Articles Index
What is an Introducing Broker
An Introducing Broker (IB) is an industry term for a commodity broker or futures broker. In essence, an introducing broker is a brokerage firm that deals directly with the client, while the trade execution and back office work is left to the Futures Commission Merchant (FCM) - commonly known as a clearing firm.
Rosenthal Collins Group Misses Suspicious Activity
As far as futures clearing firms go, Rosenthal Collins Group is one of the more respectable firms in the business. However, Rosenthal was ordered to pay $2.5 million in April 2012 by the CFTC for failure to supervise its officers.
Trading Options on a Limit Up Day
A limit up move in a futures market can either be a very good thing for you or a very bad thing depending on which side of the market you are trading. A limit move is the maximum price a futures contract can move in one trading day. You can get trapped in a bad situation, since you can’t close out your losing position on a day like this, but the options markets may offer you a way out.
Do You Need a Local Commodity Broker
There was once a time when investors would go down to their local stockbroker’s office to place trades. Those days are long gone for most people, as a handshake is no longer required to do business for the majority of traders. Placing trades over the phone or electronically has become the accepted way of doing business for decades.
How To Begin Learning About Commodities
Someone who has never invested in commodities and has little understanding of the investment opportunities available must start somewhere to begin an education on the commodity markets. Commodities are very simple by nature, but the investment process can be more complicated. The first thing to learn is to begin with the basics of what a commodity is.
What are Managed Futures
Managed futures are investments in the commodity futures markets that are actively managed by a Commodity Trading Advisor (CTA). Managed futures are similar to mutual funds by design, but futures contracts are traded instead of stocks. The structure of managed futures has many benefits for the CTA as well as the investor.
Trading Commodities with RSI and Momentum Indicators
Momentum indicators are widely used by commodity traders to measure when a market is overbought or oversold. For traders who live by the old adage of buying low and selling high, momentum indicators are often a critical part of their trading arsenal.
The Best Time to Buy Commodities
Commodity prices tend to move higher during periods of inflation. Sometimes the economy exhibits high levels of inflation, as the late 1970’s is a prime example. Interest rates approached 18 percent to combat the high levels of inflation and commodity prices reached record highs during this period. Not all periods of inflation are this extreme, but commodities can perform well during periods of mild inflation.
What is a Commodity Broker
A commodity broker typically refers to the person who places commodity trades on behalf of his clients. The term commodity broker is also synonymous with the brokerage firm that handles commodity trades. For registration purposes, the brokerage firms are designated as Introducing Brokers(IB) or Futures Commission Merchants(FCM). The individuals are designated as Associated Persons (AP).
Can You Trust Your Broker After the MF Global Scandal
It is not surprising that confidence in the futures industry, more specifically the brokers, has taken a serious turn for the worse. MF Global was the largest futures broker (non broker dealer). Many of MF Global’s customers were with them because of the security of being with a large firm. If something like this can happen at MF Global, is any money safe? That is what many futures traders are asking right now.
Knowing Which Commodity Options to Buy
You can get lost in the selection of the commodity options you can buy. Options trade in different months and each month has a wide range of strike prices. There are also calls and puts, where is a bet on the commodity price rising or falling. There are hundreds of different options you can buy on each commodity and your decision could be the difference between a profitable trade or a losing trade.
Trading Breakouts in Commodities
A breakout strategy is one of the best strategies for tradingtrading trending markets. When people hear the term “breakout,“ they often think of a jail breakout. The concept is not too far off course when you apply it to the trading world. A market has to break out of a range in order to establish a trend. Many tries are made by the markets - some successful, some not. Some will make long runs, while others will be short-lived - very similar to escape attempts from jail.
How are Commodities Chosen to Trade on an Exchange?
It might not make sense to many people that only a chosen few commodities trade on futures exchanges, while many other commodities do not. The basic answer is that many commodities have no major economic reason to trade on an exchange and it simply is not practical for others to be listed. Below is an explanation of why some commodities are listed on an exchange and why others don’t meet the criteria.
The Turtles Trading System
The original Turtles Trading System is described in this article. It was originally created by Richard Dennis and taught to his students in 1983. Richard Dennis used this very same system to make a fortune and he is one of the top traders and money managers of all time. His students made an average of 80 percent annual compound rate of return in their first 4 years using this system.
Fundamental Analysis of Commodities
Using fundamental analysis to research and trade commodities and futures. Supply and demand are the main factors to determine the price of commodities.
Beware of Precious Metals Buying Scheme
There are many legitimate companies that buy and store gold bullion for their customers. They have typically been around for a long time and have a good reputation. Recently, there have been a number of firms getting involved in this business and some of them are cutting corners or running complete frauds. There are some red flags to watch for if you plan on getting involved with this type of investment.
The Pros and Cons of Ethanol
At first glance, ethanol seems to make sense. It is a clean burning fuel and it is better for the environment than gasoline, but things aren’t always what they seem. Ethanol solves one problem but it might be creating several larger and unintended problems.
Making a Living as a Commodity Broker
The fact is that many new commodity brokers struggle to make a living. Most new brokers work on a commission basis and some receive a token salary just to pay the basic bills. Getting through the first six months can be painful, but it will take some hard work and talent to make a career as a commodity broker.
The Influence of Commodity ETFs on the Commodity Markets
Commodity ETFs and ETNs have become a new and easy way for investors to trade commodities and include them as part of their long-term investment portfolio. However, commodity ETFs have somewhat changed the dynamics of the markets, as some believe this wave of new funds into the markets has increased volatility, ultimately leading to exaggerated moves in commodity prices.
Evaluating a Commodity Trading System
Whether you plan on buying a commodity trading system or you want to develop one yourself, there has to be a thorough evaluation of a system before you put your money at risk. Many commercially available trading systems do not perform as advertised and it takes a tremendous amount of work to develop and test a successful trading system.
The Future of Natural Gas
Natural gas as the fuel of the future makes sense no matter which method of analysis you use. Natural gas is one of the cleanest burning fuels and the United States has enough supply to become energy independent. It has also become one of the cheapest fuels - even cheaper than coal. So why is it not the most widely used fuel in the U.S. when the facts clearly show that that it should be our number one energy source?
How to Open a Commodities Trading Account
Opening an account to trade commodities is probably easier than you think, but it is a major financial transaction and you can expect to fill out some paperwork and wait a couple days before you can begin trading commodities.
Benefits of Trading Futures Online
Trading commodities and futures online has many benefits over using a full service commodity broker. Much lower commissions is probably the best reason, but you really can't rely on a broker to make all the trading decisions for you, unless he has proven to be a good trader over time.
Trading Commodities Using Trendlines
Trendlines are an excellent technical analysis tool to use when you are trading commodities, futures, stocks or any other markets. They are primarily used for determining the trend of the market and the trendline establishes an excellent place to enter the market on a pullback within a trend. Trendlines also provide notice of when a trend might have changed, thus allowing traders a place to exit positions with the trend and possibly enter the market in the other direction.
Moving Averages for Trading Commodities
Moving averages are one of the most popular technical studies used in commodity and stock trading. The most commonly used technique of moving averages is for purposes of determining the trend of the market as well as finding support and resistance levels.