by Aurelio A. Pena
COMMODITY futures trading had been a common activity among the world’s traders for more than a century. But our country is still so far behind, we’re still investing and trading company stocks in the Philippines Stock Exchange.
A few months ago, we came across a business news report saying that the PSE is planning to install a new system in the exchange that would allow local traders to buy and sell commodities like corn, rice, pork, tuna, sugar, coffee, cocoa, etc. It wasn’t clear, though, whether these commodities will all come from local producers or from the world’s producers.
The trading of commodity futures is simply the buying and selling of these commodities for delivery at a future date— say like March, June, September and December. A trader usually buys a contract of these commodities which come in different specifications and volatile prices that change from day to day, making it a perfect vehicle for trading in the commodity exchange.
Commodity trading, however, has grown over the years to a point where the word “commodities” no longer refers to agricultural products. These days, global traders who move the world’s markets 24 hours a day, buy and sell commodity futures that also include foreign currencies, crude oil, gold, silver, interest rates, treasury bonds, stock index, etc.
Although trading in stocks and commodities share the same high risks and trading strategies, the methods of trading execution is a bit different — but can be learned very quickly by any passionate trader.
You still call a broker to place your buy (or sell) order, there’s still a “limit order” or “market order” to choose from, and you can still be a short-term trader and long-term trader, depending on your appetite for risk and level of greed.
These days, most commodity trading in the world’s commodities, take place on-line by global traders from every country on this planet. The “open outcry” and physical execution of stock and commodity orders at the New York Stock Exchange (or other world’s exchanges for that matter) where you see traders yelling and signaling with their hands to each other, have declined over the years.
So, if you see foreigners stooping over their laptops day and night at coffee shops or hotel lounges, chances are, these guys are stock or commodity traders watching those prices move on the charts, waiting for the right “buy” or “sell” signals before they make their moves.
Most global traders who move the world’s markets don’t trade from high-rise buildings on Wall Street, but from their own “home offices” in small obscure towns.
The size of their trading accounts can rise or fall thousands or millions of dollars in minutes or even seconds depending on how fast the markets move for or against the “positions” made on these commodities. Huge profits as well as huge losses are common among traders in the commodity markets.
Minimum deposits to start trading commodities online can range from $2000, $5000, $10,000 to $25,000 depending on the broker firm in the US that deals with the global markets. Most of these commodity brokers can be contacted online.
(For inquiries, email me at : tradingpost_post@yahoo.com )
