Futures PriceA futures price in commodity trading is the price on which commodities traders agree for a commodity futures contract at a given commodity delivery date. The futures price may vary significantly from the current market price, the spot price, for the commodity. The futures price of a commodity is determined by the marketís assessment of commodity supply and demand in the coming months and years. Traders will use both fundamental analysis and technical analysis in order to predict prices and guide their trading in commodities. In beginning commodity futures trading traders will be well served by taking Commodity and Futures Training. This training will be useful for beginners and seasoned traders. Developing skill in the use of Candlestick analysis will help the trader anticipate futures price movements and profit from the inherent variability of commodity prices.
Futures price variability is based on projected supply and demand. Eventually the commodity price, the spot price, will be determined precisely by supply and demand. In futures trading of commodities the use of technical analysis tools such as Candlestick pattern formations will help the trader anticipate the marketís reactions to changes in fundamentals. Candlestick patterns have been used for centuries of commodities trading. Because patterns are repetitive both market trends and market reversal can be predicted with a great deal of accuracy. Using these tools made rice traders rich in ancient Japan and can profit the trader in commodities today as well.
In trading the commodity futures of oil futures, gold futures, corn futures, or in live cattle commodity trading traders will need to watch commodity news reports and the current NYMEX commodity futures price. This is part of fundamental commodity analysis. The point is, obviously, to anticipate changes in the futures price of a given commodity. The trader can buy commodity futures and sell commodity futures at any point during a futures contract up until the delivery date. Therefore it is possible to profit from variation in the futures price of a commodity even if it only takes place over a few days. Staying current with market fundamentals will put the trader in the right commodity market at the right time. Analyzing Candlestick pattern formations will help the trader execute trades at the most opportune time for both buying commodities and selling commodities. Commodities markets are made up of many traders with many opinions regarding the same fundamental information. The sum total of their trades tends to be repetitive and falls into patterns. Successfully using this information is the essence of successful Candlestick trading tactics.
Another means of trading the futures price of a commodity is by trading options. A trader can buy or sell calls or puts on commodity future contracts. As with all options trading the trader who buys calls or put is purchasing the option to buy (with a call option) or sell (with a put option) a futures contract at an agreed upon price, the strike price. Unlike with buying or selling futures the purchaser of options is not obligated to carry through unless conditions are profitable. A useful course for learning about options trading commodities is Options Training with Stephen Bigalow.
What is the major advantage candlestick investor's have over other technical traders? They can see what is actually occurring in investor sentiment now! When analyzing the market trend, there is a very simple process for having a relatively accurate feel for which direction the market is moving.
What is the most powerful aspect of candlestick analysis? The signals themselves! The Japanese Rice traders spent hundreds of years observing, analyzing, and utilizing the signals profitably. The assumptions are very simple. Witnessing a bullish signal in the oversold conditions as an extremely high probability of indicating a reversal is about to occur.
Friday, the Dow experienced a Bullish Engulfing signal in the oversold condition. This was following a Doji two days prior. Both of these signals were providing indications the Bulls might be trying to bottom the market. However, another simple indicator is the T-line. The simple rule for trend analysis is the trend will remain in progress until the appearance of a candle reversal signal and a close above the T-line.
Today's trading made it obvious the Bulls did not have enough strength to push the market through the tee line. What assumptions can be made? The downtrend is still in progress. And the assumption can be made the Bulls are starting to step in in this area. The downtrend is still in progress! Fridays bullish signal was negated today. The strategy becomes very simple.
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