Gambling WIth Commodities -- Have We Lost Our Minds?

reply to post by CosmicCitizen

One real problem to the system overall tho (beyond the principles of trading and hedging) however, is the large amount of derivatives (futures and options contracts) on financial instruments which if there was a massive default that would overwhelm the clearing capacity of the exchange involved could create a chain reaction of defaults in our financial system with a very bad ending. That is where reform needs to be made (obviously more than just "position limits").

I held positions for a few seconds to a few minutes.

As if that actually solves the problem speculation is meant to be addressing. It just adds to the greed and corruption.

reply to post by roadgravel

It does add to "liquidity" tho.

isn't this just the same kind of trading that ruined the economy in 2008?

Yes, but the American people don't care about things that have a real impact on our lives- they only care about stupid things like guns, trucks, and country music.

While they are crying that the government is "tyrannical" for giving us healthcare and clean air, they completely ignore the real tyranny that is perpetrated every day by big business.

reply to post by tothetenthpower


Futures trading is a GOOD thing. I've done it for years. It's not the same as derivatives based on bad loans or whatnot.

reply to post by Bedlam

Exchange traded futures are not the same as this OTC derivative contracts (ie CDOs) where there is serious counterparty risk. They are risky in that most speculators lose but if you do win you can expect to be paid (the MF Global and PFG fiascos not withstanding).

reply to post by tothetenthpower


So what's new. This corrupt action has been going on for a long time. If a farmer wants to make money at farming he has to invest in speculation and let the corporation profits dwindle. This means he can make money from government to get the next year rolling and take profits from the speculating at a low investment rate. Win Win situation. The oil speculation is even worse with the stockholders making little and the execs of the corporation having advanced speculation knowledge for their investment. The metals investors are also rigged but they are at least sensible people who understand to see the economies needs.

Futures trading is a GOOD thing. I've done it for years. It's not the same as derivatives based on bad loans or whatnot.

Sure, people are so good at predicting the future. More like future prices based on emotion today.

reply to post by CosmicCitizen


I agree, that's why I said they weren't alike. However, the op brought up exchange traded commodities as an example.

Originally posted by roadgravel
Sure, people are so good at predicting the future. More like future prices based on emotion today.

There are several ways to make money doing this. You don't win every trade.

One definite way is to trade based on emotion. I probably made more that way than anything else.

reply to post by Bedlam

Most traders who trade on emotion lose (ie buy high and sell low) because said emotion is often a reaction to breaking news and reinforced by a general consensus. Kudos to you but most traders should trade based on charts and systemic signals and not emotion.

reply to post by CosmicCitizen


Sorry, I wasn't at all clear. I trade on the floor trader's emotions. You can spot definite trends in markets based on things like the weather or barometric trends at the exchange. There are some 'rule of thumb' guidelines they use on the floor that you can capitalize on as well, if they start giving signals you can bet on the floor responding to it.

edit to add: this is what you get for my last post running out the door