Day Trading Futures
With a 24-hour period, day trading futures can become fast and furious. Add lightning fast speed to the volatility of the stock market and one can readily imagine what it is like to trade from sunup to sundown. Day traders typically buy and sell futures, contracts to pay a certain amount for shares that might fluctuate wildly within minutes, hours or by the close of trading. To place orders, traders must not only be knowledgeable of stocks and commodities, but also experienced and confident enough to handle the added pressure of high-speed, high-risk investing. One wrong move and fortunes can be lost from one minute to the next, as emotions run high waiting to see actual prices commodities wind up selling for in the global marketplace.
Executions made by day trading futures must be lightning fast because the markets are subject to change with the weather, rumors of war, or other factors which determine or impact production. Commodities are products which are either grown or occur in nature. Soybeans, wheat, crude oil, livestock, and precious metals are all regularly traded on Wall Street. But the prices at which these products are bought and sold worldwide can fluctuate according to supply and demand. The supply of certain consumable goods is determined by the weather, international conflict, or other domestic and foreign economic indicators. If Iowa experiences abnormal droughts, farmers cannot grow sufficient amounts of wheat to supply the nation's consumers, particularly companies that depend on supplies to manufacture other products or to feed livestock. A shortage of wheat will result in a greater demand and a higher price, not only in the futures market, but also in the supermarket. In uncertain economic times, only God can sustain His people. "Give us this day our daily bread. And forgive us our debts, as we forgive our debtors. And lead us not into temptation, but deliver us from evil: For thine is the Kingdom, and the power, and the glory, for ever. Amen" (Matthew 6:11-13).
Day trading futures in wheat or any other commodity requires studying consumer buying trends, forecasting and analyzing past performances, and anticipating declines due to inclement weather trends or threats of global conflict. Researching markets, following news reports detailing current events which directly impact stocks, and forecasting futures prices are all time consuming and tedious exercises which enable veteran investors and brokers the ability to accurately assess economic indicators and make informed decisions about what, when, and at what price to buy or sell. But commodities trading is not for novices or for the weak at heart. Making a bold buy when the markets open and waiting to see how stocks fares at the close of trading can be nerve wracking at the least. The more investors trade, the greater trepidation they can experience about taking a loss.
Fearless investors who engage in day trading futures usually place two to three orders within a twenty-four hour period. By the close of the day, those orders placed for commodities futures could experience a net gain or loss determined by factors totally out of the trader's control. But the distinct advantage in day trading futures is that investors don't have to wait overnight to find out if the price they traded was too high or low. If a day trader bought commodities futures below the market value, the choice is theirs to sell at a higher price, but there are only twenty-four hours in which to trade again. However, if the market value exceeded an order, traders realize a net gain and can rest happy.
Another requirement for day trading futures is to not only be familiar with commodities and have the ability to forecast values, but also to be careful about monitoring brokers commissions and fees. Win or lose, commissions can quickly add up with each investment, especially due to the speed at which orders are entered. If trades last for a few minutes or hours, zealous investors may wind up losing their shirts by trading with too rapid a succession. Trading futures in a volatile market is somewhat like gambling on a slot machine in Las Vegas. It only costs a quarter to play, and playing looks like fun. Trying to match up three lemons at a time to win the jackpot seems easy enough; so gamblers keep pumping quarters into the machine in rapid succession, hoping to win. By the time players decide to give up, the amount of money that might have been won has already been spent feeding the slot machine. To avoid recklessly feeding the "kitty," new traders may want to solicit the aid of experienced advisors or open a managed account with firms that are well versed in valuing stocks and trading in the futures market.
For novices, day trading futures may be a big gamble; but for the experienced investor, trading in lucrative markets can pay off big. The most traded stocks are those which are secure and offer relatively high yields. Precious metals, such as gold, platinum, and silver coins, hold their value and increase in price. Gold is predicted to nearly double, possibly reaching $2,000 a troy ounce, as the value of the U.S. dollar continues to decrease globally. Crude oil prices ebb and flow with the potential for war and conflict in the Middle East; but, overall, prices are stable. Another high-yield secure investment for day trading futures is the government-backed 10-year U.S. Treasury notes. By studying the markets, researching consumer buying trends, and staying abreast of regional, national, and global news; traders should be able to continue trading to realize net gains.
Commodity Trading AdvisorAn astute commodity trading advisor is proficient in forecasting and valuing commodities futures and steering clients toward high-yield investments. Analyzing today's stock market requires keen insight and expertise in predicting prices based on supply and demand. While the average day trader doesn't have a clue about how commodities are priced, a shrewd trading advisor who specializes in one or two products may have spent years studying consumer buying trends, production and consumption trends, and performance histories to accurately predict futures prices. Advisors keep abreast of current global events to assess their impact on the supply and demand of certain agricultural products and ensuing consumer buying trends. Simply stated, the law of supply and demand illustrates a correlation between the amount of available goods and their relative cost. When a commodity is in abundant supply, the demand goes down and prices decrease. However, a shortage of that same commodity will increase demand and force prices to escalate.
An example of the law of supply and demand might be the price increases experienced at supermarkets when crops are scarce due to droughts, flooding or other abnormal weather patterns. If regional farmers lose crops to droughts or disease, foodstuffs must be shipped in from other areas of the country. The cost of long distance shipping or even foreign food imports adds to the per pound cost at the local supermarket. Corporate food producers will realize a profit, which causes shares or stock in the company to show a net gain. If a commodity trading advisor correctly predicted a price increase due to past economic trends or weather patterns, producers and investors win. Shareholders or commodities future traders will realize high-yield returns if they purchased stocks when prices were low and were able to sell at a higher predicted price. "He that handleth a matter wisely shall find good: and whoso trusteth in the Lord, happy is he" (Proverbs 16:20).
Because of the volatility of today's stock markets, engaging the services of a commodity trading advisor is crucial to making prudent investments. In an uncertain global economy, no one can afford to take a gamble on putting hard earned cash into high-risk, low performing stocks. A commodity trading advisor is expert at interpreting production and consumer trends, assessing current market data and making comparisons with past performance, and predicting the effects current events have on commodities futures. Bank mergers and takeovers, plant closures and job layoffs, fluctuating crude oil prices and abnormal weather patterns all affect how commodities will perform on a daily basis. When the financial markets take a tumble, prices for agricultural products can also take a plunge. And when consumer buying power is down due to high unemployment rates, prices for consumable goods, especially food products, will also decrease due to a sluggish market with diminished cash flow. Crude oil prices not only put a dent in consumer's wallets at the gas pump, but also increase the price of diesel fuel used by America's interstate trucking industry, which is largely responsible for transporting commodities across state lines.
An experienced commodity trading advisor may rely on data from several reputable sources. Reports published by the U.S. Department of Agriculture, the U.S. Department of Commerce, the Department of Energy and Futures Exchange, and the Labor Department help advisors get an overview of commodities futures and how they will fare in light of domestic economic downturns and joblessness. USDA data will provide information on the types and amount of produce grown on America's farms, along with annual and seasonal projections. Large production figures usually indicate that the market will be priced lower, whereas production diminished by adverse weather conditions or disease will increase demand and boost prices in commodities futures and at the supermarket. Advisors know the markets and crops almost as well as the farmers who produce them and are able to share significant insight, not only on anticipated stock performance, but also on production and growth trends.
An experienced commodity trading advisor must keep a pulse on domestic and foreign economies, and an eye for anticipating negative and positive changes which affect supply and demand for goods and services at home and abroad. Advisors know that escalating unemployment rates will impact consumer buying power and demand for durable goods manufactured using agricultural products. Materials for new housing construction, household furnishings, clothing, and paper products may all take a price cut when consumers cannot afford to buy. A key role of a commodity trading advisor will be to study consumption trends, accurately interpret economic indicators, and place a market value on commodity-related investment instruments, such as stocks, bonds, securities, and high-yield money markets. A trading consultant not only carries the responsibility for advising investors on which instruments may offer the highest yields in the future, but also the responsibility to maintain a consistently high level of integrity and ethics in dealing with the finances of others.
Investors seeking the advice of a professional commodity trading advisor should first consult individuals in the financial industry or stock market who have experienced success in trading commodities. Trying to find an advisor online is fine, but when it comes to investing money in an up-and-down market, it is best to take the advice of veteran traders. A good idea is to deal with someone who has weathered a volatile market's highs and lows and yet remained victorious in accurately predicting and pricing commodities futures. Mutual fund managers, brokers, and other more experienced investors may offer several suggestions. Ask for and check references from seasoned and satisfied traders. Advisors should have at least several years of trading under their belts, preferably ten or more. Consultant fees are negotiable between investor and advisor, but remember: you get what you pay for.