NYMEX Commodity Futures PriceA NYMEX commodity futures price for gold futures, oil futures, corn futures, coal futures, copper futures, and many more commodities is the price paid throughout the world for futures contracts on that commodity. The NYMEX is the New York Mercantile Exchange and is the worldfs largest physical commodities exchange. Its commodity trading is handled by its COMEX branch. Traders track NYMEX commodity futures prices using both fundamental and technical analysis in order to profit from commodity price fluctuation. The traders for each commodity typically consist of producers and processors of commodities who are hedging investment risk and speculators. Traders who speculate in trading commodities can often profit from substantial NYMEX commodity futures price swings brought about by variation in supply and demand. When beginning commodity futures trading a trader is best advised to start their education with Commodity and Futures Training.
The NYMEX is a transparent market for commodities trading. It is one of the few exchanges worldwide that still employs an open outcry system. Each company that wishes to trade on the NYMEX sends its traders buy commodity futures and sell commodity futures on trading floors, one designated for each of the traded commodities. The NYMEX commodity futures price for a given commodity for a given delivery date is arrived at by traders shouting bids. The system is raucous but entirely open. The average trader looking to buy corn futures, for example, at a given NYMEX commodity futures price will enter limit orders with a broker. The broker will pass the order, electronically, to the trader at the NYMEX and the trade will be executed, providing that the NYMEX commodity futures price has not moved beyond the limited imposed by the order.
The NYMEX offers commodity trading in agricultural commodities, metals, and energy commodities as well as an array of futures contracts and options contracts on interest rates, non farm payroll, environmental items, and Forex. Trading options in commodity futures trading in wheat, corn, oil, or gold futures can be a useful way of retaining the option to buy or sell futures on a commodity if the NYMEX commodity futures price moves as anticipated. On the other hand, if the futures price is subject to a market reversal the trader only needs to pay the price of the premium for buying puts or buying calls on a commodity. In order to maintain active trading in case of emergencies or natural disaster the NYMEX has built a backup trading floor and computer system outside of New York City. This was occasioned by the fact that the NYMEX headquarters were previously in the World Trade Center and were destroyed by the terrorist attacks of September 11, 2001.
Trading commodities can be very profitable. It also entails investment risk. Serious traders will always do fundamental commodity analysis appropriate to the type of commodity that they are trading. This will give the trader a broad view of the market and its possibilities. Then the trader will engage in technical analysis of commodity futures price movement with tools such as Candlestick pattern formations in order to profitably anticipate price movement.
Market Direction: How do you know whether to sell or hold when the markets are moving sideways? This answer becomes simplified when you can analyze the characteristics of the signals that are forming each day. As we have experienced over the past week, both the Dow and the NASDAQ has pretty well moved sideways. Many stocks have emulated the markets. The sideways movement of the market could either represent resting during uptrend or a change of investor sentiment before a downtrend occurred. For many investors, they do not have the visual capabilities of understanding which way the market might go during a sideways motion. The candlestick investor has the advantage of visually assessing whether the Bulls or the Bears are in control.
For high probability trading, the knowledge built into each candlestick signal represents the attitude of investors. As illustrated in the Dow chart, the past week demonstrated a flat trading range. Friday's hard selling would have induced profit-taking. However, knowing what each candlestick signal represents would have allowed the candlestick investor to reestablish some positions by the end of the day. This requires a trading technique that most investors do not ever master. Closing a position when it looked like it was time to sell and reestablishing the position when the indicators changed back around and indicated the buying was still intact.
For the investor that may not have been aggressive in selling positions, as the selling occurred in the markets on Friday, there was still an indicator that required confirmation. The tee line required a close below it to show that a change of investor sentiment had occurred. As witnessed, the buying came back into the markets late on Friday afternoon, closing the Dow and the NASDAQ above the tee line. The probabilities from that type of close represents a trend is still in its current direction. Had the Dow closed below the tee line at the end of the day, for those that did not close positions on the initial weakness would have been induced to close their positions at that time. This is not rocket science! This is using the candlestick signals and the confirming indicators that have proven to be high probability trade situations.
The Japanese Rice traders made using candlestick analysis very simple. The graphics on the charts make identifying panic selling at the bottom and exuberant buying at the top. When a stock price, currency, or commodity price starts attracting attention, start watching for a reversal signal. Wheat has reached record highs over the past few days of trading. The past week of trading saw the daily price moves start expanding. What does this illustrate? Exuberant buying! What do we want to watch for when we can identify exuberant buying? A candlestick reversal signal! Friday showed a large Bearish Harami after prices moved up the limit in the overbought condition. Mondays trading opens lower and formed a Doji. This is the trade set up that a candlestick investor wants to take advantage of. All the makings of a reversal are in place.
A weaker open on Tuesday would warrant shorting the position. What would weakness represent? The direction of a trend will usually move in the direction of how they open the price after a Doji. What would this chart scenario illustrate. A weaker open after a Doji that followed a huge candlestick reversal signal would also indicate the tee line was not going to act as support. Where could a pullback occur to? The 20 day moving average, or the 200 day/50 day moving average area. To get a better insight, the Fibonacci retracement numbers could be applied.
The important factor in the situation is knowing what a price will probably do if it opens weaker in this scenario. The more trade situations that can be established where the potential of a loss is greatly reduced, the higher the potential profit compounding effect can be applied to one's trading profits.
Private training sessions - There is potentially one spot available for the August 27 -- 29 private training session on Keuka Lake. The water is 11 warmer than normal, making both morning and afternoon swimming very refreshing. The water is crystal clear, the temperature ranges from 77 to 82 each day with a nice breeze. If you are serious about improving your trading abilities, a private training session, overlooking the clear waters of Keuka Lake, makes for an opportune time to gain valuable knowledge.
Chat session tonight for members at 8 PM ET.
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