Commodity Day Trading
The skills required for commodity day trading can be very unique as are the various temperaments and characteristics of the individual trader. As the name implies, these traders will attempt to turn a profit on the stock market within the period of a single trading day. Stocks and commodities will be both purchased and sold by these traders, sometimes at a very rapid pace. The hope is to hang on to the stocks just long enough to see a profit and then quickly sell so as to reap this profit before it dissipates. This type of activity can be very risky and will not always be successful when it comes to making money for investors. A trader may only hold onto an investment for a few minutes if they believe that this is the best way to make money for a client. Or, in some cases, the trader will hang on to the stock for a few hours in order to reap the benefits of a stock or commodity that is on the rise. The minute that the value of the stock or commodity begins to drop, these traders will usually react by selling off these very short term investments. The hope is that the ending selling price will be higher than the price that was paid when the stock was originally purchased earlier in the day. Many who engage in commodity day trading do not see great profits and can, in fact, loose a great deal of money very quickly.
These concerns over lost profits has not kept commodity day trading from becoming very popular. The Internet may be part of the reason for this popularity. Access to needed information is much easier to obtain thanks to the world wide web, encouraging casual traders to participate in ways that were, at one time, not feasible. These traders will also, generally speaking, not charge the kinds of steep brokerage fees that more traditional firms might charge. Timing and well developed instincts are just some of the key qualities that traders in this category must possess. In addition, a keen sense of concentration can be an absolute necessity. Some traders feel that stocks and commodities should be sold at any sign of weakness. Conversely, when a stock shows the slightest sign of promise, these traders will frequently attempt to snap it up before the price rises too high. Knowing how to hang on to an investment just long enough can be difficult. Obviously, for a commodity day trader to be successful they will know better than to hang on to loosing investments. The difficulty can arise in recognizing the signs that identify winning and loosing stocks and commodities. There are a number of so called experts who market their particular style of day trading on the Internet and through other publications. As with any kind of profit turning venture, the buyer should beware. Investing a lot of money in get rich quick schemes and other questionable plans may not always work out for the best. But that is not to say that there are not some basic commodity day trading tips that potential traders should heed. Frequently this information will be offered free of charge through a number of sources.
There are many tips and recommendations that are made by professionals who are experienced in commodity day trading. These tips will frequently deal with when to purchase a stock or commodity and when to sell. This only makes sense since honing such skills can mean the difference between success and failure on the stock market. Keeping a target price in mind for selling can be another important tip. Short term investing skills can generally only be honed over time and with consistent practice. An ability to understand the market is key as well. The conditions on the stock market can vary and the ability to handle these changing conditions wisely is a major goal for commodity day trading. Many skilled investors will develop their own style and some may favor many quick trades in the course of a day. Other traders may feel more comfortable with hanging on to a stock for longer periods of time and committing to fewer individual trades. Whatever the preference, it is obviously never a good idea to linger over a decision for too long a period of time, or any gains that have been made could quickly be turned into losses. Anyone who wishes to learn the ins and outs of this type of trading can certainly benefit from the advice of a seasoned mentor.
Anyone who wishes to succeed at commodity day trading will need to keep a sharp mental attitude while on the job. Some experts recommend that novices begin slowly, working in shorter intervals. The reason for this is the extreme concentration that is required in this type of work. Developing the ability to do this can be built over time. The Bible discusses the attentive eye of God as He watches out for believers. "Behold, the eye of the Lord is upon them that fear him, upon them that hope in his mercy." (Psalm 33:18)
Putting in the effort to develop a sound plan is essential for commodity day trading. Such strategies for success will usually require a good deal of discipline. Using a carefully honed plan can, in some cases, yield more success than investing that is based on hunches or emotions. Establishing specific criteria for buying and selling can help to eliminate impulse decisions. While this type of investment activity can certainly have its risks, many skilled traders enjoy such fast paced opportunities for profit.
Commodity Options TradingCommodity options trading is a complicated and risky business venture and should probably not be attempted by people who are not familiar with commodities markets. Although, trading may be risky, it can also be highly lucrative for those who do know how to work the markets. This type of money-making venture is based on speculation and timing, and it requires a great deal of skill and knowledge about the financial and investment world. Speculation is nothing more than conjecture. When speculation is applied to buying stocks, bonds, commodities, or real estate an investor is hoping to take advantage of an unexpected and sudden rise or fall of prices to make profits. Savvy investors know that taking risks and investing at the right time can lead to huge profits. On the other hand, great monetary losses can also be incurred. Knowing the risks and how to work the markets can minimize the risks involved with option trading but not eliminate them all together. In fact, all types of options trading survives on risk. If the markets stayed flat and risk free, the chance of making huge profits quickly would be eliminated. Investors take a calculated risk based on what they've learned from the past. Remember, the Bible says wisdom and knowledge are more precious than gold and silver.
Speculating with money that a person cannot afford to lose is the equivalent to gambling. Think about a person walking through a casino with three silver coins. They go up and down the aisles past one slot machine after another conjecturing on which one will pay off. Some people say timing is everything with the one-armed bandits. Books and classes are offered that offer insight on how to beat the odds and win big. Find the right machine at the right time and three dollars could turn into a fortune. Commodity options trading is sort of like that. Find the right option at the right time and a little money can be turned into a sizable profit rather quickly. People with disposable income wishing to get into options trading might want to take an online seminar or college course to gain a basic understanding to the trading system. "A wise man will hear, and will increase learning; and a man of understanding shall attain unto wise counsels: To understand a proverb, and the interpretation; the words of the wise, and their dark sayings." (Proverbs 1:5-6)
Any primer on commodity options trading should begin by breaking down the three basic components. Each of the three parts is a separate but important concept. Knowing what each part is provides important information that will be helpful to the prospective trader. Commodities futures were originally developed a as layer of protection for producers against the devastating losses associated with crop failures. They are also a hedge against price fluctuations associated with crop surpluses. Commodity options trading is also known as the commodities futures market. And, it is highly speculative. One lure to investors is that large profits can be made in a relatively short period of time. Unlike stocks or real estate that often require a long-term investment before dividends are realized, commodities options trading is a short-term monetary investment.
Buying and selling quickly is important. And, the investment may be less than five percent of the commodity's dollar value. Keep in mind, traders are not actually buying or selling a product. They are entering into an agreement to buy or sell an asset at a later date and time for a specified price. This is a good time to issue a warning. When to buy or sell an option is pure speculation or conjecture, and studies indicate that the majority of investors involved in commodity options trading lose money. Not surprisingly, strict rules govern commodity options trading. Even what constitutes a cash commodity is defined. Basically, a cash commodity is a raw and undeveloped asset such as copper, soybeans, cattle, or cotton. Going on that standard, a steer is a commodity, but hamburger is not. Copper is a commodity, but copper wiring and piping is not.
Also, any perishable commodity such as wheat, rice, or corn must have sufficient shelf life which allows ample time for it to be processed and delivered to the consumer. More importantly, a commodity's price has to fluctuate enough so as to create market uncertainty. This is actually how money is made or lost. Investors can conjecture as to what the markets will do, but they never really know for sure. And, getting inside help is illegal. A commodity can be any raw asset that is in demand and is sold without qualitative differences. For example, soybean pricing is universal, but processed soybean products such as soymilk will have different levels of quality and will be priced accordingly. Keep in mind, commodity options trading is only one of several investment opportunities available. In addition to options; stocks, bonds, and futures contracts can be bought and sold.
Each type of option should be considered a complex financial transaction carrying the risk of loss in addition to the possibility of great profits. Take time to learn about each one and then consult a financial expert for details about trading specifics. Again, commodity options trading is not a market that amateurs can easily succeed. Do some online research and it won't take long to realize that making money consistently through trading is difficult for experienced investors. There are too many variables that affect commodities. A flood or drought could affect the price of wheat. Although forecasters can predict weather patterns from year to year, accurately predicting how sudden weather changes will influence cash commodity pricing is difficult or impossible. Again, healthy profits are possible, but the risk of monetary loss is too great for the casual investor.