commodities and future trading

gravediggah · 02-25-2004, 06:46 AM

Can somebody tell me how this works and the benefits involved?

Chgoman · 02-25-2004, 08:55 AM

If you have to ask, then you don't want to do it. It is extremely leveraged trading. You have to have a substantial net worth for most firms to even let you open a futures account as you can make an investment that costs you less than a thousand dollar and be up or down tens of thousands of dollars in a matter of a few hours at times. Unless you really know what your doing and how to protect yourself with futures options, don't even think about it.

Merlin · 02-25-2004, 09:05 AM

This is not really for the individual investor. It is designed more as a way for large commodity producers like miners and farmers as well as large commodity consumers like food manufacturers to manage the price volatility associated with production. Yes, you can speculate in this area but it is most definately not recommended. If you want to learn more most books on financial derivatives have large sections on forwards and futures. How they work. How they are quoted. How they are priced. Etc. Read one of those and it will cure you of all your futures curiosity.

LegendKiller · 02-25-2004, 11:17 AM

Quote:

Originally posted by Merlin
This is not really for the individual investor. It is designed more as a way for large commodity producers like miners and farmers as well as large commodity consumers like food manufacturers to manage the price volatilirt associated with production. Yes, you can speculate in this area but it is most definately not recommended. If you want to learn more most books on financial derivatives have large sections on forwards and futures. How they work. How they are quoted. How they are priced. Etc. Read one of those and it will cure you of all your futures curiosity.

I agree with the two above. Futures aren't for normal people, or even above normal people. Individual speculation is reserved for those who know enough that they wont lose much, or can afford to lose a lot.

I had a professor that made a killing off of futures trading. However, in order to get the account with his broker, he needed to bring in most of the research he has ever done on derivatives (he has 3 PhD's relating to finance).

Only organizations that really use futures are farmer co-ops, large institutions, or companies that have a lot of risk in their specific areas.

LK

gravediggah · 02-25-2004, 01:36 PM

I really dont know t much about it, but I have a friend that has been doing it since the early 90's and he has gave me some info on a particular commodity where there would be a definite profit and I am just trying to learn every bit that I can about it.

Merlin · 02-25-2004, 01:47 PM

This is a highly competitive market. Nothing here has a definite profit. And if it has been consistently paying to do something that is typically a sign that there is the possibility of very significant losses popping up every so often. Read up on derivatives trading, I like Hull's book on options, futures and other derivatives. You'll learn that these things have very sophisticated computer models following them to make sure that no excess profit can be had.
Check this...

02-25-2004, 06:46 AM	#1
gravediggah Lieutenant Join Date: Jun 2003 Location: Wouldn't you like to know Posts: 229	commodities and future trading Can somebody tell me how this works and the benefits involved? __________________ Can you keep a secret?

02-25-2004, 09:05 AM	#3
Merlin Admiral Join Date: Dec 2001 Location: Square On My Arse Posts: 7,410	This is not really for the individual investor. It is designed more as a way for large commodity producers like miners and farmers as well as large commodity consumers like food manufacturers to manage the price volatility associated with production. Yes, you can speculate in this area but it is most definately not recommended. If you want to learn more most books on financial derivatives have large sections on forwards and futures. How they work. How they are quoted. How they are priced. Etc. Read one of those and it will cure you of all your futures curiosity. __________________ Last edited by Merlin : 02-25-2004 at 11:28 AM.

02-25-2004, 01:47 PM	#6
Merlin Admiral Join Date: Dec 2001 Location: Square On My Arse Posts: 7,410	This is a highly competitive market. Nothing here has a definite profit. And if it has been consistently paying to do something that is typically a sign that there is the possibility of very significant losses popping up every so often. Read up on derivatives trading, I like Hull's book on options, futures and other derivatives. You'll learn that these things have very sophisticated computer models following them to make sure that no excess profit can be had. Check this... Last edited by Merlin : 02-25-2004 at 01:49 PM.

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02-25-2004, 08:55 AM	#2
Chgoman Lieutenant Commander Join Date: Apr 2002 Location: Mission Viejo, CA Posts: 564	If you have to ask, then you don't want to do it. It is extremely leveraged trading. You have to have a substantial net worth for most firms to even let you open a futures account as you can make an investment that costs you less than a thousand dollar and be up or down tens of thousands of dollars in a matter of a few hours at times. Unless you really know what your doing and how to protect yourself with futures options, don't even think about it.

02-25-2004, 01:36 PM	#5
gravediggah Lieutenant Join Date: Jun 2003 Location: Wouldn't you like to know Posts: 229	I really dont know t much about it, but I have a friend that has been doing it since the early 90's and he has gave me some info on a particular commodity where there would be a definite profit and I am just trying to learn every bit that I can about it.

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