Watching Futures Like A Commodity ManagerWhat is the difference between ordinary commodity trading and a commodity manager? A commodity trader looks to make money for himself. A commodity manager makes his or her living earning money in the stock market. This of itself makes for a compelling reason to look at the way that commodity managers approach the market and how they view events that affect various commodities.
Stock Options and The Housing Market
Stock option trading strategies have become a closely monitored item among many commodity managers. Once the strength of the economy, housing has become a serious liability and a consistent negative impact on stock prices. Because of this negative influence, the housing sector will continue to have a disruptive effect on stock futures.
Commodity Managers and Hurricanes
The mild start to the 2007 hurricane season has actually been on the minds of many commodity managers in futures trading. Without an active hurricane season, commodity managers are seeing orange juice futures plummet. Orange grove owners are no doubt waiting to sell futures contracts, hoping to see an upturn in prices. Additionally, speculators holding naked selling naked puts are likely to extremely nervous as a storm-free season could leave them with huge losses.
Other Weather Related Futures
With an unusually long heat wave for the Midwest growing regions, commodity managers are seeing prices continue to move upward in soybean and corn futures. These prices will continue to climb until the region sees relief from the soaring temperatures.
Wheat futures are another commodity that continues to rise. While a pricing correction may be close at hand, fears of a worldwide wheat shortage will keep the price of futures orders high. Another strong performer, coffee futures are viewed by many commodity managers as a commodity on the verge of a breakout.
Precious metals like gold and silver, along with copper always occupy a place of interest for commodity managers. Futures brokers routinely monitor these metals because of their close ties with the American economy. Futures trading in copper, as of late, has been in somewhat of a defensive position. Copper is a strong indicator of the economy. It normally rises or falls based on the strength of the economy, both in the US and in the world.
Silver and Gold futures tend to inversely track the economy, especially in the US. When the economy and the US dollar struggle, gold and silver prices usually rise. To start the second half of 2007, commodity managers have actually seen the prices for gold and silver futures drop as the dollar has gained some strength.
What Does It All Mean?
Commodity managers look for any advantage they can find when trading commodities. It doesn’t matter whether they are trading in pork bellies or crude oil futures, finding trends before they occur means finding profits. This idea is true not only for commodity managers but for your garden-variety investor as well. If you can predict what is going to occur in the future, you can more profitably invest in it. The key to this knowledge is extensive research and a watchful eye on the events that affect each particular commodity.
Commodity managers make their living knowing what will happen at the futures exchanges before it occurs. By understanding the dynamics that affect various commodities, it is possible to foresee changes in trends and place futures orders based on solid research and a watchful eye on both the weather and the news. Seeing futures the way an expert does can help even the everyday investor to profit from futures trading.