Posts Tagged ‘commodities futures’

THE CHANGING COLOURS OF COMMODITY EXCHANGES

Trading Hours is basically the hours of a day where trading of a futures contract can take place in an exchange. Again, this varies widely according to the asset being covered. Some commodities futures are traded only a couple of hours a day and some index futures are traded 24 hours a day non-stop.

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With a number of exchanges around the world, trading takes place almost 24 hours a day, except on weekends. There are at least a dozen major exchanges that serve as a marketplace for commodities worldwide. Each of these specializes in certain commodities, while others trade in whole different set.

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Additionally, as the side effect of being such a huge market, the market is extremely liquid and numerous transaction volumes takes place daily.

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Instruments (contracts) traded on commodity exchanges include futures, options and other derivatives. Agricultural products, precious metals, industrial metals, and fossil fuels and other forms of energy are other products are among the primary goods that are traded in these exchanges.

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A concept is emerging for trading in movie futures. Media Derivatives, a division of Veriana Networks, and Cantor are racing to set up the first US exchanges to offer futures on movie box office receipts. They are closing in on their goal of offering hedging — and speculation — instruments to investors and movie studios wary of audience fickleness and box office volatility.

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The basic purpose of commodity futures markets is to allow suppliers/users of the product to sell/buy such contracts, whereby they can “lock in” a future price of the commodity and thereby eliminate the uncertainty and risk of doing business while facing an unknown future price. However, commodity trading has moved to electronic trading from open outcry systems, following the trend in financial securities trading. Electronic trading has been found to affect areas like bid-ask spreads, transaction costs and speed of information dissemination.

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Commodity trading market is a lucrative field for investors. It generally refers to the future market, which empowers the traders investments, needs and can be gainful, expensive and enjoyable.

Additional Directional Movement (ADX) Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

Topic is Additional Directional Movement (ADX) Part 1.

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Additional Directional Movement (ADX)

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We would touch upon aspects like what is ADX, what does it mean for Investors and what are the basics of ADX.

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As futures markets are volatile in nature & remain in over bought/-sold condition for a period of time, there is a need to confirm a move with an additional confirmation signal.

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It is important to predict the trend of the commodities futures & the analyzing the strength with applying technical tools.

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Reading directional signals from price alone can be difficult, & it is here where this indicator “Additional Directional Movement” provides an early signal to guide investor in right way.

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This indicator was created in 1978 by J. Welles Wilder, who also created the popular Relative Strength Index.

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THE BASICS

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ADX differentiates between strong and weak trends, allowing trader to enter only the strongest trends.

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The positive & increasing values on the Y-axis of the indicator measures how strongly price moves upward; the negative or decreasing figures measure how strongly price moves downward.

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· When the +ADX is dominant and rising, price direction is up.

· When the -ADX is dominant and decreasing, price direction is down.

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In other words, the -ADX rises when price falls, and falls when price rises.

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Next Blog we would read about what are the features of ADX and the current scenario of the ADX in the market.

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Stay Tuned for more on this.

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Economic Indicators – Leading the World Part 2

Hello Friends here we come up with an extension of our previous blog, ECONOMIC INDICATORS… “Leading the World” Part 1.

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Economic Indicators - Leading the World Part 2

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In previous Blog, we had touched upon the aspect like

what are Economic Events & Indicators and important sources of data provider for calculating & determining economic indicators.

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However in this Blog, we would try to know about the classified categories of Economic indicators in details and what is Time Era.

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Classified Categories:

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1. Leading indicators:

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These indicators are to forecast trends of the overall economy.

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The indicators included in the figure are:

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interest rate spread, M2 money supply, average manufacturing work week,

manufacturers’ new orders, S&P 500, average weekly unemployment claims,

vendor performance, housing permits, consumer expectations and

manufacturer’s new orders for non-defense capital goods.

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2. Lagging indicators:

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An indicator to generate transaction signals or to confirm the strength of a given trend.

It is a measurable economic factor, for example, corporate profits or unemployment that changes after the economy has already moved to a new trend.

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3. Coincident indicators:

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It provides information on the current state of the economy.

For example, coincident indicators move up when GDP is growing and down when GDP is shrinking.

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This indicator varies directly with, and at the same time as, the related economic trend.

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The four economic statistics comprising the Index of Coincident Economic indicators are

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– Number of employees on non-agricultural payrolls,

– Personal income less transfer payments,

– Industrial production,

– Manufacturing and

Trade sales.

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Time Era:

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Knowing when each piece of information will be released is important to successful trading.

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The economic calendars are found on many websites.

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These figures helps to decide how to trade using these events, it can help explain unanticipated price actions during those periods.

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These indicators play a vital role in determining the trend or movement of the stock market & the commodities futures.

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It has been seen many times that when a positive data of these indicators like GDP or Industrial Production comes into picture & looks promising,

the trade of currencies like Euro, USD, INR; precious metals like Gold, Silver, base metals of Copper, Zinc, Lead show a positive move & short-term rally immediately.

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Stay Tuned for more and more on this 🙂

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However For More latest Industry,Stock Market and Economy News Updates, Click Here

ECONOMIC INDICATORS… “Leading the World” Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series”.

 

Topic is ECONOMIC INDICATORS… “Leading the World”.

Here, we would go through the Brief of like what are Economic Events & Indicators and important sources of data provider for calculating & determining economic indicators.

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ECONOMIC INDICATORS… “Leading the World”

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Economic Events & Indicators are statistics that precede an economic event.

 

The goal is to track the economy & derive a forecast for future performance.

 

Economic indicators have tremendous potential to generate volume and to move prices of commodities futures as well as the financial markets including Forex.


Tools of Construction: This would include separate sections of statistical methods including

– Calculating indices and re-basing them,

– Differences between arithmetic and geometric averages,

– Standard deviations,

– Regression analysis,

– Correlation and causation,

– Margins of error in statistics calculations and

– What this means for interpretation, subsequent revisions and why they happen.

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Economic indicators include various indices, earnings reports, and economic summaries.

 

Examples : unemployment rate,  housing starts,  Consumer Price Index (a measure for inflation),  Consumer Leverage Ratio,  industrial production,  bankruptcies,  Gross Domestic Product,  broadband internet penetration,  retail sales,  stock market prices,  money supply changes etc;

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The important sources of data provider for calculating & determining economic indicators are like:

– Bureau of Labor Statistics,

– Census of Construction Industries,

– Bureau of Economic Analysis &

– Reserve Bank.

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The value of the indicator data is considered important if it presents new information, or is instrumental to drawing conclusions which couldn’t be drawn under other reports or data.

 

Each indicator is marked with “H”-“M”-“L” (High-Medium-Low), according to its level of importance, as commonly considered.

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Next Blog we would try to know about the classified categories of Economic indicators in details and what is Time Era.

Stay Tuned for more and more on this 🙂

 

However For More latest Industry,Stock Market and Economy News Updates, Click Here