Welcome to Commodities Trading Guide
Commodities Commodity Futures Trading Resources Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Underlying Truths about Commodities Trading Systems
from:
There are procedures to follow when trading commodities. Computerized programs or the commodity trading systems are responsible for giving signals to the members when to sell or buy commodity futures or options contracts. The system produces the signals basing from mathematical formulas typically based from the trading data including prices and trading volumes involve in the technical analysis.
Trading systems that are based from technical analysis are attempting to predict the price movements in the future basing on price trends, price relationships and historical prices.
Do not rely too much on trading results being hypothetically posted. Many promoters of commodity trading systems often advertise hypothetical results. It is based from simulations of trading using either the historical data prices or real time simulated computer trading. Do not be fooled because there are some promoters only pretend that they have traded future contracts occurred in the past using the market price.
They then procure calculations of trading results basing from actual historical prices. The results are impressive, showing trading results having huge net profits within small marginal calls. Try to observe that the results do not reflect the actual trading. There is no actual investment, no actual profits, no actual future accounts, and no actual trading that really happened. All are only simulation results.
Assess these inherent limitations of hypothetical results of commodity trading.
- Hypothetical results do not go along 20/20 with the actual or historical results. The results produced on the trading system are not traded in the actual market so there is a high probability of risks that a trader can face about decision making. Actual price and demand of the commodity and its supply could have greater impact if compared to the hypothetical results.
- Real time posted on the results is not real. Hypothetical results based their tested systems on historical market data but trading in real time uses a live feed data when a system trading is being tested.
- There is a financial limitation. Hypothetical results do not take into consideration the trader’s ability of meeting margin calls or absorbing the losses of the trading. It already assumes that the trader who uses the trading system can survive financial losses and meet the results of margin calls. Remember that in reality, it is very difficult for a trader to sustain unacceptable losses and margin calls due to commodity trading thus this changes also affects the trader’s decision whether to continue on trading or not.
- The results posted are not tested under the real condition of the market. It only assumes that specific prices are used to buy and sell future contracts. Because these assumptions are not based from the real market condition, the systems can either underestimate or overestimate its performance. Remember that in reality, the execution of a trade is impossible to make in some of the markets. The actual bid or asked spreads does not reflect the actual prices as what is being posted in the hypothetical results.
- There is a possibility of rigging results. Be cautious because some promoters can display historical trades having the best-yielded profits.
- The promoters failed to consider the cost of leasing or purchasing the trading system.
Every individual should remember that in trading commodity options or futures by purchasing a certain trading system couldn’t guarantee profits. Commodity options and futures belong to endeavors which are regarded as high risks so there is no guaranteed trading system appropriate to gain profits.
Commodities Commodity Futures Trading Resources Specific links
Commodities Commodity Futures Trading Resources News
Commodity prices propel Toronto market higher
The Toronto stock market was slightly higher Thursday, powered by higher energy and gold stocks after worries about the future of the euro-zone pushed commodity prices to multi-month lows earlier this ...
Read more...Oil's Toughest Question
NEW YORK (TheStreet) -- This last week has seen an avalanche of articles, papers and opinion pieces attacking the idea that oil and gasoline prices are affected by speculation, in response to President Obama's recent plan to try and bolster the enforcement resources of the Commodity Futures Trading Commission against speculation. This plan, which the president knows has no chance of passing ...
Read more...How to Buy...: How to buy ... commodities
Commodities investing is volatile, promising big gains and capable of big losses. But this volatility can work in your favor in a broad investment portfolio, where a small amount of commodities can offset risks associated with stocks, bonds and cash.
Read more...Commodities Sink Stocks as Jobs, Housing Boom: Corporate Canada
Canada’s commodity shares have fallen to their cheapest prices since the recession, wiping out the stock market’s best start to the year since 2004 as global economic concerns overshadowed the best two-month job growth in more than 30 years.
Read more...CME expanding daily trading hours to 22 beginning May 13
Since the development of futures contracts for buying and selling farm commodities began in 1848—there have been several significant changes at the Chicago Board of Trade. And one that was announced yesterday is among a handful with the greatest impact.
Read more...