How to Trade Copper Futures
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
Copper Futures Trading is one of the most popular vehicles in the industrial metals market. Copper is used in a wide variety of markets such as construction, plumbing, manufacturing and architecture. With such a wide array of usages, trading copper offers many opportunities for gain. More and more investors are looking to raw commodities as trading vehicles as they provide more liquidity and volatility within their respective markets. Trading raw commodities as futures contracts also allows for better price transparencies.
Copper is usually a great indicator of economic growth within a region. As the demand for copper rises, the more valuable the commodity becomes given its vital contributions to industrial and urban development. Worldwide copper consumption has been on the steady rise since 2011, with China being the world’s top copper consumer. Industrial copper producing companies use the futures market to hedge against losses and for price mitigation. Investors generally use the copper futures market to leverage their capital against price fluctuations to generate returns on their investments.
A copper futures contract represents 25,000 pounds of copper. Standard trading hours operate from Sunday through Friday beginning at 6:00 p.m. until 5:15 p.m. the following day Central Standard Time, allowing a 23 hour trading platform. The 45 minute break allows for the close out on the previous day’s results. Trading in copper futures requires paying close attention to market fluctuations and remaining active on developing markets. Because copper moves within the market at high volatility, neglecting a position for even a short period of the day can be very costly. Below are a few of the most popular exchanges copper futures trade on:
- Commodity Exchange (COMEX): COMEX is a member of the Chicago Mercantile Exchange and specializes in a large amount of industrial metals. This exchange also provides another version of copper futures contracts that represent 12,500 pounds of copper. Prices are updated on a continual basis on this exchange during trading hours, giving real time quotes and market activity for traders to analyze and take favorable positions.
- London Metal Exchange: This exchange provides a more global approach to the copper market for investors to play their hand abroad. This is important because the majority of copper consumption and movement occurs outside of the continental U.S. with Chile, Peru and China leading the market. Futures contracts on this exchange are the second most popular currently.
- Multi-Commodity Exchange: This exchange offers both standard and mini futures contracts for investors. Standard contracts on the MCX occur in February, April, June, August and November. This India based exchange has contracts at 1 MT and 250 kilograms in a minis format.
A popular approach to trading copper futures is in the Online Trading Futures platform. Most brokerages tend to trade in stocks and stock options. However, there are a lot of brokerages that are now recognizing the popularity growing among traders to trade online. As a result, many offer online trading platforms for experienced traders who tend to want to make their own day to day trading decisions. Many brokerages offer simulated online trading modes to familiarize an investor with the market temperament without risking any financial assets. Simulated trades occur in real-time, with simulated money, offering and ideal learning experience for someone new to the copper futures market.
Remember, there is a certain amount of risk involved with any investment, therefore gains are not guaranteed. The way to trade the copper commodity is to become familiar with copper market participants and consumers, as well as to pay close attention to market trends. Playing the market closely while monitoring economic trends within regions that consume copper at a high rate puts an investor in the right place to take bold positions on contracts. Keeping up with news related to construction industries will also keep an investor well informed about the daily direction of the market, which is recommended for evaluating price directions. Consulting qualified futures brokers who specialize in industrial metals and who can read the direction of the market will greatly aid in sound decision making.
For more information about Copper Futures Trading and market activity visit https://www.cannontrading.com.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.