An Associated Person (AP) Commodity Trading Advisor (CTA)
Can Help you Make Money Trading
Welcome to Commodity Trading Advisor, here to provide a Commodities Futures Trading News source for your trading success.
An AP/CTA Trading Advisor helps traders trade the markets for profit!
There are ways to trade commodities futures markets successfully with reduced risk of loss...
A Commodity Trading Adviser (aka CTA) is a financial markets term with a definition being a person who directly or indirectly advises investors about buying or selling commodity futures and/or commodities options. Non-direct advising includes providing information via financial websites, the media or by written communications, including online commodity futures trading advice over the-internet.
For more commodity futures markets trade information please pay a visit to Commodity Trading Systems or go-to Commodity Futures Trading the traders and day trading web site for successful long-term trading or day-trading the commodity markets. A CommodityTradingAdvisor can help futures traders trade the commodities markets with less risk (at least comparatively speaking), with no direct trading assistance). More traders knowledge and trader information is located at Commodity Trading Advisors...
Commodity Futures Trading Tips for Successful Trading
Commodity futures trading refer to trading of futures agreements. These agreements are deals made to trade the primary commodities at fixed rates in the future. The rates are usually based on the existing or prevailing day rate. Similar to stock trading, commodity futures are traded in particular centralized trading markets like Globex and S&P.
Today, there is a massive increase in the number of commodity traders trading futures agreements because of many reasons. Among these reasons include the following:
- simplicity of trading that enables anyone to do online-trading and virtual-trading
- the present of high liquidity in the market due to large trade volume made daily
- the stability of the market
- easiness to own an underlying commodity wherein one can buy a high-priced product at a lower price during the time of agreement
- low rates of commission in comparison to trading underlying futures stocks
- the ability to do trading at home with decreased in working capital
- lower initial investment required
- the availability of small futures that have narrow spreads and less account minimums
- the presence of various underlying products in the market
Any person can be successful in gaining trader profits through commodity futures trading. At the futures markets, the speculators and the hedgers meet to predict whether the price of a commodity will rise or fall in the future based on a particular market or currency index. Just like any market, commodity futures trading can be risky, however the potential to see both long and short term gains can be considerable.
There are different futures markets as well as strategies that a person can use to gain trader profits from commodity futures trading. Primarily, a commodity refers to the physical product whose value is decided by the forces of demand and supply. These forces include precious metals, energy, grains, and more. The commodities are traded in a centralized market at a predetermined time whether its price will rise or fall. In trading commodities, it would be strategic to use straddles. A straddle is created holding the same number of puts and calls with the same expiration date and strike price. The “calls” is where the trader expects that the price will rise while the “puts” is where the trader speculates that the prices will fall.
Another commonly used strategy in gaining traders profits from commodity futures trading is scalping. Just like commodities, the prices of trade currencies in scalping are speculated to rise or fall. In the value of currency, the scalpers try to take short-term profits off the incremental modifications. As this is done repetitively, the profits will continue to grow in time resulting to significant total profits as all small profits are combined. In able to continue gaining trader profits, one must require strict discipline in order to continue making short-term and small profits while preventing large losses.
In the commodity futures markets, there are two main types of futures trading agreements available. The first type is called as commodity futures and requires physical delivery. The futures in this type include agricultural commodities. The second type is called as financial futures, which often require cash settlement. This type involves mutual funds, bonds, treasury notes, and the like.
Tips on How To Trade Commodity Options
Trade commodity options are highly profitable. It can be more wonderful and great than stocks options because it brings risk management to an entirely new level and gives plenty of flexibility as well. Compared to index or stock options, strategies for trade commodity options can be exchanged with lesser margin. These options can also be used for both speculative and income purposes. Moreover, the margin rules of SPAN allow usage of less capital for trade commodity options. Nowadays, the commodity option trading are made substantial for complicated options strategies with the help of brokers who use deep discount commissions, online trading platforms, electronic trading platforms, and electronic mini contracts.
Commodity options are just like with stock options when it comes to trading transaction. The only difference between these two is multiples of option premiums that each represents. Apparently, there are different advantages gained from commodity options that include low margins & high yields, lower commissions, low slippage, better hedging, no additional margin trades, call credit spread, and additional trades.
Most of the trading commodity options use the SPAN margin rules wherein the calculation is centered on all angles of a selection. This can be very advantageous to the traders. For instance, a trade that uses collar strategy will have lower margin compared to the same trade that uses indices or stocks directly. Lower margins will result to better utilization of capital as well as with higher profits.
When trading commodity options, the slippage per trade can be large. However, in most cases, a trade option that involves the same currency size will result in lower slippage. The slippage is even lesser with commodity options that are electronically traded like e-mini contracts and gold options. Most of the strategies with trade commodity options need some few adjustments or hedging during the span of a trade. The general rule for hedging or adjustment is going short or long of the principal to watch over if the principal is not in favor of the trade. E-mini contracts and futures provide the best method to hedge or adjust with low capital requirement.
Trade commodity options do not have extra margin trades. With careful assessment of the current trades, possible extra trade opportunities may arise. These additional opportunities can decrease the overall margin that the trade requires. Click-here for Trading Tip-of-the-Day.
Apart from the above mentioned advantages of trade commodity options, the trader must be aware that trading options as well as futures involve considerable risks of loss or gain that maybe or not suitable for all traders. Here is a useful list of tips that one can use for profitable options trades:
- Follow the trends in the commodity market as well as your natural instincts. As soon as you have chosen your trading system, stick to it.
- Do not overtrade and apply techniques of good money management on your trading.
- Secure a position in the market wherein your profit goal exists.
- Avoid trading markets that has low capital and with volatile contracts.
- Establish trading plans prior to market opening. The plans must include objectives, exit points, and entry points.
- Maintain discipline by using technical signals such as charts. This will eliminate impulse trading.
- Cut losses short so profits can run.
- Do not overstay on a good market because there's a tendency to overstay on bad markets as well.
- Learn to trade from the short side and be patient.
- The broker and client must have rapport.
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