Futures commodity trading basics
Many people see pictures of the large crowd of traders standing in a crowd yelling and signaling with their hands, holding pieces of paper, and writing frantically. To the outsider, it looks like chaos. But do you really think that there's chaos going on in the world's futures pits?
However, those who work in that environment know exactly what's going on, and they're very organized. In this article, you'll learn a bit about the trading of futures, so that you will know how the process works.
Today's futures trading floor is much different than it was when it first began quite a long time ago. They'd set up a stall on the roadside, and sit and wait for someone to buy something. Often, their crops would spoil because the farmers had no way to preserve or store them.
Because a lot of farmers had the same idea, at the same time, demand and the average price would be a lot lower. Demand would be lacking, and supply would be too high. Conversely, in the spring demand would be raised, and commodities and crops would be in very low supply.
Many farmers would do the same thing, and as a result demand and prices would be driven lower. The opposite occurred in the spring time- supplies would decrease and demand would spike drastically. Until recently, the world didn't have a method by which to shop for commodities at a competitive price. The advent of "forward contracts", progenitors of the current futures markets, signaled a new era in trading.
It doesn't really matter where the buyer or seller is, they will get the same general information that everybody else has. Farmers, banks, producers, and companies can very easily buy or sell- the only thing they need to do is to contact their broker.
Regardless of the speculator's location, the playing field is leveled because everyone has access to the exact same information. It could be one of your competitors who takes your trade, or another speculator. - 23223
However, those who work in that environment know exactly what's going on, and they're very organized. In this article, you'll learn a bit about the trading of futures, so that you will know how the process works.
Today's futures trading floor is much different than it was when it first began quite a long time ago. They'd set up a stall on the roadside, and sit and wait for someone to buy something. Often, their crops would spoil because the farmers had no way to preserve or store them.
Because a lot of farmers had the same idea, at the same time, demand and the average price would be a lot lower. Demand would be lacking, and supply would be too high. Conversely, in the spring demand would be raised, and commodities and crops would be in very low supply.
Many farmers would do the same thing, and as a result demand and prices would be driven lower. The opposite occurred in the spring time- supplies would decrease and demand would spike drastically. Until recently, the world didn't have a method by which to shop for commodities at a competitive price. The advent of "forward contracts", progenitors of the current futures markets, signaled a new era in trading.
It doesn't really matter where the buyer or seller is, they will get the same general information that everybody else has. Farmers, banks, producers, and companies can very easily buy or sell- the only thing they need to do is to contact their broker.
Regardless of the speculator's location, the playing field is leveled because everyone has access to the exact same information. It could be one of your competitors who takes your trade, or another speculator. - 23223
posted by X - Men @ 4:46 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home