Futures and options exchanges are associations of members organized to provide competitive markets and the facilities and staffs to support such markets. The first U.S. futures exchange was the Chicago Board of Trade, organized in the mid-nineteenth century. Fifty years later, nearly all major U.S. exchanges that operate today had been formed. During the last decade the number of futures exchanges throughout the world has rapidly increased to more than 70.
In the United States, exchange membership is available only to individuals, some of whom hold a membership for their firm. Members of an exchange may exercise their trading privileges as independent market-makers (so-called floor traders or locals) trading for their own accounts or as floor brokers executing customer orders. Exchange members who trade both for customers and for themselves are called dual traders.
Today, the greatest amount of futures and futures options trading is conducted by open outcry in exchange pits or trading rings. However, computerized futures and options markets have grown significantly during the last decade, both as the sole mode of trading and as an after-hours supplement to open-outcry trading during regular business hours.
In open-outcry trading, exchange members stand in pits making bids and offers, by voice and with hand signals, to the rest of the traders in the pit. Customer orders coming into the futures pit are delivered to floor brokers or dual traders who execute them according to the order's instructions. For example, a "market" order tells the broker to execute the order immediately at the prevailing price in the pit; a "limit" order specifies the price (or better) at which the order can be filled; and a "stop" order tells the broker to execute an order at the market price if a certain price is reached. Other types of orders specify the time of the trade (e.g., at the market's open or close) or allow a broker discretion in the execution. Orders also can indicate the period for which they are valid, e.g., a day, a week or until canceled.
Saturday, November 24, 2007
FUTURE SUGAR VALUE
Sugar futures were in a steady downtrend during the first half of this year. Then, the market has consolidated for the last several months – trading between nine and eleven cents per pound.
Worldwide supplies of sugar are currently plentiful and that is the reason for the drop in prices this year. However, sugar now looks like a much cheaper component for the production of ethanol as many of the traditional grains have had substantial increases in price. This development should make the fundamentals look much better for sugar over the long-term.
Demand will likely increase for sugar-based ethanol as crude oil prices continue setting record highs. Brazil is the largest producer of sugar ethanol and it is likely their operations will continue to expand.
Technically, sugar futures have started to trend higher. With the supply and demand picture improving, the lows near 9 cents will likely hold. A break above 11 cents would look very positive.
HOW TO KEEP UPDATE
Most commodity trading firms have a research team in place that prepares commodity charts and conducts detailed study on the trends of the commodity in question.
Investing strategies based on this research are usually provided to clients.
They usually provide daily market reports before the market opens and intra-day calls during trading hours, along with monthly and weekly research reports.
Investing strategies based on this research are usually provided to clients.
They usually provide daily market reports before the market opens and intra-day calls during trading hours, along with monthly and weekly research reports.
RISK FACTORS
Commodity trading is done in the form of futures and that throws up a huge potential for profit and loss as it involves predictions of the future and hence uncertainty and risk. Risk factors in commodity trading are similar to futures trading in equity markets.
A major difference is that the information availability on supply and demand cycles in commodity markets is not as robust and controlled as the equity market.
What are the factors that influence the commodity prices in the market?
The commodity market is driven by demand and supply factors and inventory, when it comes to perishable commodities such as agricultural products and high demand products such as crude oil. Like any market, the demand-supply equation influences the prices.
Variables like weather, social changes, government policies and global factors influence the balance.
What is the difference between directional trading and day trading?
The key difference between commodity markets and stock markets is the nature of products traded. Agricultural produce is unpredictable and seasonal. During harvesting season, the prices of these commodities is low as supply goes up. There are traders who use these patterns to trade in the commodity market, and this is termed directional trading.
Day trading in commodity markets is no different from day trading in the equity market, where positions are bought in the morning and squared off by the end of the day.
Does commodity speculation affect agricultural income in India?
The vision for the commodity market in India is to reduce information asymmetry and make a robust market available to the end producer or farmer. It is also expected to balance out price information and give the producer a better price and a platform to hedge.
The futures market will allow the farmer to see the upside of the price over two to three months and help him decide where to sell.
COMMODITY INFORMATION
How big is the Indian commodity trading market as compared to other Asian markets?
The commodity market in India clocks a daily average turnover of Rs 12,000-15,000 crore (Rs 120-150 billion). The accumulative commodities derivatives trade value is estimated to have reached the equivalent of 66 per cent of the gross domestic product and the future will only see the percentage rising, says ICICI direct.com vice-president Kedar Deshpande.
What do you need to start trading?
Like equity markets, you have to fulfil the 'know your customer' norms with a commodity broker. A photo identification, PAN and proof of address are essential for registration. You will also have to sign the necessary agreements with the broker.
Is there a regulator for the commodity trading market?
The Forward Markets Commission is the regulatory body for the commodity market in India. It is the equivalent of the Securities and Exchange Board of India (Sebi), which protects the interests of investors in securities.
What kind of products can be listed on the commodity market?
All commodities produced in the agriculture, mineral and fossil sectors have been sanctioned for futures trading. These include cereals, pulses, ginned cotton, un-ginned
cotton, oilseeds, oils, jute, jute products, sugar, gur, potatoes, onions, coffee, tea, petrochemicals, and bullion, among others.
The commodity market in India clocks a daily average turnover of Rs 12,000-15,000 crore (Rs 120-150 billion). The accumulative commodities derivatives trade value is estimated to have reached the equivalent of 66 per cent of the gross domestic product and the future will only see the percentage rising, says ICICI direct.com vice-president Kedar Deshpande.
What do you need to start trading?
Like equity markets, you have to fulfil the 'know your customer' norms with a commodity broker. A photo identification, PAN and proof of address are essential for registration. You will also have to sign the necessary agreements with the broker.
Is there a regulator for the commodity trading market?
The Forward Markets Commission is the regulatory body for the commodity market in India. It is the equivalent of the Securities and Exchange Board of India (Sebi), which protects the interests of investors in securities.
What kind of products can be listed on the commodity market?
All commodities produced in the agriculture, mineral and fossil sectors have been sanctioned for futures trading. These include cereals, pulses, ginned cotton, un-ginned
cotton, oilseeds, oils, jute, jute products, sugar, gur, potatoes, onions, coffee, tea, petrochemicals, and bullion, among others.
MARKET OPTIONS
Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. BabyPips.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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HISTORY OF COMMODITY MARKETING
Food production was augmented with using technology and improved efficient tools after the Industrial Revolution. The economic development was at par with the population growth. The living standards also started to rise. The increase in production resulted in the need for more storage space and also efficient transportation of the food grains. Initially cash markets were able to handle these needs and with the passage of time, the ever growing production and large quantities of produce necessitated the future markets to regulate the price, quality and distribution of the bumper harvests. The purchasers have found a way to steer clear of the price. The commodity price was locked in well in advance of the time they were actually needed. The trader can profit taking advantage of any fluctuation in the prices by buying or selling the commodities according to the situation.
COMMODITY TRADING
It's an age-old phenomenon. Modern markets came up in the late 18th century, when farming began to be modernised. Though the trade's mechanisms have changed, the basics are still the same.
In common parlance, commodities means all types of products. However, the Foreign Currency Regulation Act (FCRA) defines them as 'every kind of movable property other than actionable claims, money and securities.'
Commodity trading is nothing but trading in commodity spot and derivatives (futures). If you are keen on taking a buy or sell position based on the future performance of agricultural commodities or commodities like gold, silver, metals, or crude, then you could do so by trading in commodity derivatives.
Commodity derivatives are traded on the National Commodity and Derivative Exchange (NCDEX) and the Multi-Commodity Exchange (MCX). Gold, silver, agri-commodities including grains, pulses, spices, oils and oilseeds, mentha oil, metals and crude are some of the commodities that these exchanges deal in.
Trading in commodities futures is quite similar to equity futures trading. You could take a long position (where you buy a contract) or a short position (where you sell it). Simply speaking, like in equity and other markets, if you think prices are on their way up, you take a long position and when prices are headed south you opt for a short position.
In common parlance, commodities means all types of products. However, the Foreign Currency Regulation Act (FCRA) defines them as 'every kind of movable property other than actionable claims, money and securities.'
Commodity trading is nothing but trading in commodity spot and derivatives (futures). If you are keen on taking a buy or sell position based on the future performance of agricultural commodities or commodities like gold, silver, metals, or crude, then you could do so by trading in commodity derivatives.
Commodity derivatives are traded on the National Commodity and Derivative Exchange (NCDEX) and the Multi-Commodity Exchange (MCX). Gold, silver, agri-commodities including grains, pulses, spices, oils and oilseeds, mentha oil, metals and crude are some of the commodities that these exchanges deal in.
Trading in commodities futures is quite similar to equity futures trading. You could take a long position (where you buy a contract) or a short position (where you sell it). Simply speaking, like in equity and other markets, if you think prices are on their way up, you take a long position and when prices are headed south you opt for a short position.
WHY SHOULD INVEST
Any investor who wants to take advantage of price movements and wishes to diversify his portfolio can invest in commodities. However, retail and small investors should be careful while investing in commodities as the swings are volatile and lack of knowledge may result in loss of wealth.
Investors must understand the demand cycles that commodities go through and should have a view on what factors may affect this. Ideally, you should invest in select commodities that you can analyse rather than speculate across products you have no idea about.
Investing in commodities should be undertaken as a kicker in your portfolio and not as the first destination for your money.
Investors must understand the demand cycles that commodities go through and should have a view on what factors may affect this. Ideally, you should invest in select commodities that you can analyse rather than speculate across products you have no idea about.
Investing in commodities should be undertaken as a kicker in your portfolio and not as the first destination for your money.
WHY INVEST MONEY
Commodities allow a portfolio to improve overall return at the same level of risk. Ibbotson Associates, a leading US-based authority on asset allocation estimates that commodities increased returns between 133 and 188 basis points, at no extra risk.
COMMODITY
You may have your debt and equity funds in place, but investing in commodities could just be the one element to improve your portfolio. Commodity trading provides an ideal asset allocation, also helps you hedge against inflation and buy a piece of global demand growth.
In 2003, the ban on commodity trading was lifted after 40 years in India. Now, more and more people are interested in investing in this new asset class. While price fluctuations in the sector could get rather volatile depending on the category, returns are relatively higher.
However, as this is not a primary area of investment for most, there is a lot of apprehension about when and how to invest. Outlook Money seeks to answer some of these questions and help you assess a whole new turf for making money.
DISCLAIMER
Off-exchange foreign currency trading involves substantial risk of loss and may not be suitable for everyone. The possibility exists that you could sustain a loss of some or all of your initial investment, therefore, do no invest money you cannot afford to lose. Investors should only engage in trading after considering their financial situation, trading experience, loss tolerance, and other circumstances. Therefore, it is advisable to seek independent advice if necessary. Past results are not necessarily indicative of future results. Risks are also associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, and Internet connection.
Trading foreign exchange on margin carries a HIGH LEVEL OF RISK, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose! You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
OUR PHILOSOPHY
Buying or selling stocks is not an easy task if you want to make money doing it. Millions of investors have lost money in the past trying to guess stock price movements.
In order to consistently make money in the stock market, investors have to be right over 70% of the time. This success ratio is extremely difficult without the guidance of a successful, reliable and robust stock selection method or algorithm that has been tested and has worked over many years.
We promise to provide this important part of your trading strategy. Our newsletters and trading systems will improve your returns by identifying opportunities with significant profit potential in both rough and easy times in the market.
Our newsletters and trading systems can be profitable for short-term, medium-term and long-term traders and investors. What makes our products and services even more valuable for any trader or investor, is that it works in bull, congested (sideways) and bear markets.
SHARE TRADING
Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company.
It can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market.
Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.
Trade exists for many reasons. Due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.
Trading can also refer to the action performed by traders and other market agents in the financial markets.
It can be expressed as a company's sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company's unit sales volume (in a market) divided by the total volume of units sold in that market.
Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.
Trade exists for many reasons. Due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.
Trading can also refer to the action performed by traders and other market agents in the financial markets.
ABOUT SITE
Tradertimes.blogspot.com is a one-stop solution provider and guide to help Indian traders and investors maximize their returns from the markets and create wealth for themselves and their family.
Our range of profitable newsletters and robust trading systems together with our sound money management principles will help any Indian trader or investor take advantage of market volatility, explosive moves and strong trends to extract maximum profits with the least amount of drawdown.
Our goal is to help Indian traders and investors achieve above-average returns from the markets by providing them with profitable trading signals and at the same time protect their trading capital from large drawdowns with our sound money management principles.
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