Commodities and Futures Guide.com

Institutional investors with more than $200 billion plus assets have invested in hedge funds and are using Risk Metrics’ to monitor the risks associated with their investments. These investors, including pension funds, sovereign wealth funds and fund of hedge funds, account for almost 20% of assets under management in the hedge fund industry.

These buy side investors can use Hedge platform community to access tailor made risk reports from Risk Metrics and aggregate position-based risk information across their hedge fund portfolios. Moreover, the hedge funds are invited to provide this information to Risk Metrics free of charge.

Brian Schmid, head of Risk Metrics Group’s alternative investments business strategy, told Hedge Funds Review over 1,000 hedge funds were eligible to provide information to HPC. He said more than 200 hedge funds representing over $350 billion in assets under management have already signed agreements to participate in HPC.

Risk transparency and reporting are rising up the agenda for institutional investors. According to a survey by EDHEC Risk and Asset Management Research Centre, 92% of investors believe the quality of hedge fund reporting is an important signal of a fund’s overall quality and pivotal for decisions about hedge fund investment.

Institutional investors can use HPC to generate a number of risk reports on their hedge fund investments, including Value at Risk and stress tests. Risk Metrics is working on including liquidity risk reports within the service. In the future, the company said counterparty risk reports could also be added to HPC.

These are four common things that an individual may focus in order to be successful in the investment industry

·      Lack of a trading plan

One should have proper plan in place before stepping into the investment world. Analyze their risk and return profile before making a decision. Moreover, they should also have a clear idea of when they should enter into the markets and exit.

T Too much risk

Try to be risk averse and don’t invite yourself into trouble by taking huge leverage positions. It’s was because of extensive leverage LTCM failed to cover up its positions.

L   Failure to control Risk

Have a sound internal auditing and risk management team in place. Constantly focusing on the kind of exposure which a fund or their investment may be exposed too and try back you investments by investing in alternative investment avenues which would have low correlation with the traditional investments

· L Lack of discipline

Abide and comply by the standards set. Try to focus on the fundamental aspects of the investment you make rather than making a decision based on the insider information ( noise trading).Understanding the know-hows of investments and trading according would eventually end up fruitful.

This is an article about how the commodities perform even in tough economic conditions.Experts have shared their views about investments in the commodities and they say that recession has not aborted the supercycle which commodities experienced but rahter it’s just an interruption.

Just like equities, commodities tend to move in long-term, or secular, bull and bear cycles. Both are punctuated by short-term, or cyclical, movements. According to Chris Watling of Longview Economics, these secular cycles can be traced back to 1750 – the average bull run has lasted over 20 years, with average cumulative gains of 293%.

The CRB spot index is well up on 2001 levels, says David Rosenberg of Gluskin Sheff & Associates. It’s also interesting to note that during the latest sell-off, “the price of virtually every commodity” bottomed at a higher level than the average price during the last five recessions – even though this contraction was the worst in 70 years.

To read more about the experts views and know about the investments in commodities market click here

Mastering the Trade provides the reader a glimpse of how John Carter conducts his trading. Key aspects which I found are the following.

• Carter thoroughly covers how a normal speculator is regularly on the wrong side of the markets and is frequently exploited.
• He runs the gamut of everything you need to do in order to trade for a living.

Small Speculators – The Amateur Traders

In this chapter the author explains clearly how the market works and how traders take positions based on what they perceive. He explains the advantage of being an early bird in this competitive market. Moreover the reader can also understand how a professional trader differs from a retail trader and how their bets differ and who would end up on the winning side and reasons for the same.

John Carter’s Trading Strategies

Different trading strategies are discussed throughout the book and the author himself explains about his strategy of making money by going through the NYSE Tick Indicator.

The Tick measures the latest up or down ticks of NYSE stocks. He explains in the book that he just sets an alarm when the Ticks hit extreme levels of + or – 1,000. Once the alarm sounds, he places a trade in the opposite direction to fade the extreme move

The Trading Plan

The important aspect of the commodities trading is to have a formal trading plan.

• Carter provides a nice outline of a trading plan and even has a sample plan from one of his students
• A plan will include the markets you will trade, trading capital, trading strategies, profit objectives, risk parameters and even taking time off when trading is going poorly or too well
• Above all is he even explains how to setup computers, monitors, software and everything else you need for your own trading office

The Handbook of Commodity Investing is a book which focuses on the fundamentals of the commodity markets and the logic of investing in commodities with a long-term investment horizon.

Long-Term Commodity Investing

The author discusses about the different life cycles of investment and how an investor can earn sustained periods of above average returns, which are followed by prolonged periods of depressed prices. Individuals can also realize the benefits of including commodities in your portfolio to increase your long-term gains.

How to Invest In Commodities

The author presents many different investment vehicles you can use to invest in commodities – pros and cons. They include futures, futures options, commodity ETFs, commodity trading advisors (CTAs) and hedge funds.

The other key aspects presented in this book are the following

· Differences between fundamental and technical analysis

· Timing with which one should enter the market in order to get above average returns

· Entry and exit checklists are presented via case studies

Technical Indicators

The reader can clearly understand about the mechanics of trading by following the indicators

• Stochastics work well for determining whether a market is overbought or oversold.
• MACD sometimes overlaps stochastics and it helps to determine the strength and direction of a trend.
• The moving averages and Bollinger Bands help determine direction of trend and good buying or selling areas.

Trading Formations and Patterns

The author focuses on the trend analysis and introduces to the reader about some the vital forecasting concepts like analyzing seasonality, cycles which would help the trader in making decisions when he predicts a particular pattern.

Putting the Trading Plan Together

Since it introduces to the reader about the various indicators and forecasting tools, a lot would depend on the trader how he uses these tools to make a profitable decision. Case studies would definitely help the reader about how things can be put together given an economic scenario.

Commodity trading strategies are simply the basis for why and when you will buy and sell commodities. You should have some well thought out strategies before you begin trading commodities.

Most commodity trading strategies consist of either a range trading or breakout methodology. Each type of strategy has its pros and cons, so it is up to your personal taste on which type of strategy might work best for you.

Range Trading Strategy

Range trading in commodities simply means buying near the bottom of a range (support) and selling at the top of a range (resistance). Another way to look at this strategy is that one might look to buy a commodity after it has experienced a lot of selling and becomes oversold.There are numerous indicators which measure overbought and oversold levels like RSI, Stochastics, Momentum and Rate of Change. These strategies work well when the market has no significant trend.

Trading breakout Strategy

Trading breakouts in commodities means that a trader will look to buy a commodity as it makes new highs and sell a commodity as it makes new lows. New highs and lows can easily be spotted on a chart, as they are the peaks and troughs.

This strategy works best when commodities are trending strongly.  To know more about the commodities trading strategies click here

Market Order

Market orders are the simplest and most common type of futures order. You will want to use a market order when you want to get filled quickly, where the market is currently trading – more or less.

Market orders have priority over all other orders, which means they will be filled before limit orders, stop orders and others. A market order does not specify a price. If you are trying to buy a futures contract, you will normally get filled at the ask price. If you are trying to sell a futures contract with a market order, you will normally get filled at the bid price.

Limit Order

A limit order is meant to buy a particular futures contract at a certain price or better. You will use this type of futures order when you want to get a better price than where the market is currently trading.

A limit order to buy is placed below the current market price. A limit order to sell is placed above the current market price. To learn more about order types click here

Coffee is one of the world’s most important cash commodities. Coffee is the common name for any type of tree in the genus madder family. It is actually a tropical evergreen shrub that has the potential to grow 100 feet tall. The coffee tree grows in tropical regions between the Tropics of Cancer and Capricorn in areas with abundant rainfall, year-round warm temperatures averaging about 70 degrees Fahrenheit, and no frost. In the U.S., the only areas that produce any significant amount of coffee are Puerto Rico and Hawaii.

Coffee is generally classified into two types of beans: arabica and robusta. The most widely produced coffee is arabica, which makes up about 70 percent of total production. It grows mostly at high altitudes of 600 to 2,000 meters, with Brazil and Colombia being the largest producers. Arabic coffee is traded on the New York Board of Trade.

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• CTA Fund Startup Challenges
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