Trading futures and options can be somewhat daunting at first; however, a little bit of education can help everyone from the long-time producer to seasoned investors better understand the commodities market. The Bower Trading team is happy to consult with you and provide both information and insight. We’ll also help you establish a personal strategy and be with you during all stages of the process to assure your personal goals are met. To get you started, here’s a little Futures 101.
Futures markets are designed to protect against wild price fluctuations in the cash market by buying or selling a contract for a given amount of the commodity in the future. This commodity can be anything in one of the following categories: physical commodities, interest rate products and index products.
These products are bought and sold on centralized exchanges such as the Chicago Mercantile Exchange, the Intercontinental Exchange and the New York Mercantile Exchange. These exchanges allow everyone from the small investor to the large multi-national bank to buy and sell these products via open out cry and the electronic market. Open out cry is a public method of price determination that allows for a known market to all participants.
When an investor buys (goes long) a contract, they will profit when the price of the contract rises. On the flip side, when one sells (goes short) a contract they will profit when the price declines. This is different for investors who are familiar with the up-tick rule in the stock market, for in order to sell a contract it does not have to make an up move first.
All markets move in a different manner based on information that varies from weather reports in South America to the latest report of farm acreage. Each of the commodities markets has a different flair and tone that can only be grasped with experience and education in that given market. The first step in learning how to trade is to become comfortable with the basic terms and concepts. Click here for common terminology.
The Market Letter will give you an intimate knowledge of these current market conditions from an experienced professional that will allow you to view the market like never before.
As the investor decides the trades, Mr. Bower and account executives personally give advice to each of their clients as to the continuing changing market conditions in any given situation.
Our staff has decades of experience from both behind a desk and in the production aspect, thus allowing you to make the most informed decisions possible.