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Learn How to Trade
Stock
Market Basics
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Testimonials
Great
site Kenny.
Technical
Analysis written in a straightforward way so that everyone understands.
There's
only a small few who get it consistantly correct and you are certainly
in
that group.
Chris
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Thanks
for putting this all together and sharing! BHW
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Awesome
Stuff! Kenny has shown time and time again the ability to show us direction in
these markets. Khalsa
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Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.
Thanks for sharing. Gene
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Took a gold short at 1240
just closed at 1203 :-)))))))))))))))))) ........ top call!! Gekko |
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Commodities
Commodity
Trading is the oldest
form of trading and how it all began. A commodity
is any Product,
Item, or Raw Material that has value and can be traded. Once upon a
time it would have been an animal skin to keep warm, or perhaps a shiny
bauble that you fancied. It is still exactly the same except, nowadays
we have "Crude oil" and "Futures" etc.
Commodities
are separated into several different categories:
- Metals
- Gold,
Silver, Copper, etc
- Energy
- Crude
oil, Natural Gas, Heating oil, etc
- Softs
- Cotton,
Coffee, Cocoa, etc
- Grains
- Rice,
Soya-bean’s, Wheat, etc
- Meats
- Feeder
cattle, live cattle, lean hogs, etc
- Financials
- Bonds, Futures, Options, etc.
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Commodity Markets
Commodities
are traded in commodities exchanges such as London Metals Exchange
(LME), New York Mercantile Exchange (NYMEX) and Chicago Board of Trade
(CBOT), etc
Now, most investors cant actually take delivery of these commodities.
You cant simply dump a delivery of Natural Gas into a shed and sit back
until the
price goes up a bit, and may-be you do have a yard big enough
to keep a
couple of dozen Lean Hogs in, but would you want to? Fortunately
Commodity trading is slightly differently to stock trading.
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How to trade
Commodities
Commodity
trading is done by trading Futures or Options and we will explain how
to trade futures options in that section of this website. Another way
to trade commodities is by investing in stocks that are directly
associated with that commodity.
For example,
if you thought Gold was going to rise in value, you could
consider buying a Gold mining company whose share price may benefit
from increased profits.
You can also
invest directly int an ETC that tracks the commodity you
are interested in or invest through ETFs that hold a basket
of related stocks from that particular sector.
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Why buy Commodities
Commodities
can sometimes be a better
investment if stock markets are in decline. If share prices are
tumbling, investors may seek a safe haven in
commodities under the
premise that people will always have to eat, so Rice or Wheat may
currently give a better potential return.
It might be a particularly severe winter causing energy prices to rise
through increased demand, or a bad summer so the crop yields are poor
and demand outweighs supply causing the price to rise.
Prudent investors may want to add diversity to their portfolio by means
of commodity trading to help protect themselves from the risk of only
holding stocks in case the market crashes. |
Commodity Trading - Risks
For
a number of reasons, Spreads for most commodities are much wider than
with popular stocks therefore you need prices need to rise more before
you break even, never mind make a profit, so commodity day trading is
much tougher for the small investor.
As with all investments, commodity prices can be very
volatile, prices may go down as well as up. Commodity prices can be
just as volatile as Stocks and move substantially against you in a very
short space of time. |
Stock Market Basics - Contents
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Free
Stock Market
Trading Course
A Free
10 part stock market beginners trading course. This trading course
offers an introduction to understanding how the financial markets work
and how to trade successfully.
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"Risk
comes from not knowing what you
are doing"
--Warren
Buffett--
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Financial Spread
Betting
Tax Free Trading in the UK*
What is spread betting (spread
trading)
and how does it work? Learn about the many advantages of
financial spread betting and find out where you can spread bet.
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Elliott Wave Theory
Learn how Elliott Wave analysis can improve your trading. Find out how
to access a Free 10 part tutorial for learning about the basics of
Elliott Wave analysis.
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