Online Commodities Trading
Trading commodities has been the foundation of human economic activity through the ages, fundamental for our survival as individuals and fundamental for the sustainability of our economic and social systems. The second section will cover derivative products, options, futures and spot trades, mechanism of trading, clearing system, margin requirements, mark to market system, membership issues and registration procedure, risk management, hedging and speculative trading, difference between commodity trading and stock trading, special issues relating to commodity market.
In traditional stock market exchanges such as the New York Stock Exchange (NYSE), most trading activity took place in the trading pits in face-to-face interactions between brokers and dealers in open outcry trading 22 In 1992 the Financial Information eXchange (FIX) protocol was introduced, allowing international real-time exchange of information regarding market transactions.
Relevant FCA approved qualifications for traders, e.g. the International Certificate in Wealth and Investment Management, which is assessed by a multiple-choice examination, is offered by the Chartered Institute for Securities & Investment (CISI) Traders often have to take the examinations relevant to other European exchanges.
Once we buy commodity in future segment using margin & then if we plan to take physical delivery of that contract instead of keeping it in future segment & settle in terms of this scenario,our bought commodities will be kept in exchange’s authorized warehouse as a deposit & will be sold from the warehouse later on.
Apart from the exempted categories of persons, any person who provides broking services, advisory services or operates a pool for commodity futures contracts, commodity forward contracts, trading in differences, leveraged commodity trading and certain forms of spot commodity trading, must apply for licenses.
For instance, if I wanted to enter the Copper market and go long, I might buy a put option with a strike price that’s at or near my entry price, and use it as a hedge just in case the market moves against me early on. Let’s say that the market completely takes off, and my put option expires completely worthless…not a problem, I’m making money due to the long futures contract, and the put option was there for insurance purposes” anyway; any losses sustained from the put option will (hopefully) be offset by the gains in the futures contract.
Profiting from commodity trading often requires a combination of market knowledge, luck and most importantly, strong risk management But over the years, the number of commodity trading houses has dwindled, and the institutional, pure-play commodity hedge funds that remain, and actually make money, can be counted on two hands.
(2) No commodity pool operator shall, directly or indirectly, solicit, accept or receive funds, securities or other property from a prospective participant in a pool that it operates or that it intends to operate unless on or before the date it engages in that activity the pool operator delivers or causes to be delivered to the prospective participant a risk disclosure document which shall be in such form and contain such information as the Board may prescribe and receives from the prospective participant an acknowledgment signed and dated by him that he has received and understood the nature and contents of the disclosure document.
Volatility in coffee has come to a crawl once again which is a good thing therefore lowering the monetary risk as all of the bad news has already been priced into coffee & many of the soft commodities so keep a close eye on this for a bullish position possibly in next week’s trade as this sleeping giant will awaken once again just like what happened in the grain market.