices... We will change the bar's time frame from days to weeks or months... and then to hours or minutes. We use software that creates different kinds of charts on the computer screen. A computer will not help a bad trader, it just makes our life easier. Do you prefer fundamental analysis or technical analysis? We like both. Most successful traders emphasize technical analysis. Fundamental analysis is based on supply and demand to forecast future price action. It's application to fundamental analysis of commodities has to do with consumer behavior - things that may happen and how consumers respond. Factors that have affected demand in the past are always important. Governments and companies publish statistics concerning crop sizes and demand levels, but bear in mind that these numbers are gross estimates at best. Technical or chart analysis involves analyzing past price action of the market itself to forecast the likely future price action. Here we don't care about the reasons or causes for prices going up or down. Charting can be used by itself with no fundamental analysis - but we always prefer to se it in conjunction with fundamental information. ------------------------------------------------------------------------------------------------------------------------------------------------ |
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Watch Out For These Warning Signs of Fraud From the US Commodity Futures Trading Commission (CFTC) Get-rich-quick schemes that sound too good to be true. There’s never a free lunch. Be very careful if you recently retired or came into money and you’re looking for a safe investment. You could be a very attractive target for a crook. Once your money is gone, it can be impossible to get it back. Predictions or guarantees of large profits. Always get as much information as you can about a firm or individual’s track record and verify that information—even if you know the people involved or they are recommended by friends or relatives. If you can’t get solid information about your investment and the company, don’t invest. Before you invest, always check it out with someone whose financial advice you can trust. Promises of little or no financial risk. Be suspicious if the firm or individual says there is little risk. Be suspicious if someone tells you that a written risk disclosure statement is only a routine formality. Written risk disclosure statements are important to read thoroughly and understand. Claims of trading in the “Interbank Market.” If a firm claims that they will trade foreign currency for you in the interbank market, or that you should trade in the interbank market, be cautious. The term “interbank market” refers to a loose network of currency transactions negotiated between financial institutions, usually banks and investment banks, and other large companies. Unsolicited telephone calls about investing. Be skeptical if someone you don’t know calls you about investment opportunities. Someone asking you to send cash immediately. Be very cautious if someone tries to convince you to send cash or transfer money to them immediately by overnight express, the Internet, mail, or any other method ------------------------------------------------------------------------------------------------------------------------------------------------ Before You Trade: Know the Basics of Futures Trading Consider your financial experience, goals, and financial resources and know how much you can afford to lose above and beyond your initial payment. Understand commodity futures and option contracts and your obligations in entering into those contracts. Understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you. Understand what it means to trade on margin: margin trading can make you responsible for losses much higher than the amount you invested. Know who to contact if you have a problem or question. ------------------------------------------------------------------------------------------------------------------------------------------------ Kinds of Fraud to Watch Out For Foreign Currency Trading (Forex) Foreign currency trading scams often attract customers through advertisements in local newspapers, radio promotions, or on attractive Internet sites. These advertisements may peddle high-return, low-risk investment opportunities in foreign currency trading, or even highly-paid currency-trading employment opportunities. Precious metals scams often work the same way. The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks, or that employment as a currency trader will make you wealthy quickly. Commodity Pool Operators Commodity pool operators often solicit investments from friends, neighbors, co-workers, and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, these investment schemes turn out to be fraudulent, and you can lose your entire investment, in many cases as a result of outright theft. Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate “Ponzi” schemes in which little or none of the money sent in by investors is ever invested as promised in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony “profits" to earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors. Be wary of such payouts if you do not fully understand their source. Introducing Brokers Introducing brokers often use advertisements and infomercials on radio and television to promote commodity futures and options. These advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events (such as a hurricane or a terror attack) create an opportunity to make big money by trading in commodity futures and options. They promise quick riches, like turning $5,000 into $20,000 in just a few months, with little risk. -------------------------------------------------------------------------------------------------------------------------------------------- Best Alternative Investment Books ---------------------------------------------------------------------------------------------------------- Keywords Commodities exchange, commodities futures trading, commodities trading, commodity exchange, commodity future, commodity future online trading, commodity future trading, commodity futures, commodity futures broker, commodity futures brokers, commodity futures trading, commodity futures trading commission, commodity option trading, commodity trading, commodity trading advisor, commodity trading broker, commodity trading software, commodity trading system, discount commodity trading, online commodities trading, online commodity trading
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