Futures and Futures Options Trading

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United Futures Trading Company, Inc. Just what is commodity trading? Well lets look at first what a commodity futures contract is: A transaction in the commodity futures market is made on the trading floor or in the trading computers of the exchange between brokers who are members of the exchange that particular commodity is trading on.

The seller will have a broker, and buyer will have a broker. They will then transact an order for a purchase and sale. The buyers and sellers of commodity futures contracts have obligations. The buyer is obligated to take delivery and pay for the cash commodity during a specific time frame.

The seller is obligated to broker commodity future online trading the commodity, for which he will be paid the price that was decided in the exchange pit by the brokers.

Sometimes the price can be more or less depending on the grade quality of the specific material. The buyer and seller can eliminate their obligation by offsetting their trade at the exchange before the contract comes due. This is what most speculators do in the commodity markets. There are speculators and hedgers that trade in the commodity markets. A hedger is not interested in making a profit off the movements in price of a commodity futures contract, but rather in shifting his risk of loss on the commodity itself due to adverse price change.

Broker commodity future online trading will buy and sell futures, or options on futures, for the purpose of making a profit. They will buy futures a long position when they think prices will rise, or they will sell futures a short position when they think prices will fall.

Both the speculators and hedgers add volume to a broker commodity future online trading making it a more liquid market to trade. Most individuals who open commodity trading accounts are speculators looking to benefit off of the price movement of the commodity broker commodity future online trading traded.

Farmers, oil operators, cattle companies, etc could open a commodity futures trading account looking to be a hedger and reduce their risk of price movement. Here is a simple example of a speculator we will call him a futures trader executing a trade and how it would work. Once the futures trader has established a futures trading accounthe would then call his broker to initiate a trade. He would let the broker know if he was looking to buy or sell long or shortbroker commodity future online trading specific commodity he wants the trade in, the month and year of the contract he is looking to trade, broker commodity future online trading quantity, and the price which he is willing to buy or sell for or he can say Market Order to have the trade broker commodity future online trading at the current market price in the trading pit.

Sometimes conditions are present when the trade can not be executed for some reason which is rare but can happen. After the trade is executed, the floor broker would relay price paid or sold and relevant information back to the trader's broker. The futures trader's broker would then let the futures trader know the price that the Buy or Sell the trade was executed. In recent times, more trading has been done through the use of online futures tradingeliminating the use of telephones and calling of brokers on the telephones.

The futures trader can trade directly from their computer and have the trade routed directly to the trading floor of the exchange. At the exchange some orders electronic markets are executed immediately in the exchanges computers. This is becoming the more preferred method of trading because it tends to be quicker. He then calls his broker or enters an order into his computer trading platform to sell the futures broker commodity future online trading he has bought earlier in the day.

Commissions and fees would be deducted from his buy and sell. And remember the risk of loss exists in futures trading. This is just a brief example of how commodity trading works. This in no way explains all the intricacies involved with trading.

Trading commodities is risky and one should only use risk capital to invest. Please contact one of our licensed brokers who can explain more in-depth on how the commodity markets work, and determine if you are suitable to trade these fast paced markets. Also feel free to request a free investor kit from our site. Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading.

All trading rates quoted per side. Applicable exchange, regulatory, broker commodity future online trading brokerage fees apply to rates shown. Please email webmaster unitedfutures. Open An Account Now Online!

The Basics of Commodity Futures Trading.

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A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures , options , and similar financial derivatives.

Clients who trade commodity contracts are either hedgers using the derivatives markets to manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit. Ever since the s, the majority of commodity contracts traded are financial derivatives with financial underlying assets such as stock indexes and currencies. When executing trades on behalf of a client in exchange for a commission he is acting in the role of a broker.

When trading on behalf of his own account, or for the account of his employer, he is acting in the role of a trader. Floor trading is conducted in the pits of a commodity exchange via open outcry.

A floor broker is different than a "floor trader" he or she also works on the floor of the exchange, makes trades as a principal for his or her own account. IBs do not actually hold customer funds to margin. They advise commodity pools and offer managed futures accounts. CTAs exercise discretion over their clients' accounts, meaning that they have power of attorney to trade the clients account on his behalf according to the client's trading objectives.

A CTA is generally the commodity equivalent to a financial advisor or mutual fund manager. A commodity pool is essentially the commodity equivalent to a mutual fund. This is the commodity equivalent to a registered representative. From Wikipedia, the free encyclopedia. Retrieved from " https: Commodity markets Commodities used as an investment Brokerage firms. Views Read Edit View history. This page was last edited on 9 February , at By using this site, you agree to the Terms of Use and Privacy Policy.