For most people, trading in the ‘market’ means buying and selling stocks and bonds. For some, though, this market is slow moving and unexciting and they prefer something with bigger swings and more profit potential. Commodities futures trading is just such a market and more and more people are becoming involved in this area.

Trading in any of the available markets is a little bit like gambling in a casino. You step up to the table, place your bet and then await the throw of the dice, the spin of the wheel or the turn of the cards. For some this is a fascinating experience and, indeed, gambling has become a very popular pastime all over the world. As with gambling, trading involves a certain amount of ‘luck’ but there are also ‘systems’ that can significantly increase your odds of winning.

In stock trading you’re betting on the relative strength of a company. By purchasing stock you’re buying equity in a listed company with the hope that the value of the company (and their stock price) will go higher after you get into the trade. If it does, you’re able to later sell your stocks at a profit. If the opposite occurs, when you sell your shares you’ll be faced with a loss.

With commodities, traders are buying and selling actual physical products. They may be agricultural (grain, sugar, coffee, O. J., beef, pork, etc.), industrial (gold, silver, copper and platinum) or financial (T-bills, currencies, etc). These commodities all have a fluctuating ‘spot price’ which is the cost for buying unit one of that product at this exact point in time. These prices are continually moving up and down.

You can also buy commodities by utilizing a ‘futures contract’ for a specific item, whether it be gold or grain. With a futures contract, you’re agreeing to a future buying or selling price, to be transacted on or before a specific date. Most people trading the commodities markets are speculators who have no intention of actually taking delivery of, say for example, 5,000 bushels of corn or wheat. They are simply agreeing to buy at today’s price for a specific monthly contract in hopes that the price will increase and they’ll be able to sell back at a profit. Another option is to SELL now (if the price seems to be going DOWN) and by back later after the price drops.

When you BUY a futures contract you are said to be LONG in that commodity. Your hope is that the value of your contract, whether it be for pork bellies or live cattle, will increase between the purchase date and the delivery date. If the market goes up and you sell your contract back you will profit the difference between the purchase price and the selling price. You can also do the reverse, if you feel the market will be going down. You can SELL now, wait for the price to drop, and then buy back and pocket the difference. This is called going SHORT.

There are definite risks in commodities futures trading but it also holds significant upside potential too. Leverage enables individual traders to control large contracts with relatively small amounts of money but the chance of losing is always present. This market moves fast and is not for the weak of heart. Trade smartly!

Get more information and details about commodities futures trading today! When you learn how to trade futures, you will be able to begin taking advantage of the many opportunities that present themselves to you easily!

There are many types of financial instruments that traders and investors trade. Futures is one of them just like stocks and bonds. A stock gives you ownership of one part of a company. If you own 10,000 stocks of a company, you own 10,000 parts of that company. On the other hand a bond is an IOU that governments and companies issue to finance their operations.

Futures market is a highly regulated market with the CFTC responsible for its regulation. Buyers and sellers don’t come in direct contact with each other. In between is the Central Clearing House that enforces the contract reducing the risk of party default! Futures contract as the name implies is a binding contract between two parties for the delivery of a commodity or an asset or even a financial instrument at some future date between the buyer and seller of that contract.

Futures market is a very important financial market that sets the prices in the retail and wholesale markets of commodities like wheat, corn,heating oil, oil, gasoline, gold, silver, cattle, soybeans, meat, hogs, coffee and many other foodstuff. Futures market was primarily developed for helping farmers hedge their risk while growing agricultural commodities. Agricultural commodities are a very important part of the futures market. Over the decades, futures contracts become popular on a host of other commodities and contracts.

Now, futures contracts are by design time bound and expire at a fixed date. These contracts get regulated through a central clearing hours so the risk of one party backing out of the contract is minimal. This limits the time and risk exposure experienced by hedgers and speculators.

Now you can easily trade these contracts by opening an account with a FCM brokerage and deposit an amount to start trading these contracts on margin. The minimum amount with most of the brokers is something like $5,000 but it can less too! Brokers allow leverage upto 10:1 when you trade on margin. Compare this to the leverage of 2:1 allowed by stock brokers. In the last decades, electronic trading has become highly popular among the traders. This includes futures as well.

In US, open outcry trading still takes place during the official hours at the different futures exchanges. However, most of these futures contracts also get traded electronically. GLOBEX allows electronic trading of most of these futures contracts 23 hours each day. Electronic trading provides a more level playing field, more price transparency and lower transaction costs.

CME, NYMEX and CBOT are the three most important Futures Exchanges. GLOBEX allows you to trade most of the contracts that get traded on these exchanges. The popular contracts that get traded on GLOBEX are the E-minis like the S&P 500, NASDAQ 100 and Dow. You can also trade E-mini gold futures as well as crude oil futures on GLOBEX.

Now, GLOBEX trading continues during the night after the official close of CME, CBOT and NYMEX at 4:15 PM EST. However, overnight trading can be thin and highly volatile as compared to the official hours. You can find GLOBEX quotes on CNBC and Bloomberg!

These quotes are real time. Futures trading can be highly profitable but risky as well. Before you dabble in them, you should paper trade these contracts for at least a month just to get a feel of how to do it. There are many contracts that you can trade and the possibilities of making money in futures trading are immense. Imagine the prices of crude oil going up again just like what happened in the summer of 2008!

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