Online Futures Trading
Online futures trading is available for every person who is ready to take on the big profit-big losses world of commodities trading. While only registered traders can get on the floor of the well-known futures trading mercantile exchanges in Chicago and New York, online futures trading allows anyone to work directly with a licensed broker who can trade with the floor of these large markets. Doing business in this high stakes market arena is not for the faint of heart. With a sudden monsoon or a hurricane that wipes out a coffee crop or sugar harvest, millions of dollars can be lost overnight. Making that all a reality is the fact that trading in commodities is all accomplished by leveraging. Leveraging means that for example, a hundred thousand dollar buy or sell agreement can be made with just ten thousand dollars used as a margin.
Commodities are mostly the products that arise from the dirt of the earth. They are oil and wheat and sugar and bananas and corn and all the other products that can be mowed down by a hurricane or a tornado. They are also gold and silver and platinum and the other metals that are so important for world commerce. And in recent years, even interest rates are sold for both online futures trading as well as on the floor (the pit) of the mercantile exchanges. There is always a very high expectation in this high stakes world of commodities trading to make a lot of money, but Jesus would say to all those with a great desire for money: "For what shall it profit a man if he shall gain the whole world and lose his own soul, or what shall a man give in exchange for his soul?" (Mark 8: 36, 37)
There is a real art to doing business in the commodities market, and while there are simplified ways to explain the general way of how things are done, in reality it is much more complicated. But, here is a simplified scenario to explain online futures trading. Suppose a popcorn manufacturer is already looking three months down the line for the corn he will need for the next quarter's microwave popcorn market. The buyer sits in his Nebraska office and looks at the bushel price for corn now and sees that the price has risen ten cents in the past week to six dollars and ten cents a bushel. All indications are that a water shortage will cut the actual harvest and raise the prices more in the months to come. The buyer uses two hundred thousand dollars to place an online futures trading order for a little more than three hundred and twenty five thousand bushels of corn at six dollars and fifteen cents a bushel three months from the day of the trade. Should the price drop between now and then the buyer loses and the seller wins but if it rises above the $6.15 price, the seller certainly loses and the buyer gets to keep his job for a while longer.
When a person decides to do commodities exchanging online, there is the issues of deciding on which broker one will use. A number of brokerage houses have their own software packages that can be downloaded, enabling the potential buyer to view action directly from the floor of the mercantile exchanges with little or no delay. Delay time can be crucial when prices may be changing every few minutes, so makes sure you understand the delay time of the broker's software. It is not recommended under any circumstances that one try to begin online futures trading without having some extensive experience in mock or simulated trading exercises. Many of the online futures trading systems that a person can use do offer buying simulation practices and it is certainly a very strongly recommended thing to do!
Since a margin account enables a person to control at least ten times the amount of the actual sale, the risk factors are huge. A trader doing business in the commodities market will try and figure out his own personal trading system in order to make as much money as possible. It is a complicated business and there is no one "killer" or "deep secret" system. Everybody loses money at times, some people just make a little more than they lose. In any case, those who deal with commodities through the trading of futures must deal with technical and fundamental analysis of the markets. Some traders put their nose to the wind and base their buys or sales on the fundamentals. The fundamentals of market analysis have to do with guessing prices on what might be the weather and the availability of refinery capability at a certain time in the future, be it a few days or a few weeks or months.
The other side of online futures trading as well as the pit trading on the floor of the exchanges has to deal with the technical analysis of the market. The fundamentals guy is out in Iowa with his hand in the dirt smelling the wind to see if rain is coming, but the tech buyer is poring over charts and graphs and looking at forecasts not of weather but of market possibilities. While everyone has their own secret system that they will not share with anyone else, it is probably for certain that most systems are a combination of both fundamental and technical market analysis. A beginner to this high profit-high loss game will be dazzled by the many system options that he or she can buy and/or use. Go slowly, talk to experts and remember that most want to make money off your ignorance.
Currency Futures TradingCurrency futures trading are a complicated process by which various countries' currencies are traded against the dollar. It is a concept that began in 1972 when the gold standard was ended. The gold standard stated that there must be enough gold in the treasury to cover each dollar printed. Once that was dissolved, the actual value of the dollar began fluctuating, allowing for speculation on what might be its value weeks or months down the line. The agreements are built around a future date, but since the numbers change daily, the agreements can also be ended on a daily basis if desired.
Futures trading in currency are the arena of the Chicago Mercantile Exchange which oversees and hosts the trade business that takes place each day,Monday through Friday. Almost three hundred and fifty billion dollars of trading happens each work day and there appears to be no downward trend in the growth. Futures' exchanges involves not only currency exchanges, but livestock, agricultural products and precious metals. These various products are often referred to as commodities. Currency futures trading often referred to as FX markets, happen on the floor at the Chicago Mercantile Exchange and occur through the well known practice of bidders shouting out bids as well as through electronic bidding. Large banks, hedge funds and multinational corporations all participate in currency futures trading. "In God is my salvation and my glory: the rock of my strength and, my refuge, is in God." (Psalm 62:7)
All futures trading markets have two types of investors: those interested in protecting their investment and those who speculate on what the price will be at some future date. Typically, hedgers are those who produce and manufacture the agricultural products and glean the precious metals. Speculators are interested in taking risks to bet on what the price of products will be at a later date. The hedgers bite their fingernails, the speculators chew their finger and toe nails and both are in therapy for severe psychological issues. Okay, that's just a little humor but it is a very explosive and highly fluid atmosphere in which the trader must operate. The chances for stratospheric profits and devastating losses and both present. Futures trading, including currency futures trading is not for the faint of heart.
The big boys in this business are the ones not seen on the floor of the Chicago and New York exchanges. The guys and ladies yelling and looking flush or glum on the television are locals or floor traders who are trying to make money for their own accounts. These independent traders hope to make small profits all day long on selling and buying various futures in the space of a few minutes. These small traders help keep the markets moving, sometimes called market liquidity. These are the guys who have never heard the words of Will Rogers.
Currency futures trading are all based on leveraging. This means it only takes a relatively small amount of money to control a large amount. Recently it took $4700.00 to control $62,000 in British pounds. Should the pound do quite well against the dollar in a particular calendar cycle, a large fortune could be made with just this relatively small initial margin and maintenance margin fee. Should the pound drop on the date specified, not only could the margin and maintenance fess be gone, but also money from the trader's pocket. All would depend on how much the pound dropped against the dollar.
There are a number of phrases that are thrown around in money futures trading that may sound rather strange. Remember that in currency futures trading there are always two countries' currencies at play and one of them usually being the US dollar. "Going long" means that you are expecting the dollar to gain strength against a particular currency in the months to come and is known as a currency call option. A currency put option is the opposite, used to describe the bet that the dollar will drop in value. The strike price is the number of the currency difference at the beginning of the agreement. A long strangle is when the trader hedges and puts up both call option and a put option because the market is so volatile. There are many other components in the currency futures trading business, all pointing to the fact that this trading is very complicated and demands those who really know what they are doing to participate.
The trading of commodities is not for the one who longs for security and a rock to hide under in the midst of inclement weather. A very high percentage of traders lose money and some have lost fortunes. The commodities market, including currency futures trading is especially hard on the person trying a make a quick buck, a fast hundred thousand, a killing in the market. They are people who cannot control what they are doing and get excited at the prospect of being "this close" to the big deal. No matter how well the plan is laid out, no matter how much effort goes into being safe, commodities trading can turn on one phrase by a governmental leader such as James Baker saying in the press conference the initial word "Regrettably" after talking to the Iraqi foreign minister in 1991. Oh yeah, that Will Rogers really could turn a phrase. "I am not as concerned about the return on my money as I am about the return of my money."