Agree That Virtue Has Become a Commodity

Commodities trading offer an excellent chance for other folks to make an investment in. Trading in futures contracts offers folks the unique opportunity to speculate in something aside from stocks. Though sometimes they also operate in an identical manner, commodities trading presents a different methodology of earning income for the amount invested on it.

There are particular advantages that commodities trading offers to interested financiers. One of them is that such instruments are thought to be highly leveraged investments. For a stockholder to possess a futures contract, he only desires to invest a little fragment of the value of the contract. Most financiers only invest about 10 % of the contract's price in return for trading them. This way, financiers might possibly be able to trade bigger amounts of commodities than if he ever acquired the commodities outright. (Maitland: 165)

If he expected the movement of the costs of the commodities traded properly, the financier has an excellent chance of profiting ten-fold for an original investment of 10 % of the particular futures contract's worth. That's how leverage works to a benefit of the financier in commodities trading.

Another advantage of futures trading is that it is basically a paper investment. Although futures trading involves certain commodities, the investor doesn't have to worry about how to take care of the produce himself. Trading is done with the futures contract changing hands instead of the commodity itself. This makes it quite convenient since the investor doesn't have to worry about where to store and keep the commodities being traded for the meantime.

Another virtue of commodities trading is that commodities trading is that the futures contracts being traded are thought to be extremely liquid. This implies that there are big amounts of contracts being traded in the market on a regular basis. Orders can be placed quickly and they can be acquired or sold in a corresponding fashion. There are always many available purchasers and sellers for the futures contracts, whatever commodity it may be.

One good thing about the futures trading market is that it enjoys fairer trading as compared with stock and share trading. Trading in the futures exchange can be very vocal as trading is done in the midst of shouting of “Buy!” or “Sell!”. Another thing is that it is more difficult to get insider information in futures trading that seems to be a big problem in the price manipulation in stock trading. (Skapinker\: 287)

Commissions on futures markets have a tendency to be smaller in comparison to other trading markets. The commissions are sometimes paid after the position has finished. Dependent on the standard of service, the commissions for brokers can be as low as 5 bucks to as high as 2 hundred per exchange.

For an investor, it may be quicker to make money on futures trading. Aside from the leverage provided by futures, the markets tend to move more quickly as compared to cash markets. But this can also work against the investor since the quick ...