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Commodity Trading
- Books, Tips and Advice

Commodity Trading - Books, Tips and Advice

Trading commodities is different from other forms of trading and requires specific knowledge in order to be successful at it.

Here at 123OnlineTrading.com you will find educational articles - from the basics to advanced techniques - and hundreds of books available on the subject of online commodity trading from noted, experienced authors like Kenneth Trester, Sheila Slaughter, Merlinda D. Ingco and David Loader.

Topics range from modeling and pricing for agricultural, metal and energy markets, politics, policies and how they relate to entrepreneurialism, forecasting futures and numerous trading secrets.

Commodity Trading - Tips and Advice

Intro to Commodities Trading - Part I
Why aren't paintings commodities? Because each one is unique. Commodities are uniform and one individual or portion serves the same purpose as any other. An ounce of gold, a barrel of oil, a bushel of wheat. In every case, one is pretty much like another. It makes little difference to most of those buying it whether they receive this ounce of gold or that one...

Intro to Commodities Trading - Part II
Let's examine a highly simplified commodities future contract trade. Suppose a trader buys a contract to purchase oil trading on NYMEX (The New York Mercantile Exchange) at $70 per barrel for WTI with an expiration date of August 6th. (Oil comes, obviously, from a variety of major sources, including the North Sea near England, Alaska, Saudi Arabia, West Texas, etc. The locations often lend their names to the different sub-types of commodity and generally have different prices)...

Commodity Exchanges
There are more than a dozen major commodity exchanges around the world, reflecting the global nature of speculation today...

Trading Financial Indexes
Stocks and bonds aren't the sort of thing the novice investor typically thinks of as a commodity. Even less do they view a statistical measurement of changes in their prices as similar to gold, wheat or oil. Yet, because stocks and bonds (and the indexes that measure price changes) trade in the form of futures and options contracts, they can be traded in the same way as other commodities...

Commodity Types
Commodities are categorized for ease of price comparison, research and other conveniences in trading. Investors interested in getting involved in one of the riskiest, and potentially most profitable, areas will need to know the basics...

Reading Commodity Prices
Welcome to the confusing world of commodities. Most trades are carried out by buying and selling futures contracts, rather than trading directly in the commodity. And most futures contracts trade more or less like stocks or bonds, with the key exception that they have an expiration date. Nevertheless, some of the mechanics of trading can still be confusing to the novice. One of these is the most basic item of information: price quotes...

Trading Commodities - Margins
Suppose you've been reading the newspaper lately and seen the substantial rise in inflation over the last two years. You bet, along with many others, that this trend is likely to continue for the next two years. You decide to hedge your portfolio, and possibly pick up some profits, by investing in gold...

Commodities Trading - Leverage
Most commodities trades are executed in the form of futures contracts. A specified percentage of the asset price is paid and a buyer accepts the obligation to deliver (or take delivery of) a set quantity of the good at a future date. Hence the name...

Trading Coffee
It's great to be able to trade a commodity where you wouldn't mind actually taking delivery. Coffee prices have been rising for the last two years, after a substantial dip. Producers haven't completely recovered, but for the first time in several years optimism is on the rise.

Trading Silver
Silver is unique among commodities. Like gold and a few others, private investors can feasibly take actual delivery. But unlike gold, the price is within reach. Physical storage is not out of the question and security can be as simple as bank's safe deposit box...

Trading Uranium
For those who like their trading radioactive, uranium offers a wild ride. Prices exploded a couple of years ago, then dropped back just as quickly to the $29 level, then boom up to $45. And you thought oil prices were volatile. Nevertheless, prices have been on a steady rise the last two years, and it's no surprise.

Trading Soybean
Trading Soybean - Soybeans aren't sexy... except to a commodities trader. Yet this grain is among the lowest risk, most potentially profitable trades around...

Trading Oil
For decades, commodity trading in petroleum products was a club for only the big guns. At 42 gallons per barrel, and a minimum contract size of 1,000 barrels, the prospect of delivering oil was only for professionals. But several changes have occurred in the last few years to alter the scene.

Commodities In Your Portfolio
For over thirty years - roughly 1974-2004 - the S&P 500 trended upward, with the CRB (Commodity Research Bureau) trending down. The CRB is analogous to the Dow Jones Index - a mathematical combination of commodities prices that indicates their movement. It's composed of weighted averages of prices of oil, coffee, gold, wheat, etc. Yet many savvy investors continue to trade in commodities, and many of those do very well. Why is that?..

Commodities - Funds
Investors come in all flavors. Some are bold, whether they have the capital to lose or not. Some are cautious and regard capital preservation, with the hope of some small return over a long period, as the paramount value. Somewhere in between, but closer to the latter probably, is the territory for most fund investors...

Commodities Trading Strategies - The Spread
A large number of common trading strategies are for the purpose not only of making a profit but, as a hedge. Hedging is essentially an attempt to buy some form of insurance to minimize risks. Typically, along with minimizing risks comes a cap on potential profits. Let's examine one of these strategies: the spread...

Commodities - Basic Risk Management - Order Types
It's common knowledge that in trading commodities, like any other kind of speculating, there are no guarantees. You can make money, or lose money - a lot, and quickly. What's less commonly known by the average trader are the many methods professionals use to reduce the risk of loss and limit the amount...

Commodities - Basic Risk Management - Hedging
Two different motives compel commodities traders: speculation and hedging. They're not mutually exclusive - one can do both at the same time - but speculation is primarily profit oriented. Hedging is more oriented toward protecting profits or minimizing a potential loss, it's a defensive strategy...

Commodities - Fundamental Analysis
Fundamental analysis, in essence, comes down to studying the factors affecting supply and demand. When supply is great relative to demand, prices tend to fall. When demand is large relative to supply, the price of a commodity rises. But beyond those simple and obvious principles, there's a world of complexity. What, after all, affects supply and what influences demand?..

Commodities - Technical Analysis - Expectancy
Fundamental analysis in commodities trading looks at economic factors such as weather predictions and crop yields, new mines opened, new oil extraction technology, etc. In short, factors affecting the causes of supply and demand. Technical analysis, by contrast, is based on the idea that trends can be detected by charting mathematical manipulations of a few basic variables: price, volume and a few others. Most macro-economic factors are given much less weight. Actual market activity in the recent past is what is considered most important to predict future prices...