Futures can be traded in both up and down markets. If a particular trader expects the market to go up, a long trade is usually done wherein the trader buys a contract and then sells it. On the contrary, if a trader believes that the market will go down, and then he will most probably make a short trade by entering a trade through selling a contract and then exiting by buying another contract. In futures trading, instead of taking or making deliveries, a trader merely speculates his position in the market’s volatility by predicting directions of trends. If prices move in the right direction, then the trader would be able to profit. If this does not happen, then a trader would experience some losses. |
This particular arena in trading can be very promising, but it involves so many risks as well. But if you are well experienced in trading stocks and have adopted quite an understanding in the different trends, behaviors and strategies that the industry has to offer, then chances are, you may probably do well in this particular playing field.
Commodities are raw materials that will make their way into the economy and will react much sooner than the stock market.Look at building materials. Copper and Lumber markets will move up after February since home construction and wood manufacturing and products like electrical wire, copper pipes, building materials for new home construction. This should create some great trading opportunities in the future. Traders that are looking for a pure commodity play, then you should consider an ETF that invests in just the Futures markets.
The energy markets consists of Crude Oil, Gasoline, Heating Oil and Natural Gas. These exchange traded funds can become just like a news stock when the commodity is in the news. When oil was heading to the upper $140 range, the reporters could not stop talking about oil. Many traders got into this rise in Oil prices by participating in oil ETF's. A trader needs to apply good risk management of their trading capitol to survival, even with ETFs. ETF Futures Trading
You can check out the agricultural grains sector it has many commodities. The larger ones are corn, soybeans, wheat, rice, and sugar. Much of our grain supplies go to the farmers that use it to feed livestock. The most popular grain ETF is the PowerShares DB Agriculture Fund (DBA). This fund holds a basket of agricultural contracts on wheat,soybeans, corn and sugar.
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