An Initiation To Product Futures Trading
How It All Began
Commodity futures trading, as we know it today, came about for the very first time in Japan in the 17th century, where rice was traded in future agreements. It was a period when farmers and purchasers came together and chose to commit to each other future rates worked out on appropriate terms in exchange of grain for money. Thus began product futures trading, as we know it today.
What Are Commodity Futures?
Today, most of the futures product trading exchanges are set up in a comparable way. Members of the exchange do the actual trading on the flooring. Stock stands for equity in a public company, and can be held as long as you desire, whereas commodity futures trading contracts have a defined life. In the past, people used commodity futures trading techniques usually to hedge threats and variation in rates, or to benefit from them, and not for actually purchasing into the commodity. The concept is that an agreement requires shipment of the commodity within a certain predefined time period unless it becomes null and space. The individual purchasing the product futures trading agreement agrees to purchase the defined commodity at a repaired rate on a specific date. The person selling the product futures trading agreement consents to offer the commodity at a certain rate on a particular date. As time goes on, the agreement rate changes, and this brings about revenue and loss in the trade. It is to be noted, nevertheless that, the shipment usually does not occur. The contract is generally liquidated before its expiration. The whole trade is based upon the concept that there will be no delivery, however we can speculate on the rate of the underlying product at a future time to make money. Product futures trading is done all over the world now.
Various Types Of Commodities
There are lots of types of products that are sold the international market. These can be really broadly classified into the following:
- Precious metals like Gold, Platinum, Silver, etc.,
- Metals such as Aluminum, Copper, Steel, and so on,
- Agricultural items like Rice, Corn, Oils, Cotton, Wheat, etc.,
- Soft products such as Cocoa, Coffee, Tea, Sugar, etc.,
- Livestock like porkbellies, cattle, and so on,
- Energy commodities like Crude oil, Gasoline, Gas, and so on
Product futures trading, as we know it today, came about for the very first time in Japan in the 17th century, where rice was traded in future agreements. Stock stands for equity in a public company, and can be held as long as you desire, whereas product futures trading agreements have actually a specified life. In the past, individuals utilized product futures trading methods usually to hedge risks and fluctuation in costs, or to take benefit of them, and not for actually buying into the commodity. The individual purchasing the product futures trading contract concurs to purchase the defined product at a repaired price on a particular date. The person offering the product futures trading contract concurs to sell the commodity at a particular cost