Buy Commodity Futures

Buy Commodity Futures
By
www.CandlestickForums.com

Traders buy commodity
futures in the expectation that
the spot price on the
commodity contract
settlement date will be higher
than the contract price.


The trader will rarely accept
delivery when they buy
commodity futures.


They will sell an equal
quantity of the commodity,
thus exiting the contract.


The only ones who will
actually deliver or take
delivery of commodities are
the producers and their
customers.


These traders are hedging
when they buy commodity
futures or sell them.


For example gold mining
company may sell gold futures
and an oil refiner may buy oil
futures in order to lock in a
competitive price for the next
months or years.


It is possible to buy
commodity futures on oil and
other energy products several
years into the future.


Trading commodities requires
a basic knowledge of the
commodity in question and
ongoing fundamental and
technical analysis in order to
competently anticipate
commodity price trends.

To learn how to buy
commodity futures engaging
in Commodity and Futures
Training is wise.


The use of very visual
technical analysis tools such
as Candlestick chart analysis
can lead to profitable trades in
the commodities markets.


Hedging commodities by
producers and their customers
goes back to the beginning of
Candlestick basics in ancient
Japan when rice traders learned
to let the market tell them what
the market would do.


The traders who developed
Candlestick charting learned
that market history repeats
itself.


This repetition of Candlestick
pattern formations allows traders
today to buy commodity futures
with an accurate sense of where
the market is going next and how
to engage in profitable
commodity trading.


When producers and
customers hedge they are
guaranteeing themselves a set
price at a future date.


This is a form of insurance and
means of managing
investment risk.


The constant buying and
selling of commodity futures
by the main players in the
commodities markets
provides a baseline liquidity
and stability to commodity
trading.

The addition of traders
speculating on market activity
adds to market volume and
liquidity making technical analysis
more accurate and typically
makes Candlestick trading tactics
even more successful.


Those who buy commodity
futures are buying contracts
for large quantities of live
cattle, gold bullion, crude oil,
and other commodities.


However, the commodity
market offers the trader
leverage so that he or she
need not provide the money
to pay for the entire contract.


To buy commodity futures the
trader will typically pay
several percent of the contract
price.


The leverage in buying
commodities can lead to
substantial returns on
investment.


The leverage can also lead to
losses exceeding initial
investment.


Because of the potential
market volatility in trading
commodities the trader is well
advised to stay in close touch
with his or her investment.


When a trader decides to buy
commodity futures the trader
is not obliged to keep the
contract until the settlement
date.


If Candlestick analysis predicts
that commodity futures prices
will move in a profitable
direction the trader can be
ready to sell an equal contract
and exit his or her position
with a profit.

If, as can happen, a technical
analysis tool such as Candlestick
chart formations predicts an
unprofitable market move the
trader will be able to exit the
position before experiencing
substantial losses.


Buy Commodity Futures

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Buy Commodity Futures