Wednesday, January 18, 2006

How commodity trading works

How commodity trading works: "Compared to stocks, trading in commodities is much cheaper, because margins are much lower than in stock futures.Brokerage is low for commodity futures. It ranges from 0.05? 0.12?cause of this, commodity futures are a speculator's paradise.If you are a hard-core trader who follows the technical charts and do not really care what you trade, and if you are nimble and savvy, then commodity futures could be another asset class that you would be interested in.The advantages in this line is that there are no balance sheets, no complicated financial statements----all you have to do is follow the supply and demand position of the commodities you trade in very closely.Go onto the commodities trading exchange - NCDEX and MCX - to see which commodities are offered for trading, their contract size and other criteria. You will have to get hold of a commodities broker but that should not be a problem. There are lots of brokers that offer commodity trading these days.But, it would be wise to avoid commodity trading if you are a rookie. A better move would be to initially trade in stock futures before opting for commodity futures. "

posted by ATM @ 9:53 PM

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