Commodities trading tools

We believe having access to insightful information and good tools is crucial for successful online commodity futures trading. As such, we've curated a variety of Commodity Futures trading tools and educational resources such as quotes and charts to help our traders gain an in-depth understanding of the trade execution and decision making process involved in commodities futures trading. So the Chicago Board of Trade created futures contracts. The need for Grain Farmers to spread risk through hedging is to take a futures position that is equal and opposite to a position held in the cash market.

The objective is to mitigate the risk of an adverse move in prices. Commodity futures trading allowed this mechanism. The most important structure of commodity futures trading is the role of the commodity clearing house. Every clearing-house member must put up fixed original margins and maintain them with the clearing house in the event of adverse price fluctuations.

In such instances, the clearing house may call for additional margins throughout the day without waiting for routine end-of-day settlement. Examples of commodity clearing houses in the U. Commodity market liquidity is a market's ability to facilitate the purchase or sale of an asset without causing drastic price change. It can be sold rapidly, with minimal loss of value, any time within market hours. The essential characteristic of a liquid market is that there are always ready and willing buyers and sellers.

It is similar to, but distinct from, market depth, which relates to the trade-off between quantity being sold and the price it can be sold for, rather than the liquidity trade-off between speed of sale and the price it can be sold for.

A market may be considered both deep and liquid if there are ready and willing buyers and sellers in large quantities. When starting out with trading futures, it is very important to do your research about futures.

Both understanding the risk involved in trading futures and understanding the leverage in futures are two very important key factors. When researching the risk of futures, you have to understand that you can be exposed to substantial risk that may not be suitable for all investors.

Certain reports and different movements in these markets can either cause minimal losses or wipe out your account, or just the opposite cause minimal wins or substantial gains in your account. Also the leverage in the futures markets allows you to trade a large sum of money in one futures contract with a substantially smaller account size of capital in your account.

Doing your research on these two factors can help you tremendously in seeing if trading futures is something you would like to dive into and start trading. If you find that trading futures is something you would like to start, some great advice is to keep your focus on one or two markets. Really study these markets and learn how they trade certain times of the days, when they have the most volatility and how they react to certain reports when release.

If you steer your focus to more than 2 markets and you are completely new to trading, it can substantially decrease your sustainability in the future markets. Trying to learn market movements, volatility, different front months, and market reaction for different reports for more than two markets can be very difficult when starting out.

Focus on at most 2 markets you that interest you, build a strategy, keep a trading journal and work from there. Make sure you set up a demo, get comfortable with the platform, place trades, and ask your broker for a walk through the platform.

Implement the strategy on your demo for the 1 or 2 markets you will be trading and practice for about 3 to 4 weeks. Keep a trading journal of your trades, how the market is moving for the day, and when you find the most volatility in that specific market. After 4 weeks, start to trade live but do not over trade. Take what you learned from those 4 weeks and start implementing that in your live account.

If you do not, you may live in demo trading and never pull the trigger to trade live. Start off by trading 1 contract, do not over trade and do not let your emotions get the best of you when you start trading live. It actually is a market that can be buffeted by plenty of globe events, so it pays to remain on top of major financial press release. Another permanently popular product is gold, which has actually long been considered a store of wealth and has held a special appeal for many of us-- as the Californian gold rush back in the s would definitely testify.

Nowadays it's traded like any other economic tool as well as is still a vital product to many investors all over the world. Traditionally, in times of problem and market volatility, gold is perceived as a 'safe house'-- somewhere for financiers to keep their money away from various other riskier possessions. Although the yellow steel can theoretically be sold numerous money, the normal market quote is to price gold in bucks, normally as 'bucks per troy ounce'.

This relationship to the United States buck is a crucial one as well as is one more aspect that will certainly have an impact on the price of gold. If the dollar ends up being much more attractive to investors as well as starts to rise, the price of gold will generally go down. In recent times, some people have actually seen the United States buck as a safe house for their cash and that has actually decreased the charm of gold.

This is another aspect to consider up when trading gold: the impact any type of moves in the dollar will carry the price of gold. As an example, if the US central bank, the Federal Reserve or FOMC, made a decision to reduce interest rates, this would generally weaken the United States dollar as well as lift the price of gold. Similar to oil, since gold is such a global product it pays to keep a watchful eye on the significant financial announcements such as rate of interest as well as unemployment numbers, which are launched often.

The energy markets are additionally prominent amongst commodity traders. The arrival of renewable energy has created included rate of interest for commodities such as nationwide gas, heating oil as well as fuel. Similar to the oil markets, world occasions and national politics can have an impact on the energy markets, so it is wise to keep an eye on information and also economic releases when trading energy.

Some resources of energy can not be invested in directly as an asset, such as uranium, which is made use of for nuclear power terminals. Breaches of resistance levels generally indicate a move to higher prices, while breaches of support levels often indicate lower prices. Commodity Channel Index CCI : This powerful technical indicator generates buy and sell signals for commodities based on how overbought or oversold they are.

The indicator is designed to profit from changes in price trends. Cash and Carry Arbitrage : With this strategy, a trader will take a long position on a commodity betting the price will rise while shorting betting the price will drop a futures contract for the same commodity. Spread Trades : A spread trading strategy involves buying one commodity while at the same time selling a correlated commodity so that the net result is a profit for the trader even if they incorrectly guessed one leg of the trade.

Typically, spread trading is applied to futures or options contracts, which is called a time spread. Read our deep-dive on all types of chart analyses. Before you begin trading, you must face the fact that it can be a risky endeavor. Here are some ways you can reduce your exposure. Traders should research historical price ranges of commodities as a guide to calculate worst-case scenarios.

Entering positions in small sizes can enable traders to make margin calls if markets move against them. Many novice traders hold on to losing positions and hope that they will return to profitability. This focus on increasing profits rather than limiting losses is a major mistake that traders at all levels must learn to avoid.

One way to avoid this problem is to place disciplined stops on commodity trades. A stop is a level below which a trader exits a long position. A basket of commodities helps protect traders from the volatility of any individual commodity. It also adds diversification to a stock and bond portfolio. One way that traders can diversify their commodities portfolio is by trading different types of derivatives with exchange-traded funds ETFs , index funds , or exchange-traded commodities ETCs.

Related : Commodities through financial instruments like derivatives are classified as securities. We conducted a study on which US states are the most dependent on the securities industry. As with stocks and bonds, speculators in commodities markets look to buy an asset at a low price and sell it at a higher price or vice versa.

Read about specific factors that can impact prices for commodities on our individual commodities pages like: gold , crude oil , or corn. Many online brokers allow traders to create a demo account before making live trades. These practice accounts let you use play money on their live platforms to test your trading strategies. But you can learn from the mistakes others have made. Here are some rookie mistakes to avoid.

Traders use pricing charts to make decisions about when to enter and exit trades. Do your homework so that you know the difference between feeder cattle and live cattle or Brent crude oil and WTI crude. Commodities are the raw materials that drive the economy. Future Trading Tools. Technical Futures Trading Tools.

Cleartrade Trading is a firewall-friendly online futures and options trading order entry platform that connects its users with access to the trading global marketplace. As an online Web enabled application, the product is suitable for any online trading customer with a connection to the Internet and a web browser. Trader are also able to access Cleartrade Trading thru their iPhone or Android phone.