In commodity futures trading is a type of investment, where you can make the money by speculating on the price of certain goods up or down in the future. Raw materials are usually the main things people use every day. In most cases, these products are the foundation for a modern society.
When it comes to certain products traded on the futures market, it must meet certain conditions to make it allowed the negotiation. A condition is that the goods must be standardized. In the negotiation of agricultural and industrial products, the goods must be negotiated in your raw materials and unprocessed. In this case, wheat can be traded on the futures market, but no flour.
Another condition that goods must meet a certain type that is perishable must have adequate life. The reason for this is that these products are sold with deferred delivery scheduled at a later date. Therefore, it can not require a long life so that goods can be delivered with its quality is still good and intact. Another condition that the product must meet certain, it is that it must have a price that changes often, which creates uncertainty and opportunity for profit.
L story behind the commodity futures trading has changed the need for farmers to earn more from each harvest. Before futures commodities began, farmers have always been at the thank you for your provider when s acts in the pricing and sale of their crops. Dealers usually set the price and the farmers can not to anything other than accept the terms. D a way farmers were exploited by traffickers and if some form of sale of their crops.
In seeking to have a more equitable system of doing business, farmers have begun offering the collection for future buyers. Farmers have begun to take its own terms, for future harvests to dealers. The transaction consists of products offered as a fixed price for delivery to a specified date. Contracts have been signed between farmer and interested buyer to specify a certain amount of goods to be delivered at some point in the future. In this system, which is TODAY Today known as futures trading began.
It was later in 1878 as a central facility to deal with commodity contracts was established in Chicago. In this installation, farmers and merchants of first started in the local trade in grain, which was delivered immediately after an agreement on price. It finally evolved into futures, when farmers began to commit future harvests to dealers interested u200b u200bdispostos d buy for s ensure that their grain supply is maintained in the future.
Previously, futures trading is to first few agricultural products such as cereals. But later, a large number of others joined in. Now there are markets Commodity Futures Trading dealing in precious metals such as gold, silver and platinum. There is also a futures market for cattle and livestock, as well as energy products like oil and natural gas. He then include trade in coffee futures, orange juice advertising industry, such as wood, cotton and even the rate instruments with currencies and interest stocks.
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