Level2StockQuotes.com - Futures Trading Markets Commodities - Articles

Features a introduction into the futures trading markets, commodities trading, and some history..

Futures Trading Introduction and Articles for Investors, Futures Markets Speculators and Hedgers..

Futures Trading:
The futures trading markets are a meeting place for buyers and sellers of many different commodities futures like financial futures, oil futures, gold futures, silver futures, copper futures and many more. The futures trading market is a continuous commodities futures auction and used for showing information about future supply and demand, foreign currencies and stock indexes. Futures trade daily and are mainly used by producers, consumers and speculators in the futures trading markets.

Futures Trading Market Brief History:
The trading floor of the futures exchange, with all the shouting and signaling to buy or sell commodities does give the direct impression of chaos. In reality prior to the grain markets being established in the middle of the nineteenth century, the farmers would harvest their crops in the fall of the year and bring their crop to market. The farmers would try to bring their crop to one of the major populated areas and transportation centers to sell to buyers. Seasonal glut was a major concern for the farmer as it drove prices to nearly nothing.

Futures Trading Floor Traders:
Local people who buy and sell futures contracts or stocks on the floor of the exchanges are known as floor traders. The floor trader is similar to the market makers and specialists, they help provide liquidity in the market. Floor traders also can make trades on their own accounts, but unlike the market maker or specialists, the floor traders participating in the market are not known and fully understood.

Futures Trading Hedgers:
The principle of hedgers is simple but can be somewhat complex. In this article we attempt to clarify futures hedgers and what benefit they have. The hedgers in the futures market buy and sell futures contracts mainly to establish a price level many weeks or even months in advance, this is done to establish a know futures price level for goods they later intend to buy or sell in the cash market or bond market. Some hedgers use the futures market to lock in a price that is acceptable somewhere between their buy and sell price, this is a margin between the two prices.

Futures Trading Speculators:
To speculate in futures contracts oil futures, gold futures or other commodities, first you must decide with the help of your futures investment broker or investment advisor what futures to buy and when. If you decide to speculate in the futures markets, or any futures commodities, gold futures or oil futures contracts, only buy when you are confident in your analysis and decision that the futures commodity you are going to buy, will increase in value within the time frame you set with your futures broker. After you place your order to buy futures contracts, if someone takes the opposite side of your trade it possibly could be a hedger or another speculator who has a different opinion from your own as to what direction the futures contracts price will be.
Futures Trading Markets Commodities - Article Continued...

Futures Trading Markets Commodities - Article Continued...

Futures Trading What is a Futures Contract:
Futures contracts consist of two main contracts, futures contracts that are for real delivery of a commodity and those futures contracts that are for a cash settlement.

Futures cash settlement is simply the holding of a cash settled future until expiration. At that time, there is a final margin payment, and the contract expires.

Very few futures contracts are the delivery type of contract. Most hedgers, speculators and investors in the futures markets do not have any desire to take delivery of say 500,000 pound of grain or sugar contracts they bought or sold.