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Category Archives: Commodity Trading
Investment is a game of money of securing future money by taking a risk today. Trading therefore comes with a list of rules to play by. Commodity trading in particular offers tremendous potential for becoming a completely different asset class.
However, before investing in any kind of commodity, you must do an in depth research and also ask your broker as many questions as possible. Through this category archive we provide you as much information and valuable insights into the world of commodity trading.
We at Cannon Trading are here to help you with your commodity trading needs. You as a trader should select your commodity trading advisor only after performing a due diligence on him/her. We in fact do that for you. This way, you get only the best advice to help you with your commodity trading.
We’ve got the information that you might need at every step of commodity trading, and you’ll find it all right here in the commodity trading section of our blog. Read up, and read on to get equipped!
What is an Online Commodities Futures Trading Contract?
Online trading of commodities futures creates a commodities contract, which is a legal agreement between two parties. The contract specifies that you agree to buy or sell a product or asset to be “delivered” later at a certain price. The buy/sell price is called the future price of the underlying asset. Commodities futures brokers can assist you in online commodities trading.
Types of Investors
There are two kinds of participants in online commodities trading markets: hedgers and speculators. Hedgers don’t necessarily seek to profit by trading commodities futures; they are striving to stabilize their income and expenses (the costs of their business operations). This allows them to make a budget and predict their costs to their investors and board of directors. Most speculators do not want to physically take possession of the underlying asset: they do not want truckloads of corn dumped in their driveway. Speculators are betting on the future prices of certain commodities. They have the power to cause dramatic price swings in the futures markets, but they also provide liquidity – the ability to sell an investment at its near-value – to the futures markets.
The sugar market has made a significant upside move over the past few days and weeks.
Weather concerns for part of the growing areas in Asia, as well as strength in Brazilian real contributed to this rally.
From a technical point of view, I feel this market is overbought and over-extended, but when fundamentals take over, you can use the charts for wall decoration…That being said, I will be looking for signs of exhaustion on the daily and weekly charts.
The chart below is a monthly chart of sugar, and you will see that we are trading right against recent highs and I got a sell signal in the shape of my red diamond. However, I don’t have a crystal ball, hence I will look on the daily chart for a similar clue before trying to go against the trend and go short.
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