There's a group of agricultural commodity products that trade on the IntercontinentalExchange (ICE), known collectively as the softs, although some of the products are hard.Most of them are food related, though a few are not, but all are grown. Plus, many of them are grown in the developing world where statistics are not as available and accurate as those released by the United States Department of Agriculture.They are: orange juice, cocoa,...more
One thing good about trading commodity futures contracts on margin is that you're not borrowing the money from your brokerage, as you are when you buy stocks on margins. Therefore, you don't have to pay any interest.When you buy stocks on margin, actual ownership of these assets is transferred from the name of the old owner into your name. The old owner wants the entire amount of money due to them right away. If it doesn't come from you, it has...more
One of the most popular trading vehicles is now the Interbank foreign exchange market, but which is unregulated. You can also speculate on price moves in conjunction with the US dollar for the euro, yen, Swiss franc, British pound, Canadian dollar and Australian by buying and selling futures contracts for these currencies on the CME via the electronic Globex trading platform. These are under the jurisdiction of the National Futures Association (NFA) and CFTC.These contracts are quoted in terms of looking at them from an American standpoint. That is, you're using US dollars to buy (or sell) the other currency. The price represents how many US dollars it takes to acquire the other currencies. Of course this changes constantly based on various political and economic factors out of the control of anybody who does not happen to be the Chairman of the US Federal Reserve, United States President, or equivalent offices in the European Union, Great Britain, Switzerland, Japan, Canada and Australia.The contract for euros is for 125,000 euros. One tick is $12.50.The contract for yen is for 12,500,000 yen, but one tick is still $12.50.The contract for British pounds is for 62,500 British...more
Many day traders like to work with NASDAQ stocks, because they tend to be more high tech, sexy and popular. Although the big bubble of the 1990s burst, they are still highly volatile.The regular NASDAQ 100 contract is $100 X the index value. It's quoted in dollars. One tick is $25 per .25 points.The e-mini NASDAQ 100 contract is one-fifth the...more
Commodity futures trading has a variety of broker orders no longer in frequent use. These are not taken so much anymore. Several are nearly obsolete because of twenty-four electronic trading. One type of now little used order to commodity futures brokers is called Immediate Or Cancel (IOC). This is much like a Fill OR Kill (FOK).The order is sent...more
Four different grains are traded on the futures exchanges of the United States (I'm pretty sure that some foreign exchanges offer rice futures): corn, wheat, soybeans and oats.All four have the same contract size of 5,000 bushels. The penny price of one contract (or the multiplier) is therefore $50. (That's .01 times 5,000.)However, the grains are traded down to the fourth of a cent. Therefore, each tick is worth $12.50, and is quoted as cents per bushel. However, they are always quoted in eighths, so the denominator of the fraction is always an eight. So the minimum tick is 2/8. You can have 2/8, 4/8 and 6/8s. Because the denominator is always eight, there's no reason to show it in price quotes. Therefore, if December corn is $4.25 and 2/8, you'd see it displayed as 425'2. The two is the fraction. That is written with an apostrophe in front of it, sometimes by a hyphen.Of course it helps to trade these if you're familiar with the various kinds and grades of these grains. You should also know where they're grown, when they're planted and when they're harvested. Spring wheat and winter wheat are different, for example.Weather has a major effect on these commodities. Too much rain...more
One bond is the same as another bond with the same characteristics, so interest rates products also are fungible, and therefore have futures contracts based on them.Most of them are based on United States government bond issues, but there's also a...more
The Chicago Board of Trade offers futures contracts on 30-year T-bonds, 10-year T-notes and 5-year T-notes. Each contract represents $100,000 worth of underlying securities.However, remember that such bonds are worth more or less depending upon their...more
After the long bond contract, you can trade contracts for T-notes in the 10-year, 5-year and 2-year category.The 10-year and 5-year notes are very similar to the long bonds. The contracts are for $100,000 and quoted in fractions of par value. One...more
The margin on a eurodollars contract is just around $1,000. Because the contract size is $1,000,000, this represents 1/1,000, or a tenth of one percent. This is amazingly small. Eurodollar contracts expires in March, June, September and December....more
The commodity futures exchange allow people to take positions in their contracts with a much smaller amount of money than stock buyers are allowed. This trading without putting up 100% of the money is called going on margin.The most a stock buyer can...more
There are four commodity contracts known just as the meats, which trade on the CME. These livestock contracts are: feeder cattle, live cattle, lean hogs and pork bellies.Although pork bellies has been the most publicized by the media, it's a thinly...more