Highlight text to annotate itX
Hi this is Tod. Let's talk about Commodities Trading. In Today's world there are many different
products to trade commodities with. For many years about the only way to trade commodities
was in the futures markets. Futures are a high leverage and liquid way to trade commodities.
You will need an adequately funded futures account to trade these commodities with futures.
Many of these futures markets were developed so that commodity producers could hedge seasonal
prices. You will find futures to trade on many commodities such as metals like gold
and silver, natural resources such as oil, natural gas, gasoline as well as agriculture
products such as wheat, corn, coffee and even cattle. Futures can be somewhat complex and
risky to trade. Each futures commodity contract can have completely different margin requirements
and other differing contract specifications, so beware and learn each one before trading
Today, we also have numerous ETF's or exchange traded fund products for commodities trading.
A big advantage of an ETF is that they trade just like stocks so they are much simpler
to trade than futures. You can even find commodity etf's that are double leverage and some that
are short products or the inverse of a long position so that you can easily trade in either
market direction even in an IRA account. Some popular etf tickers include GLD (which is
gold), SLV (which is silver), USO (which is oil) and many more.
When trading commodities you need to be aware
that the market action can be very different than company stocks. This can be attributed
to seasonal issues and environmental issues such as droughts or hurricanes. For example
some bad news such as a drought in the mid west can cause corn prices to rise really
Another way to trade commodities is with options. Many futures options have low volume , are
dangerous and can have extreme levels of leverage which could be devastating in a market move
against your position. One of the secrets to option trading is to have substantial volume
in the various options contracts. Many Etf's now have adequate volume for option trading
such as the GLD and the USO tickers. Options provide substantial leverage and with certain
option trading strategies you can better manage and control the leverage as well as the risk
and returns of your positions. GLD and USO have become favorite underlying assets for
many options traders and will provide the most versatile way to trade gold or oil once
you have learned the basics of option trading.
If you are interested in learning more about trading options as well as learning about
the best underlying assets to trade take the link below to Real-World Options where we
have put together an innovative course for learning about options trading and how to
evaluate option positions. After taking the link you will find more information about
the course. Bye Now.