1. Commodity Trading As An Investment Vehicle
There are many inherent advantages of commodity futures as an investment vehicle over other investment alternatives such as savings accounts, stocks, bonds, options, real estate and collectibles. The primary attraction, of course, is the potential for large profits in a short period of time. The reason that futures trading can be so profitable isleverage. For instance, if you had a $10,000 futures trading account, you could trade one S&P 500 stock index futures contract. If you were going to buy the equivalent amount of common stocks, you would currently need about $350,000, thirty-five times as much. more...

2. The History of Trading
Although the first recorded instance of futures trading occurred with rice in 17th Century Japan, there is some evidence that there may also have been rice futures traded in China as long as 6,000 years ago. Futures trading is a natural outgrowth of the problems of maintaining a year-round supply of seasonal products like agricultural crops. In Japan, merchants stored rice in warehouses for future use. more...

3. The Trading Process
Here are some typical steps in the process of making a commodity trade including the trader's decision-making process and the procedures involved in actually placing the trade. In order to make decisions about when to trade commodity futures, you must have a source of price data. more...

4. Making A Trade
Assuming the trader has consulted his price charts, applied his trading plan's decision-making criteria and decided to make a trade, how does this actually take place? He will have a trading account open with a broker. Believing, for example, that the price of Silver will be going up in the near future, he calls his broker's trading desk, and the following conversation might occur. more...



5. The Truth About the Commodity Markets
In order to be a successful trader, you must understand the true realities of the markets. You must learn how the professionals make money and what is possible. Most traders come into commodity trading, lose a substantial portion of their capital and then leave trading without ever having a correct perception of what good trading is all about. For many years college professors have argued that the markets are both random and highly efficient. If this were true, it would be impossible to gain an edge on other investors by having superior knowledge or a superior approach. more...

6. Psychological Pitfalls
Here are some additional psychological pitfalls to avoid. Be wary of depending on others for your success. Most of the people you are likely to trust are probably not effective traders. For instance: brokers, gurus, advisors, friends. There are exceptions, but not many. Depend on others only for clerical help or to support your own decision-making process. You may acquire trading methods or systems from others or from books, but be sure to test them carefully yourself before trading. Good systems that you can buy come with computer software that allows comprehensive historical testing. more...

7. Futures Fundamentals
What we know as the futures market of today came from some humble beginnings. Trading in futures originated in Japan during the 18th century and was primarily used for the trading of rice and silk. It wasn't until the 1850s that the U.S. started using futures markets to buy and sell commodities such as cotton, corn and wheat. A futures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. more...

8. The Seven Habits of Highly Effective Futures Traders
Stephen Covey's The Seven Habits of Highly Effective People has been on the national best-seller lists for years--first as a hardback and then as a paperback. I wondered how its list might relate to commodity futures trading. My interpretation of Covey's agenda is as follows: 1) Take responsibility for yourself and your life, 2) Act in light of your vision of success in life, 3) Act with proper attention to the correct priorities, 4) Act in a way that maximizes benefits for everyone, 5) Try to understand the other person before putting your point of view across, 6) Exploit the potential for cooperation among the people in your life, 7) Pay attention to maintaining and refining your physical, mental, social and spiritual dimensions. more...

9. The Correct Way to Optimize Commodity Trading Systems
In previous articles in this space I have made the case that the average person has the best chance to be a profitable trader if he or she adopts a 100-percent mechanical approach. This is the only surefire way to minimize the emotional influences that inevitably destroy nearly every trader. It is also the only way to know whether your method has been profitable historically. Abandon the idea that you will ever find the "perfect" system. The perfect system this month may be lousy next month. It will definitely have many difficult periods in the future. Just as every trader and every methodology has losing periods, every system, no matter how brilliantly created, will encounter periods of market price action it cannot trade successfully. Thus, I am content with a good system. more...

10.Implementing A Mechanical Approach to Trading Commodities
In my article in the last issue of Trader's World, I argued that "The average person has the best chance to be a profitable trader if he or she adopts a 100-percent mechanical approach." This is the only surefire way to minimize the emotional influences that inevitably destroy nearly every trader. I know that in my own case, the more mechanical I am, the better my results are. Assuming you have decided to try the 100-percent mechanical approach, how exactly should you proceed? You would think that the most important step would be to find the perfect system. Strangely, finding the system is only a small part of the job. more...

11.Day-trading: Not what you think
From a 22-year veteran of day-trading, here are the rules for succeeding in this most difficult of the periods. By Mark D. Cook The day-trader is a cross between an extrovert and an introvert with both characteristics in balance. The introvert aspect is depicted by the disciplined workaholic with a reclusive concentration. The extrovert aspect is depicted by an aggressive, competitive, self-motivated individual striving to be the best in a selective profession. If you think you have that Dr. Jekyll/Mr. Hyde personality, then you are invited to explore my world -- the world of the professional trader. more...

12.Day-trading overview
Day-trading, which was once the exclusive domain of the floor trader, is now fair game for all speculators. Inspired in part by large intraday price swings, instant availability of quotes, affordable high-powered computers and competitive commissions, the new wave of day-trading methods and systems has attracted thousands of traders in recent years. The undeniable thrill of trading within the time span of one day is, however, a double-edged sword: one that can hurt as well as heal. To be successful, a day-trader must have the discipline of a machine, the instincts of a fox, the emotions of a rock, the skills of a surgeon and the patience of a saint. (And a little luck wouldn't hurt either.) more...

13.How to find the right support and resistance
My personal preference for day-trading and short-term trading is to buy dips and sell rallies. Two components are needed to make this strategy work. First, you have to be trading in the direction that gives you the best chance of success. Second, you have to be able to identify potential support or resistance for that trading day. I'll discuss one technique from each of these two components that make up my day-trading approach. more...



14.Day-trader's paradise
Most traders have their favorite markets. In many cases, though, the same markets you excel in with interday trading, you may perish in with intraday trading. It's vital, then, to know how to pick good markets for your day-trading strategies. But one market can't be a panacea for all day-trading problems. It's still important to know what you trade, warns William Darby, president and chief executive officer of Darby Trading Consultants in White Plains, N.Y. "Professional traders often find they have a special knack for some markets, whether it's from past job experience, training, whatever. Some people just perform better in certain markets." more...

15.Risk and Money Management
Trading commodity futures should be treated like a small business. Think about the budgeting and money management required to make a small business successful. To have a successful business, one should have a business plan, be sufficiently capitalized to weather downturns and unexpected adverse events, and keep accurate accounting data that should be analyzed periodically. A trader should have a trading plan, sufficient money in the account to overcome a series of losing trades, and keep good records of trades to be able to analyze them efficiently. more...

16.Exchange Fees FAQ
Our most frequently asked questions about exchange fees are listed below. If you have a question not answered here, please contact your broker for assistance. more...

17.Futures Orders types
Refer to Order Types for great tips on order entry procedure and types of orders. more...

18.RefcoLive Symbol List
Complite symbol list of futures contracts for RefcoLive electronic trading platform. more...

19.Glossary of Futures & Options Terms
Glossary of Futures & Options Terms. more...

20.Risks - Budge - Try Hedge
The introduction of trading in Index Futures in the Indian markets will now enable operators, both individuals and institutional to hedge risks. Trading in financially engineered products such as futures, whose value is derived from the underlying asset - in this case the scrips on the index, will help operators to cover their positions into the future. The risk characteristics of emerging markets differ from those of more mature markets in fundamental ways. Even standard concepts such as hedge ratios or statistical measures such as correlation and volatility must be suitably interpreted before being applied. more...

21.How to whisk your oil price risk
Risk Management has been looked upon as rocket science by many finance professionals leave alone the layman individual. The introduction of derivative trading in India with BSE and NSE allowing trading in Sensex Futures has still not gained ground. Risk Management tactics employed by State Electricity Boards (SEBs) and the government of India in terms of the Escrow account failed miserably. The Indian government has now permitted oil companies in India to hedge against commodity price risks while importing crude and petroleum products. more...

22.World Sugar
If surveyed most U.S. citizens would probably say that sugar comes from Hawaii, isn't that what it says on the bag? Though some sugar is; in this article we will discuss how and where sugar is produced and how the market can be affected. more...

23.Foot and Mouth Facts
With the recent news regarding foot and mouth disease outbreaks in Europe, South America and the Middle East, now might be a good time to learn about this disease and how it could affect us in the United States. Foot and mouth disease is a severe, highly communicable viral disease of cattle and swine. It also affects sheep, goats, deer and other cloven hoofed animals, called ruminants. The United States has been free of the disease since 1929 when the last of nine U.S. outbreaks were eradicated. more...



24.Cocoa Fundamentals
The price of cocoa is influenced by a number of fundamental factors that affect demand and supply including climate, political instability, pestilence, regulations, and the economic strength of consuming countries. Cocoa is grown in tropical climates found in Africa, South and Central America, and Southeast Asia. The Ivory Coast is by far the major producer of cocoa in the world followed by Ghana, Indonesia, and Brazil. Approximately 75% of the world cocoa crops are harvested between October and February. A second harvest, referred to as the mid-crop, takes place from May to August. more...

25.Cattle Markets
A common question asked by new traders is "What are Feeder Cattle and Live Cattle?" We will answer this question and review production and consumption factors that affect the price of Cattle in the United States. more...

26.Calculating Profits and Losses
Learn how to calculate profits and losses, read price quotations, and determine the the value of a given change in price. First we will define some useful terminology below. Contract size- One contract represents a specific number of units of the commodity. For example, one wheat contract represents 5000 bushels of wheat. Unleaded gasoline contracts are for 42000 gallons. There are 40000 pounds per live cattle contract. Point value- A change in price will result in a change in value of the contract. The point value specifies the dollar change in value of the contract per change in the price. The point value is derived from the contract size. This is illustrated by several examples below. more...

27.Bull Call Spread
The Bull Call Spread is one of the most popular forms of options spreading. In this type of spread you would buy a call at a particular strike price and sell a call at a higher strike price in the same commodity. Typically, both options are traded in the same contract month. Bull Call Spreads tend to be profitable if the underlying futures contract settles at or above the higher strike price (the option that you sold) upon expiration - therefore this is a bullish position because it relies on the underlying future moving up in price. more...