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which one do u like more?commodities or forex trading?

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which one do u like more?commodities or forex trading?

Post by segun on Mon Apr 07, 2008 12:05 pm

What do you guys think is better forex or commodities trading.

I've been trading commodities but never forex was wondering what you guys think. Which is better and what's the difference.

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Re: which one do u like more?commodities or forex trading?

Post by fxjedi on Sat Apr 12, 2008 12:51 pm

forex for me!

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Re: which one do u like more?commodities or forex trading?

Post by storm on Wed Apr 16, 2008 2:17 pm

hi segun,commodities trading is almost similar to forex but trading the contracts are more time dependent than in forex.as in, when your cotton or porkbellies contract expires at the end of the specified month, there's nothing u can do if the price of your commodity has not reached the price you planned.forex is more fast paced and brings higherr profits.but they both have almost the same leverage and risks of loss

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Re: which one do u like more?commodities or forex trading?

Post by oliverpip on Thu Apr 24, 2008 10:49 am

hi all,
is commodities trading the sam as futures trading?

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Re: which one do u like more?commodities or forex trading?

Post by KEYAMO on Sun May 11, 2008 1:10 am

Futures-afro
Understanding the Basics
Today s futures markets encompass all the worlds major market groups: interest rates (e.g., T-bonds),
stock indexes (e.g., the S&P 500), currencies (e.g., Japanese yen), precious metals (e.g., gold), energy (e.g.,
crude oil), and agricultural commodities (e.g., corn).
Although the futures markets had their origins in
agricultural commodities, this sector now accounts for only about one-fifth of total futures trading. During the
past two decades, the introduction and spectacular growth of many new contracts have resulted in the
financial markets (currencies, interest rate instruments, and stock indexes) accounting for approximately 60
percent of all futures trading. (Energy and metal markets account for nearly half of it)
Today's futures markets encompass all the world's major market groups: interest rates (e.g., T-bonds),
stock indexes (e.g., the S&P the remaining 40 percent.)
Thus, while the term commodities is often used to
refer to the futures markets, it has increasingly become a misnomer. Many of the most actively traded
futures markets, such as those in the financial instruments, are not true commodities, and many commodity
markets have no corresponding futures markets..
Trading volume in futures has expanded tremendously during the past generation. In 1991 total volume of
all futures traded in the United States alone exceeded 263,000,000. Conservatively assuming an average
contact value of at least $40,000, the total dollar value of these contracts exceeded $10 trillion! (Yes, trillion,
not billion.)affraid
The essence of a futures market is in its name. Trading involves a standardized contract for a commodity,
such as gold, or a financial instrument, such as T-bonds, for a future delivery date, as opposed to the present
time.
For example, if an automobile manufacturer needs copper for current operations, it will buy its
materials directly from a producer. If, however, the same manufacturer were concerned that copper prices
would be much higher in six months, it could approximately lock in its costs at that time by buying copper
futures now. (This offset of future price risk is called a hedge.) If copper prices climbed during the interim,
the profit on the futures hedge would approximately offset the higher cost of copper at the time of actual
purchase. Of course, if copper prices declined instead, the futures hedge would result in a loss, but the
manufacturer would end up buying its copper at lower levels than it was willing to lock in.
While hedgers, such as the above automobile manufacturer, participate in futures markets to reduce the
risk of an adverse price move, traders participate in an effort to profit from anticipated price changes. In fact,
many traders will prefer the futures markets over their cash counterparts as trading vehicles for a variety of
reasons:study
1. Standardized contracts-Futures contracts are standardized (in terms of quantity and quality); thus, the
trader does not have to find a specific buyer or seller in order to initiate or liquidate a position.
2. Liquidity-All of the major markets provide excellent liquidity.
3. Ease of going short-The futures markets allow equal ease of going short as well as long. For example,
the short seller in the stock market (who is actually borrowing stock to sell) must wait for an uptick before
initiating a position; no such restriction exits in the futures markets.
4. Leverage-The futures markets offer tremendous leverage. Roughly speaking, initial margin
requirements are usually equal to 5 to 10 percent of the contract value. (The use of the term margin in the
futures market is unfortunate because it leads to tremendous confusion with the concept of margins in
stocks. In the futures markets, margins do not imply partial payments, since no actual physical transaction
occurs until the expiration date; rather, margins are basically good-faith deposits.)
Although high leverage is
one of the attributes of futures markets for traders, it should be emphasized that leverage is a two-edged
sword. The undisciplined use of leverage is the single most important reason why most traders lose money in
the futures markets. In general, futures prices are no more volatile than the underlying cash prices or, for
that matter, many stocks. The high-risk reputation of futures is largely a consequence of the leverage factor.
5. Low transaction costs-Futures markets provide very low transaction costs. For example, it is far less
expensive for a stocJc portfolio manager to reduce market exposure by selling the equivalent dollar amount
of stock index futures contracts than by selling individual stocks.
6. Ease of offset-A futures position can be offset at any time during market hours, providing prices are not
locked at limit-up or limit-down. (Some futures markets specify daily maximum price changes. In cases in
which free market forces would normally seek an equilibrium price outside the range of boundaries implied by
price limits, the market will simply move to the limit and virtually cease to trade.)
7. Guaranteed by exchange-The futures trader does not have to be concerned about the financial stability
of the person on the other side of the trade. All futures transactions are guaranteed by the clearinghouse of
the exchange.
Since, by their very structure, futures are closely tied to their underlying markets (the activity of
arbitrageurs assures that deviations are relatively minor and short-lived), price moves in futures will very
closely parallel those in the corresponding cash markets. Keeping in mind that the majority of futures trading
activity is concentrated in financial instruments, many futures traders are, in reality, traders in stocks, bonds,
and currencies. farao

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