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Commodities are raw materials that will make
their way into the economy and will react much sooner than the stock
market. Look at building materials.
Copper and Lumber markets will move up after February since home
construction and wood manufacturing and products like electrical wire,
copper pipes, building materials for new home construction.
This should create some great trading opportunities in the future.
Traders that are looking for a pure commodity play, then you should
consider an ETF that invests in just the Futures markets
The energy markets consists of Crude Oil, Gasoline, Heating Oil and
Natural Gas. These exchange traded funds can become just like a news
stock when the commodity is in the news. When oil was heading to the
upper $140 range, the reporters could not stop talking about oil. Many
traders got into this rise in Oil prices by participating in oil ETF's.
A trader needs to apply good risk management of their trading capitol
to survival, even with ETFs.
You can check out the agricultural grains sector it has many commodities.
The larger ones are corn, soybeans, wheat, ice, and sugar. Much of our
grain supplies go to the farmers that use it to feed livestock. The
most popular grain ETF is the PowerShares DB Agriculture Fund (DBA).
This fund holds a basket of agricultural contracts on wheat, soybeans,
corn and sugar.
Take a look at the metals sector has been great for the last couple of
years while gold has been going up. This sector consists of gold,
silver, platinum and copper. Some of these metals are used for
industrial applications while others are used for the making of
jewelry, dental, investing futures. Traders that are looking for an
ETF that holds businesses in the mining and production of metals,
traders should look at Market Vectors Gold Miners (GDX).
The Futures markets allow almost 24-hour trading, but the ETFs will only
trade while the U.S. equities market is open. This can be a
disadvantage to traders and they should protect themselves or take
advantage of price after hours
One of the benefits of trading in the ETF markets traders can limit their
risk by buying smaller share sizes. You can buy 5, 10, 40, 100 or any
amount of share you want to. In the Futures markets, you are
restricted to the size of the contract and you can't split them up.
This can create more risk than most traders will except. Learning
commodity prices and
yearly trends can give traders the edge over the average investor. You
should see moves much sooner than others who don't follow commodities. |
