Commodity Futures Trading For Beginners 商品期货入门.docx

1、Commodity Futures Trading For Beginners 商品期货入门http:/www.rb- Commodity Futures Trading for Beginners By Bruce Babcock Table of Contents1- Introduction2- Commodity Trading As An Investment Vehicle3- The Risks of Trading4- The History of Trading5- The Trading Process6- Making A Trade7- The Truth About

2、the Commodity Markets8- Separating the Winners and Losers9- Learning To Trade Correctly10.1- Elements of a Successful Trading Plan-Getting Started10.2- Elements of a Successful Trading Plan-Trade With The Trend 10.3- Elements of a Successful Trading Plan-Cut Losses Short10.4- Elements of a Successfu

3、l Trading Plan-Let Profits Run10.5- Elements of a Successful Trading Plan-The Markets You Trade10.6- Elements of a Successful Trading Plan-Manage Risk11- Psychological PitfallsIntroductionMany people have become very rich in the commodity markets. It is one of a few investment areas where an individ

4、ual with limited capital can make extraordinary profits in a relatively short period of time. For example, Richard Dennis borrowed $1,600 and turned it into a $200 million fortune in about ten years.Nevertheless, because most people lose money, commodity trading has a bad reputation as being too ris

5、ky for the average individual. The truth is that commodity trading is only as risky as you want to make it.Those who treat trading as a get-rich-quick scheme are likely to lose because they have to take big risks. If you act prudently, treat your trading like a business instead of a giant gambling c

6、asino and are willing to settle for a reasonable return, the risks are acceptable. The probability of success is excellent.The process of trading commodities is also known as futures trading. Unlike other kinds of investments, such as stocks and bonds, when you trade futures, you do not actually buy

7、 anything or own anything. You are speculating on the future direction of the price in the commodity you are trading. This is like a bet on future price direction. The terms buy and sell merely indicate the direction you expect future prices will take.If, for instance, you were speculating in corn,

8、you would buy a futures contract if you thought the price would be going up in the future. You would sell a futures contract if you thought the price would go down. For every trade, there is always a buyer and a seller. Neither person has to own any corn to participate. He must only deposit sufficie

9、nt capital with a brokerage firm to insure that he will be able to pay the losses if his trades lose money.In addition to speculators, both the commoditys commercial producers and commercial consumers also participate. The principal economic purpose of the futures markets is for these commercial par

10、ticipants to eliminate their risk from changing prices.On one side of a transaction may be a producer like a farmer. He has a field full of corn growing on his farm. It wont be ready for harvest for another three months. If he is worried about the price going down during that time, he can sell futur

11、es contracts equivalent to the size of his crop and deliver his corn to fulfill his obligation under the contract. Regardless of how the price of corn changes in the three months until his crop will be ready for delivery, he is guaranteed to be paid the current price.On the other side of the transac

12、tion might be a producer such as a cereal manufacturer who needs to buy lots of corn. The manufacturer, such as Kellogg, may be concerned that in the next three months the price of corn will go up, and it will have to pay more than the current price. To protect against this, Kellogg can buy futures

13、contracts at the current price. In three months Kellogg can fulfill its obligation under the contracts by taking delivery of the corn. This guarantees that regardless of how the price moves in the next three months, Kellogg will pay no more than the current price for its corn.In addition to agricult

14、ural commodities, there are futures for financial instruments and intangibles such as currencies, bonds and stock market indexes. Each futures market has producers and consumers who need to hedge their risk from future price changes. The speculators, who do not actually deal in the physical commodit

15、ies, are there to provide liquidity. This maintains an orderly market where price changes from one trade to the next are small. Rather than taking delivery or making delivery, the speculator merely offsets his position at some time before the date set for future delivery. If price has moved in the r

16、ight direction, he will profit. If not, he will lose.In his book The Futures Game, Professor Richard Teweles explains the functions of the futures markets: In addition to reducing the costs of production, marketing and processing, futures markets provide continuous, accurate, well-publicized price i

17、nformation and continuous liquid markets. Futures trading is thus beneficial to the public which ultimately consumes the goods traded in the futures markets. Without the speculator futures markets could not function.Since speculators perform the valuable functions of providing liquidity and assuming

18、 the risk of price fluctuation, they can earn substantial returns. The potentially large profits are available precisely because there is also a risk of substantial loss.1999 by Reality Based Trading Company All Rights Reserved.Commodity Trading As An Investment VehicleThere are many inherent advant

19、ages of commodity futures as an investment vehicle over other investment alternatives such as savings accounts, stocks, bonds, options, real estate and collectibles.The primary attraction, of course, is the potential for large profits in a short period of time. The reason that futures trading can be

20、 so profitable isleverage.For instance, if you had a $10,000 futures trading account, you could trade one S&P 500 stock index futures contract. If you were going to buy the equivalent amount of common stocks, you would currently need about $350,000, thirty-five times as much.Lets say you decided tha

21、t the stock market was going to go up. You could invest $350,000 and buy individual stocks equivalent to the S&P index, or you could buy one S&P futures contract. Buying a futures contract is the same as betting that the S&P index will go up.If you had made your move on the first trading day of Sept

22、ember, 1996 and held your position for two weeks, your common stock position would have been worth about $20,000 more than when you bought it, a gain of about six percent. Not bad for only two weeks. If you had taken the futures route, however, you would have made the same $20,000, which would have

23、been a 200 percent gain on the $10,000 margin required in your futures trading account.That is an actual example of the tremendous returns you can earn in a short period of time trading futures. Of course, you can lose money just as fast if you trade in the wrong direction. Suppose you had thought t

24、he stock market was about to go down and you had sold a futures contract instead of buying one. If you had valiantly held it for two weeks, you would have lost $20,000. Thats a good example of why you must exit your trades quickly if they start to move against you.Another advantage of futures tradin

25、g is much lower relative commissions. Your commission on that $20,000 futures trading profit would have been only about $30 to $50. Commissions on individual stocks are typically as much as one percent for both buying and selling. That could have been $7,000 to buy and sell a basket of stocks worth

26、$350,000.While profits can be large in commodity trading, it is not easy to make consistently correct decisions about what and when to buy and sell.Commodity speculation offers an important advantage over such illiquid vehicles as real estate and collectibles. The balance in your account is always a

27、vailable. If you maintain sufficient margin, you can even spend your current profit on a trade without closing out the position. With stocks, bonds and real estate, you cant spend your gains until you actually sell the investment.As you will see, commodity trading is not particularly complicated. Un

28、like the stock market where there are over ten thousand potential stocks and mutual funds, there are only about forty viable futures markets to trade. Those markets cover the gamut of market sectors, however, so you can diversify throughout all important segments of the world economy.In futures trad

29、ing, it is as easy to sell (also referred to as going short) as it is to buy (also referred to as going long). By choosing correctly, you can make money whether prices go up or down. Therefore, trading a diversified portfolio of futures markets offers the opportunity to profit from any potential eco

30、nomic scenario. Regardless of whether we have inflation or deflation, boom or depression, hurricanes, droughts, famines or freezes, there is always the potential for profit trading commodities.There are even tax advantages to making your money from futures trading. Regardless of the actual holding p

31、eriod, commodity profits are automatically taxed as sixty percent long-term capital gains and forty percent short-term capital gains. The current maximum capital gains rate is thirty-three percent, somewhat less than the maximum rate for ordinary income. To the extent that capital gains tax rates ar

32、e reduced in the future, commodity traders will benefit. If a distinction is re-established so that taxes on long-term gains are lower than on short-term gains, commodity traders will benefit.1999 by Reality Based Trading CompanyAll Rights Reserved.The Risks of TradingBefore becoming too excited about the substantial returns possible from commodity trading, it is a good idea to take a long, sober look at the risks. Reward and risk are always related. It is unrealistic to expe