Coffee Futures Trading Basics

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Trading Coffee: From Coffee Stocks to Coffee Futures—Your Complete, Step-by-Step Guide to Coffee Trading

From Coffee Stocks To Coffee Futures Discover Step-By-Step How To Trade Coffee

This Book Is The Ultimate Guide To Coffee Trading

In this book, youll learn how the coffee market works and how coffee differs from other commodities. Youll learn about the key factors that drive the price of coffee. And youll be takenstep-by-stepthrough several ways to trade coffee from From Coffee Stocks To Coffee Futures— Discover Step-By-Step How To Trade Coffee

This Book Is The Ultimate Guide To Coffee Trading

In this book, you’ll learn how the coffee market works and how coffee differs from other commodities. You’ll learn about the key factors that drive the price of coffee. And you’ll be taken—step-by-step—through several ways to trade coffee from purchasing stock in coffee companies to advanced instruments like futures and options.

Here are some of the specifics you’ll learn.

– How the coffee market works including the countries and companies that are key players– Chapter 1

– The 5 key factors that drive the price of coffee– And how to use them to your advantage– Chapter 2

– Why coffee is a very strange commodity with a very inelastic price (and what it means to you as a commodity trader)– Chapter 2

– Top performing coffee stocks and how to get started purchasing stock in coffee companies– Chapter 3

– Step-by-step how to setup a brokerage account and start trading coffee futures– Chapter 4

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– The concept of a “margin account”– What it is and how it allows you to make massive coffee trades with only a small amount of money– Chapter 4

– A rapid-fire list of tips, techniques and pitfalls to avoid when trading coffee futures– Chapter 4

– How to trade coffee options, including a detailed example– Chapter 5

– The 2 main types of coffee equity traded funds– Chapter 6

The Basics on Futures Trading

To better understand how futures are traded, it is helpful to know what a future is, the history behind them, and the benefits of trading them in addition to the trading process. A ‘future’ is an evolved financial contract to buy or sell an underlying commodity or product at a future time. Futures are exchanged through authorized clearinghouses such as the Chicago Board of Trade and must be exercised on a pre-determined date called the ‘final settlement date’. The exchange of futures contracts is regulated by the Commodity Futures Trading Commission and requires the use of credit to the contract purchaser and has less risk than a similar contract called a forward. Since futures contracts and prices are derived from a product or commodity they all called derivative securities. Speculators often buy and sell these contracts with the intent of making a profit off price fluctuations before the delivery date, however they are also used to by farmers and agriculturalists to hedge farm operating costs, and product sale prices such as those associated with animal feed and grain prices.

The History of Futures:

Modern day futures trading evolved out of a forward trading system which was used in the mid 1800’s as a way for farmers, bankers and merchants to collaborate their interests financially. A forward contract is an agreement between two or more parties to deliver a specific product on a specific date in the future. These contracts are different from futures in that they don’t have to be traded using an exchange and the settlement of price is determined by delivery of the product rather than the final settlement date. One of the largest exchanges through which this process took place was the Chicago Board of Trade, which was called The Board of Trade of the City of Chicago in the 1840’s. Over the following 30 years after 1840, futures trading which occurred through the exchanges became more regulated and standardized allowing the futures exchange to become more reliable and standardized. Eventually, in the 1970’s a fixed market related to, but separate from the actual underlying commodities emerged in which financial instruments such as bonds and foreign currency could also be traded using futures contracts.

The Trading Process:

Futures are traded using ‘margin’ which is a financial term for a credit account with a minimum down-payment or collateral. This margin amount is usually between 5-15% but may go much higher. A speculator or trader buys a futures contract through an exchange and/or a broker who works through the exchange and does so at a fixed cost of the underlying security. If the price of the underlying commodity or financial instrument rises during the term of the futures contract, the contract holder can make a profit. However, if the price falls, a loss will be incurred. During each day the buyer of the futures contract continues to hold it, the profit or loss is recalculated. Speculators in futures trading sometimes use a trading strategy using technical indicators and other financial tools to aid them in their decision making. A step by step process of trading futures is as follows:

1. Use a reliable brokerage house that works through an exchange that trades futures

2. Choose a commodity or financial instrument to trade in such as coffee or currency.

3. Study the different contracts, the costs and goods

4. Develop a trading strategy

5. Purchase the Futures contract and hope steps 1-4 work.

Why Futures are Useful:

Futures contracts are useful because their derivative nature affords them the ability to represent advanced securities transactions, products and financial instruments through a systematized trading environment. In other words, they greatly facilitate commercial trade. Some of the ways they do this are as follows:

1. Control price risk fluctuations by locking into a fixed price

2. Assist companies in generating capital in advance of sale.

3. Demonstrate buyer and seller predictions of future prices.

4. Assists observers with assessing economic and market conditions through price efficiency theory.

5. They can be used across many markets including currency, bond, equity index and commodities markets.

Who Invests in Futures and Why:

Futures are traded by farmers, agriculturalists, financial institutions and speculators. While all have a financial interest in the contract, they may have different reasons for entering into the contract. In the case of ‘hedging’ for risk , farm managers and crop farmers attempt to bring a more stable cost and selling environment to their operations through locking into a futures contract price they think is fair. For speculators and financial institutions however, the purpose of the contract is different. For these latter two participants, the intent is profit. These latter two generally do not intend to exchange the underlying commodities but rather the money for them and hopefully at a profit. Since the clearinghouse assumes the cost of the commodities they take responsibility for the cost of the commodities and can re-sell the contract.

Conclusion:

Futures contracts are financial agreements to buy or sell an underlying commodity at a fixed price on a settlement date. While the actual commodity need not be exchanged, this does happen as the futures market has evolved out of an actual commodities exchange system. The currently futures market is currently very sophisticated, and takes place through traditional trading and electronic exchanges that are regulated by Commodity Futures Trading Commission (CFTC). Futures contracts have the potential to be costly especially if the price of the commodity drops rapidly within a short time period. However, the contract may also be profitable if exercised at a profit. Futures contracts have a history in the commodities trade of farm products but have expanded to include metals, energy resources and financial instruments such as currency and bonds.

How To Trade Futures For Beginners | The Basics of Futures Trading [Class 1]

If you are brand new to the futures market and wanting to learn how to trade futures, this is the course for you. In this introduction class, I will walk you through all the basics of the futures market. What is the futures market? How does the futures market work? Where are futures traded? Who are the traders that all take part in the market? I will explain all of this and more with the goal of establishing a firm foundation of knowledge that we can then build from in the following classes. If you are someone who is looking to avoid the annoying pattern day trading rule, the futures market is a way to make that happen. Let’s get started and learn more about how to trade futures to make money online.

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Hey, it’s Clay at ClayTrader.com.

I’m gonna be your guide here

through futures trading at a very beginner level,

and a very basic level.

So I want to quickly just tell you who this is for,

because I don’t want to waste your time.

If you are looking for the mathematical theory of things,

if you’re looking for all the different nooks,

and crannies of how the futures markets work

from the mathematical standpoint,

you’re probably gonna be disappointed.

If you are looking for just listen, I want to trade futures.

I want to know how do I make money from futures.

Sure, I want to know some broad aspects of,

you know, how the futures market works,

what actually it is,

from a broad sense,

yeah, I want to know that,

but I’m more here for the practical

real world type applications,

not a bunch of theory,

not a bunch of just mathematically equations

that I’d learned in some sort of, you know, textbook.

I want to just know futures,

sure, but I wanna know how to,

how do you make money in the market?

How do they work?

How will they put profit in my pocket?

If that’s more of your mindset,

then this will be for you,

but again, if you’re somebody that’s looking for

the mathematical theory of it all,

then you’re probably gonna be disappointed.

So keep that in mind,

and maybe you’re on the fence.

Do I even want to learn futures?

One of the biggest benefits futures do allow for people

is that it is a way around the pattern day trading rule.

So perhaps you’re kind of stumbling around with that.

You’re a little bit frustrated with it.

Futures trading does not have to,

it doesn’t fall under those regulations.

So that’s one thing that I would

just kind of throw out there

that may get you interested into the markets,

and wanna learn more about them.

So with that being said, let’s go to my desktop,

and let’s get this course and class started.

Welcome to my desktop.

Before anything else,

we need to take a very wise approach to all this,

and the wise approach would be,

well, let’s just figure out what the futures market even is.

What’s the purpose of it?

What is going on?

How is it interacting with the general markets as a whole?

And once we know that,

well lets start to make money from it,

but like I said if we’re gonna make money

from the futures market,

it would probably be wise to at least know

what the futures market is in the first place.

So that’s what we’re gonna do here with this first class.

Establish a good solid framework,

and foundation from which we can build upon,

and then eventually start to make money from.

But let’s just start, like I said at the ground floor,

and let’s look at some definitions here.

So let’s grab our trusty Merriam Webster dictionary,

and look at each of these words.

So the first being future,

what does future actually mean?

Well it’s something that will exist,

or happen at a later time.

The two key components there being something.

So okay something is what?

Happening at a later time,

and we’ll get to more of that as we go,

and then the next part is just a market,

and a market is a meeting together of people

for the purpose of trade.

But we’re concerned about, and what we’re gonna look at is

a meeting together of people.

So a future market, just something,

and this something’s happening at a later time,

and this has all been based within a market,

and a market, a meeting together people.

So meeting together of people.

The logical question then becomes, okay,

well who are these people?

Who are these people that are meeting together?

You know, what are they doing?

Very, very logical question.

you got to keep in mind that there are two main people

that must be involved for a market to exist.

Once again, very, you know, basic economics here,

you can’t have a market

if there’s not two people involved, right?

One person does not make up a market.

So who are these people that must be involved,

who are these people that make up the market?

Well you’re gonna have a buyer,

and you’re gonna have a seller,

or just in general buyers, and sellers,

and that brings up the next question.

Okay, well what is the purpose of their meeting?

And that is to negotiate a deal, or a trade, right?

That’s what a marketplace does.

If you’re going to the grocery store,

and you want to buy an apple, you are negotiating a deal.

You are saying, okay,

I will trade this piece of money for that,

and you have to try to negotiate.

If you think it’s priced too high,

if you think the seller is trying to rip you off,

well then guess what?

As a buyer there’s no deal, right?

No deal, nothing’s happening.

So again, we’re keeping it very basic right now

on just economics 101,

that’s what a marketplace is made up of.

Two people and these two people are buyers, and sellers.

Let’s look at the next part here, something,

and then this is happening at a later time.

Now at this point, the deal has been made.

So that leads us to, alright,

well what is the something of a deal?

I get it, a deal has been made, but the something.

So what is this something?

And that is an agreement for a transaction to take place

at a later time in the future.

Are you seeing how everything’s

kind of coming together here?

So a deal has been made,

and then the details of the deal,

the something of this deal is just an agreement

for some kind of transaction.

So what kind of transaction,

or in other words,

what are the details of this agreement?

So a little bit of context here.

Let’s just say that when this particular agreement is made,

that the current date is August 15th.

So again, to reiterate, who is this happening,

who is making, or who’s is this happening between,

who’s making up the marketplace?

While we have, again, the buyer,

and in our situation,

in our little story here that we’re going through,

let’s say the buyer in this story,

they manufacturer, they produce,

they sell one of my all time favorites,

Sour Patch Kids, alright?

So if you’re not aware,

Sour Patch Kids aren’t exactly healthy.

That’s why I eat them in moderation,

one of their main ingredients in Sour Patch Kids

that they need to buy is a sugar, right?

So they’re saying, you know what?

I would like to buy 100 pounds of sugar for $1.50 per pound,

and then the other part of this market,

who would they be talking to?

Well, hopefully you have your common sense,

well, if they’re looking to buy sugar,

they’re probably talking to somebody that sells sugar.

Exactly, so they’re talking to a seller

that is going to offer up or produce sugar, right?

They have the big sugar cane fields,

and they are a producer of sugar.

So the seller looks at their proposal,

the buyer, and saying, alright,

the buyer’s offering us $1.50 per pound,

and they want to buy 100 pounds of sugar.

Well, you know, yeah,

I will produce that 100 pounds of sugar for you,

and then the final part of this agreement,

the last little bit of detail,

which is very important for the futures market,

is that they are saying this transaction

will take place on October 15th.

Not to insult your intelligence,

but again, as far as our story is concerned,

the current date is August 15th.

So this deal, this transaction will not actually take place

until two months later, right?

Two months into the future.

So that’s what’s going on,

or they are making an agreement for this transaction

to take place in a future, or in the future,

and that’s why this would be called a futures contract.

All a futures contract is, is an agreement to buy,

or sell a commodity on a given date for a given price.

So the agreement, again in our situation right there,

and to buy, so what’s going on here?

Well, they want to buy that 100 pounds of sugar, or sell.

So in this situation,

the seller is going to sell 100 pounds of sugar

for some commodity.

What is the commodity in this case?

Will the commodity is actually the sugar itself?

What is a commodity in general though?

Well that’s just a raw material,

or an agricultural product,

and that can be bought, and sold.

So it’s a physical product.

It’s something that you can pick up with your hands,

you can smell, you can throw it at somebody,

I guess if you want.

So what are some other examples out there of commodities?

While there is coffee beans,

and these are all things

that can be traded in the futures market.

There’s oil, there’s gold, corn, cotton, wheat,

and there there are many others,

but here is just kind of a few of the more common ones.

But again, that’s what a commodity is.

Just a raw material,

and then getting back into the definition, this agreement,

this futures contract is all what?

It’s gonna happen on a given date.

So in this situation, October 15th,

and then for a given price,

which we’ve established is $1.50 per pound,

but why in the future?

Why agreed to buy, or sell something in the future

when you can just simply buy it,

and sell it right now?

To understand we got to go back to

kind of the foundations of business.

Even if you’ve never taken a business class, that’s okay.

This is very straight forward,

but you know a principle in business 101

that if, assuming of course you want to be

a successful company,

assuming you want to have a successful business,

you need to, you know, at the very, very core,

the forefront of any decision you make of any,

you know, pathway that you choose to take,

you need to always be attempting to do one thing,

and all companies once more assuming they want to be,

you know, successful, assuming they want to be profitable,

they are attempting to do this, and what is this?

Well that is try to manage risk.

Nobody knows the future.

There is no such thing as a crystal ball.

Nobody can know for sure.

Nobody can be certain what’s going to happen.

So you need to be able to do your best to forecast

what you believe is going to happen,

what you think is most likely to happen,

and that way you can manage risk the best parts.

So that’s really, and that’s why I love that image.

That’s what companies are trying to do.

They’re trying to go from uncertainty to certainty.

No guarantees, no crystal balls,

nobody can tell the future,

but the better a company is at managing the risk,

the better a company is at trying to,

you know, erase that uncertainty,

or erase the uncertainty, that’s a good thing.

That’s going to give them a leg up on their competition.

That’s how companies get so big is

they’re just so good at managing the unknown.

They’re just so good at making decisions based off of

what they think is gonna be in their best favor

from a risk management perspective.

So risk management,

and the other word for this would you just be hedging.

So hedging, that’s what is going on in the futures market

at, you know, the, the foundational core is risk management,

and in that you know, in futures market terminology

that would be known as hedging.

So let’s look at each person in the agreement’s perspective,

and we’ll start with the buyer’s perspective.

Now, a buyer from a business point of view,

a huge focus for that buyer is what?

They want to make money of course,

and they’re gonna make money,

and their goal is gonna be what?

Well, they want to keep their costs of production

as controlled, and predictable as possible.

Not guaranteed, but let’s just try to keep

our costs as controlled,

and just keep it as predictable as possible,

because that’s gonna make our life easier

to do forward-looking projections, and all that.

So from the buyer’s perspective, when there’s, alright,

well we need sugar to make those Sour Patch Kids.

So they’re thinking you know what?

In the future, I believe a pound of sugar

might actually rise up above $1.50 per pound.

So if that’s what the buyer’s thinking,

that’s why they’re thinking, you know what?

If we think now, why do they think that?

I mean they have, for some reason,

they believe that sugar prices are gonna be going up.

So that’s why they’re saying you know what?

Let’s just lock in the price.

Let’s get the price of $1.50 locked in.

So that’s why we’re gonna do that.

So they got it locked in per that agreement.

Let’s now say as part of this story, a tornado comes,

and sugar crops are destroyed just all over the place,

and because of that,

all of a sudden there’s less sugar,

and when there’s less supply, right?

Supply, and demand, less supply of something,

but the demand stays the same,

well, that’s gonna shift prices up.

So let’s say that the new market price is $2.25 per pound.

Now here’s a quiz for you that I want you to answer.

What does the buyer pay?

What price per pound are they paying?

Okay, hopefully I gave you enough time.

If you said, you know what?

They’re paying $2.25 per found,

because that’s new market price.

That would be wrong.

They are paying $1.50 per pound.

Because, well, that’s what they agreed to.

Remember that agreement.

In the future, we’re buying it at $1.50 per pound.

So sure, that’s, I mean for the sugar company,

that’s not a very good deal,

because had they not entered into that agreement,

they could be selling that 100 pounds for $2.25 per pound,

but, because they did enter into it,

ah, now they got to sell it for $1.50 per pound.

Of course, from the buyer’s perspective, hey, alright,

we made a good decision.

You know, good job.

They’re all high fiving each other.

We’re only paying $1.50 per pound, great.

Yeah, our competitors hah,

too bad, they’re not as smart as us.

They’re over there paying $2.25 per pound,

but us, yeah, we’re gonna be able to make

those Sour Patch Kids for $1.50 per pound.

Now let’s take a look at the other side,

the seller’s perspective.

A huge focus now for the seller,

of course they want to make money too.

This is just business,

but how are they gonna make money?

How is this seller gonna make money?

Well, they’re gonna make money by just selling their product

for as high as the market,

you know, the buyers are willing to pay, right?

That’s just basic stuff there.

If you’re looking to sell something to make money,

yeah, the higher you can sell that,

that would be the goal,

because that’s gonna be the more profit.

So from the seller’s perspective,

they’re gonna be thinking something like this

when they enter into the agreement.

I believe that a pound of sugar might drop below $1.50.

That’s what they think.

Now, why do they believe that?

I mean, they’re gonna have their reasonings,

they’re gonna have their economic models,

but for whatever reason, they believe that in the future,

I think $1.50 is getting pretty high.

I don’t think this price is gonna last very long.

So that’s why they’re saying, you know what?

Yeah, yes, producer of Sour Patch Kids,

we agree to produce you 100 pounds of sugar

in the future for $1.50 per pound,

because in the back of their mind they’re thinking yeah,

because I mean if you would just wait,

you can probably get it for cheaper.

But I mean if you’re willing to pay us $1.50 now, okay,

So to carry on with the story,

they get that you know approved,

and then all of a sudden the supply of sugar just increases

all over the place.

You have a bunch of new people

getting into the business of selling sugar.

You have sugar cane crops popping up all over the place.

So once again, economics 101,

when all of a sudden supply of something increases,

well that’s going to cause prices to what?

So the new market price all of a sudden is $1.15.

So let’s go through the quiz again.

The question this time being,

so what does the seller receive?

How much does the seller get?

Are they getting $1.15, or $1.50?

If you are saying, well they’re getting $1.50 per pound,

you would be right.

Because that’s what the agreement was.

So who’s kind of getting the short end of the stick here?

Who is feeling some pain?

Aw man, the buyer, because a buyer saying, huh,

I mean we signed that contract,

we made that agreement,

we have to buy that at $1.50.

Oh that’s not gonna be very pleasant.

Now the seller’s thinking, yes we were right.

They’re all high five’in

because oh yeah, you know our you know,

other people are having to sell their sugar for a dollar.

You all those other competitors out there,

they’re having to sell their sugar at $1.15 per pound,

but because we made this agreement

with the Sour Patch Company,

we’re able to sell it for $1.50 per pound,

and they’re feeling very, very good about themselves.

I mean it would have been a good transaction on their part.

But this is all fairy.

This is all just, you know, the basics of how it works,

but let’s move into

getting a little bit more practical here,

and this will be kind of the launch point for you and I

to be able to start to make money

from the futures market itself.

Unless of course you are a maker

of some sort of product, then yeah,

maybe you would want to have more of a,

you know, this approach,

but I would assume that probably 99% of people watching this

are gonna be, you know,

wanting to get a little bit more practical with all of this,

but it’s good to know what actually is going on,

like I said, behind the scenes here,

so the strategy of hedging

are the pillars of the futures market.

Like I said, that’s the foundation.

Those are the pillars that we want to build upon.

And this is also what is known as a physical settlement.

I mean, like I said, the vast majority of people here,

and the vast majority of people in the market itself,

I mean they’re not producers,

they’re not manufacturers, alright?

So majority of the people,

I want to say that because I make this.

I already made the comment about, yeah,

I’m assuming most of you watching,

which is true also, but please also understand that

as far as the futures market as a whole,

the vast majority of people participating in it,

they’re like you, and I, right?

They’re not producers.

They’re not manufacturers of any sort of you know,

commodity that what they would need,

you know, ingredients for, or anything like that.

So this is what would be known as the speculators.

You have hedging with the physical settlement,

and then you have speculators, and this is the investors,

this is the traders.

So you and I can get involved

through what is known as the cash settlement,

because we’re not interested in,

I’m assuming nobody here wants 100 pounds of sugar

to show up at their door.

So assuming that is correct, then yeah,

you would want to be getting involved

through the cash settlement,

but the point here is that we can indeed get involved

in the futures market through speculation

by being an investor, by being a trader,

and yeah, that, that’s definitely exciting.

That’s good, I’m glad we can get involved.

So what are the types of futures markets?

Pretty much there are two broad markets

speculators can choose from.

So if you’re saying, you know what?

Yeah, I want to get in the futures market,

I want to get involved, let’s go.

There are two types of markets you can choose from.

Two types of futures.

So the first type is commodity futures,

which we’ve already talked about.

These are the raw materials.

They can be metals, they can be agriculture,

they can be energy.

I mean they can be livestock.

Like I said, anything that you could pick up, grab, smell.

Like I said, throw at somebody.

You might have a hard time throwing a cattle at somebody,

but you get the point here, right?

Like they are items that you can see,

you can pick up with your hand,

and then the other type is financial futures,

and these are literally just pieces of paper.

These are just, you know,

they’re some sort of paper that says, hey, this represents

some of other sort of abstract object, like a currency.

Have you ever thought of like

the money that you hold in your hand?

Why does that mean anything?

Well, because there was this abstract idea.

There’s this belief that,

well there’s value in there,

but is there actually value in that piece of paper?

I mean, I guess maybe if you we’re

looking to try to start a fire,

there’d be some real life practical value,

but other than that, no.

I mean it’s not like you’re gonna be able to,

you know, hammer a nail in with a

you know, a piece of paper in your hand.

So these are just objects that represent abstract ideas.

So you’d have indices,

and the most popular for these would be the S and P 500,

you have futures contracts attached to those,

and we’ll actually be talking about those in future classes,

but you can do it in regards to

you know, currency exchange rates,

and then just even interest rates,

and treasuries themselves,

and these are all the contracts revolving around debt,

and you know, you can do either people,

some people trade commodity futures,

some people just want to focus on financial futures.

But the point here being

is that these are the two broad types of,

you know, futures markets that exist,

and that the types of futures that would be out there,

you have commodity futures, and then financial futures.

So how do speculators make money?

Well, let’s look at our example here,

and remember we had that $1.50 price,

and that is going to be what we would consider,

and call in our example here, the spot price,

and spot price is something you’ll see out there,

but just understand that a spot price,

all that means is that’s the current price.

Right now at this very moment,

if you wanted to buy sugar,

it would be $1.50 per pound.

At this very moment, the current price,

that is the spot price,

but spot prices don’t change, or don’t stay the same.

So as time moves forward,

things are gonna start to change around.

Spot prices are gonna change.

Spot prices could rise up to the $2.25 mark,

spot prices could go down to, let’s call it that $1.15 mark.

Why are spot prices changing?

Well, I mean you could have weather,

you could have government decisions,

you could have just world events,

you know, just stuff happens in the world.

Interest rates, maybe interest rates changed something.

Speculation itself, that’s always the entertaining,

Not necessarily just about the futures market,

but really all financials markets as a whole is,

well why is the price changing?

I don’t know, because he got a bunch of traders.

You got a bunch of investors making different decisions.

So it’s not like from a,

you know, an economic standpoint,

supply and demand has changed at all.

I mean, supply and demand could be the exact same thing,

but prices could be changing.

Spot prices could be changing just simply,

because of speculation.

Investors, traders, acting, and that’s it.

So that’s always the crazy part about the markets is

sometimes nothing happens at all.

Supply demand remains the exact same,

but spot prices are still fluctuating.

Well, because you have a bunch of traders,

and investors that make up the market.

So let’s think about the value of the contract,

because of this change in spot price.

What is the value of this contract gonna be doing?

And again, the contract between the buyers, and the sellers.

Well when spot prices change,

the value of the contract changes.

I want to say that again.

If you’re taking notes, definitely write that down,

because this is how you make money.

This is how the futures market opens up the door

to you and I to make money.

When spot prices change,

again, the whole why

we just talked about could be for a variety of reasons,

but when the spot prices change,

the value of the contract changes,

the value of that futures contract itself

is going to change.

It’s gonna go up, and down, and all over,

and right here the change in the value

of the contract itself

is what allows speculators again, traders, us, investors,

to make or of course lose money from the contract,

and who are these traders?

Well the traders are any anybody you can imagine.

They can be people down on wall street,

they can be people you know, in the retirement home,

if they have the internet access,

they could be, you know,

whoever wants to get involved in that,

is the power of this day, and age of technology,

and the internet, and software, and brokerages,

and platforms is anybody can be participating.

Anybody can be making money from this fluctuation,

from this change in the value of a futures contract.

So you don’t need any requirements.

You don’t need to go to college,

you don’t need to have a college degree.

I mean theoretically wouldn’t necessarily be wise,

but you could just open up

in the next five minutes a futures account,

and be trading you know, the value of contracts.

I mean in theory if you wanted to,

that’s just the day, and age of technology we live in,

but that is how we are gonna be making money.

That is how the opportunity

to make money actually arises

is because spot prices change.

The value of contracts change,

and because the value of contracts change,

there is an opportunity in there for traders,

speculators to make money.

So where does all this actually happen though?

Well, this all happens

on what is called the futures exchange.

Let’s once more quickly get out our dictionary.

So what does exchange mean?

Well that is the act of giving,

or taking one thing in return for another.

But we can boil this down a little bit more.

as far as the futures exchange is concerned,

it’s the act of giving, or taking contracts in return for,

well in our case, money.

We’re giving money, we’re getting contracts,

and so on, and so forth.

Now these markets can be found all over the world.

The most famous of them all is were all actually started,

and that would be the Chicago Mercantile Exchange, the CME.

If you, maybe you’ve already done some research

and maybe you’ve seen CME places,

that’s what that stands for,

but as far as you know,

because I wanna I wanna make this timeless presentation.

So if you’re watching this several years from now

as far as, because things change right?

Now, the Chicago Mercantile Exchange

has been around for decades upon decades.

But you know, you never know.

So in order to keep this timeless,

just get out a bit of technology.

You know, if Google doesn’t exist, maybe,

you know, 10 years from now when you’re watching this,

there’s some little robot butler

that will come down from the ceiling,

and you can just ask them,

but what you’re gonna want to be asking,

or just typing into the search engine,

and just type in futures exchange,

insert whatever country you live in,

and then insert the year, and it’ll do its thing.

It’ll spit out all the information about the current

futures exchanges that exist out there,

and you can then keep up to date

on everything from that point of view.

So that’s what I have here.

Let’s go back to me at my desk,

and we’ll wrap this up.

Well, hopefully now you have a much better understanding

of what the futures market is, how it works,

what the purpose of it actually is,

and then who these players are.

And then from that,

that’ll give us a good foundation

that we can build from in future classes, no pun intended.

Before I go though few things, first off,

if you enjoyed this, just let me know.

Hit that like button,

and then also leave a comment down below in terms of

what you would like to see

in the next classes I put together.

Maybe you actually had a question on this class in,

and of itself so you can ask those,

or like I said, if you want to give me some suggestions

for future videos, again, sorry, no pun intended,

then leave those out in the common section,

but if nothing else, and you’re just,

hey, I enjoyed it,

then hit that like button, and over time I’ll try,

and do some more series in classes like that.

So just like I said, the easiest way to communicate,

hit that like button.

Also check out the channel.

The entire channel is not necessarily

just about futures trading,

it’s more about just kind of money in general,

growing wealth, taking control of your finances.

So there’s stock market stuff,

options, market stuff, personal finance,

and real estate stuff.

So check out the channel as a whole,

and hopefully you to decide to ultimately subscribe

to the channel also, but if nothing else,

like I said, hit that like button.

Leave a comment down below,

and I’ll see you back for class number two.

First off, thanks so much for watching the entire video.

Real quick before you go,

I want to invite you to a live webinar,

web class training workshop, online event,

whatever you want to call it,

but it will be me live revealing to you what I discovered

that has allowed me to transform myself

from being an employee to being my own boss,

including how I had only one losing day

out of 73 days in total.

I’m gonna cover three keys that have helped me unlock

profitable consistency within the markets.

The first key is super weird,

but in a productive type of way.

The second key is super awesome,

because it quite literally is wired into our DNA as humans

making it very easy to use,

but in a cruel way,

this becomes a pitfall for many traders.

I’ll explain it all though,

including how to avoid the pitfall

that it creates for some, and yeah, the third key,

when you hear it sounds way, way too good to be true,

but it’s not, and I’ll show you how it all works.

Then at the end, I open it up for a question,

and answer session that is again, totally live.

Even if you can’t make the live session,

please still sign up as it will be recorded,

and you can go back,

and watch the replay that I will send you.

Click the image on the screen,

or click the link down in the description box

so you can get the date, and time, and claim your spot,

which I should note is limited

due to the fact that this truly is a live event.

If you have any questions, let me know.

If not, I’ll be seeing you soon.

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