Commodity Supply and Demand

Commodity Supply and Demand

Bywww.CandlestickForums.com

http://www.candlestickforums.com/

Fundamental analysis in commodity trading has to do with anticipating commodity supply and demand.

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Successful traders who sell commodity futures and those who buy commodity

futures learn and follow the various aspects of commodity production.



Gold futures are affected by the fact that gold mining companies are digging

deeper for gold in developed countries and exploring in politically unstable

regions of the world.



Corn futures are affected by drought, flooding, and the worldwide acreage

planted.



Oil futures are affected by disasters such as the BP oil spill in the Gulf of Mexico.



Commodity supply and demand is the basis of commodity price. Anticipated commodity supply and demand is the

basis of commodity futures price.



Commodity demand rises for industrial metals like copper and energy

commodities such as natural gas during an economic recovery.



Thus commodity supply and demand together determine commodity price.



To understand how commodity supply and demand, as well as market factors,

determine commodity prices a new trader ought to consider Commodity and

Futures Training.



For the more advanced trader in commodity options a course such as

Options Training with Stephen Bigelow can be very useful.



Traders in commodities buy futures and sell futures.



Buying puts, buying calls, selling puts, and selling calls on commodity futures is also done and can be profitable as well.



Trading supply and demand has to do with fundamentals of the individual

stocks, options markets, commodities, and futures of the equity market that

one is trading.



Technical trading has to do with anticipating the actions of others in the

market.



Unlike trading other equities basic supply in the case of commodities really

has to do with just how much of the commodity there is for sale, not how

much stock, for example, is available at a given price.



Demand for agricultural commodities has to do with how many hungry people

there are and how much they can pay for rice, wheat corn, milk, eggs, and

meat.



Demand for energy commodities goes with a thriving economy as well as

severe northern winters.



It drops during a recession and when a northern hemisphere January is mild.



Successful options trading in commodity futures is just as strongly related to

commodity supply and demand as is buying and selling commodity futures.



Buying options gives the buyer the option but not the obligation to

purchase or sell if commodity futures price movement is beneficial.



Selling options on commodity futures entails the same set of risks as buying

and selling stock options.



It tends to be more profitable over the long run but can result in occasional

substantial losses.



In commodity options, just like stock options, it is the large investment houses and companies with deep pockets who typically engage in options trading of

commodity futures.



All trading in futures and options may ultimately depend upon supply and

demand.



However, the business of buying and selling at the optimal price is most

commonly and most efficiently assisted by use of technical analysis tools such as

Candlestick analysis.



In the end everyone knows the fundamentals and it is the ability to predict the sum total of what other traders will do that leads to profits.



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Commodity Supply and Demand