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Commodities Trading

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  1. steveyB steveyB is offline

    South Bend, IN
    United States

    Posts: 63
    Joined: Mar 08

    Oct 19th, 2008 (10/19/2008 11:54pm)

    Getting bored with poker, might start trading commodities just for fun/experience. I have a degree in finance and have read alot of investment literature, but no trading experience. my buddy does pretty well at it and is gonna show me the ropes. any advice?
  2. poncho veelo poncho veelo is offline

    Hood River, OR
    United States

    Posts: 2,372
    Joined: Aug 05

    Oct 19th, 2008 (10/19/2008 11:56pm) in reply to steveyB

     
    Originally Posted by steveyB View Post

    Getting bored with poker, might start trading commodities just for fun/experience. I have a degree in finance and have read alot of investment literature, but no trading experience. my buddy does pretty well at it and is gonna show me the ropes. any advice?

    GG bankroll for u. WAY to volatile now to jump in.
  3. LuckiernU LuckiernU is offline

    Inver Grove Heights, MN
    United States

    Posts: 920
    Joined: Aug 05

    Oct 19th, 2008 (10/19/2008 11:57pm) in reply to poncho veelo

    dont use $$$ you cant afford to lose.
  4. volerlarue volerlarue is offline

    Posts: 628
    Joined: Jan 06

    Oct 20th, 2008 (10/20/2008 12:03am) in reply to LuckiernU

    Okay, pork belly prices have been dropping all morning, which means that everybody is waiting for it to hit rock bottom, so they can buy low. Which means that the people who own the pork belly contracts are saying, "Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip!

  5. Frank1The1Tank Frank1The1Tank is offline

    Posts: 3,153
    Joined: Apr 07

    Oct 20th, 2008 (10/20/2008 12:03am) in reply to steveyB

    teh var1ances are pretty hi rite now
     
  6. the_schmenx the_schmenx is offline

    Burgh
    Netherlands

    Posts: 5,194
    Joined: Jan 05

    Oct 20th, 2008 (10/20/2008 12:05am) in reply to steveyB

  7. time4badbeat time4badbeat is offline

    WI
    United States

    Posts: 4,550
    Joined: Nov 06

    Oct 20th, 2008 (10/20/2008 12:06am) in reply to poncho veelo

     
    Originally Posted by poncho veelo View Post

    GG bankroll for u. WAY to volatile now to jump in.

    Isn't that the reason to do it right now? Profit off the intraday swings?
     
  8. ajedrez ajedrez is online now

    Ardmore, PA
    United States

    Posts: 2,483
    Joined: Apr 06

    Oct 20th, 2008 (10/20/2008 12:13am) in reply to Frank1The1Tank

    commodities trading is highly leveraged, meaning for a couple of K you literally can control tens of thousands of dollars worth of a commodity or contract. This is a double edged sword.

    Example

    crude oil contract = 1000 barrels of oil

    margin required to purchase an e-mini futures crude oil contract (not exactly sure of the top of my head) but its around 4-6k

    oil prices=70 thus one contract 1000 barrels x 70 = 70k

    for 4k you thus control 70k worth of oil.

    Say oil goes up 2 dollars in a day $2 per barrell times 1000 = 2k profit on your 4k investment. Not too shabby. BUT......

    If oil falls 2 dollars in a day your out 2k, and your margin falls below whats called the "maintenance margin" which is the amount your required to put up to maintain your position. So your balance is reduced to 2k, and youll get a call from your broker telling you to either send them the money to get your margin back up, or they will liquidate your position for you. In very volatile markets, this can mean huge swings very very quickly, and if your not bankrolled or have tight stops or a rigid system in place, this can mean getting wiped out very quickly.

    There are people who have ran up five figure accounts to millions of dollars, and many others who have thousands or even millions of dollars just as quickly, if not faster. Definitely something you need to be bankrolled for. GL.
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