Commodities and the Global Macro Trader
The typical image of the floor of the Mercantile Exchange being filled with a bunch of guys that couldn't get jobs anywhere else is very outdated and wrong. Instead commodity traders are increasingly becoming some of the most sophisticated investors on earth.
One of the main types of upstairs traders in the commodity markets are the CTA or commodity trading advisors. They typically do a lot of long term trend following. The second major commodity trader is the global macro trader.
Global macro traders are the next major group of players in the commodity markets. Some are heavily involved and some barely trade them but all macro traders track the commodity markets to give them a better look into the worlds macro economic situation.
For instance if oil is rising like we saw in 2008 then you have to look to see what businesses are going to get hurt and what will benefit from higher oil prices. Obviously oil companies will make more money but what about shorting airlines? Or maybe even going long railroad companies. As you can tell there are endless ideas of who is affected and who is not.
Precious metals are another area of great concern. Long looked as a fantastic inflation gauge gold and silver are also looked upon more and more as alternative currencies since most fiat currencies are looking like junk these days. As you can see precious metals are very useful to key in on currencies and inflation.
Another huge piece of the economic pie is that of industrial commodities. Industrial commodities comprising aluminum, zinc, lead, tin, nickel, iron, copper, etc are used in everything for everything. If you drive it, plug it into the wall, or live in it then you have industrial metals all around you. And you only need to have accounts with access to three exchanged to trade 95% of all this.
While many investors gloss over the agricultural commodities they shouldn't. In the future agricultural commodities will only be increasing in importance as the worlds water supplies continue to diminish. If you are already monitoring demographic trends and overall supply demand you should also be following agricultural commodities.
As you can see commodities can be a very useful and profitable asset class. With several sub sectors as well as the fact that most commodities are so universal that they only trade in one currency and it should be obvious that you need to track if not trade commodities. - 23305
One of the main types of upstairs traders in the commodity markets are the CTA or commodity trading advisors. They typically do a lot of long term trend following. The second major commodity trader is the global macro trader.
Global macro traders are the next major group of players in the commodity markets. Some are heavily involved and some barely trade them but all macro traders track the commodity markets to give them a better look into the worlds macro economic situation.
For instance if oil is rising like we saw in 2008 then you have to look to see what businesses are going to get hurt and what will benefit from higher oil prices. Obviously oil companies will make more money but what about shorting airlines? Or maybe even going long railroad companies. As you can tell there are endless ideas of who is affected and who is not.
Precious metals are another area of great concern. Long looked as a fantastic inflation gauge gold and silver are also looked upon more and more as alternative currencies since most fiat currencies are looking like junk these days. As you can see precious metals are very useful to key in on currencies and inflation.
Another huge piece of the economic pie is that of industrial commodities. Industrial commodities comprising aluminum, zinc, lead, tin, nickel, iron, copper, etc are used in everything for everything. If you drive it, plug it into the wall, or live in it then you have industrial metals all around you. And you only need to have accounts with access to three exchanged to trade 95% of all this.
While many investors gloss over the agricultural commodities they shouldn't. In the future agricultural commodities will only be increasing in importance as the worlds water supplies continue to diminish. If you are already monitoring demographic trends and overall supply demand you should also be following agricultural commodities.
As you can see commodities can be a very useful and profitable asset class. With several sub sectors as well as the fact that most commodities are so universal that they only trade in one currency and it should be obvious that you need to track if not trade commodities. - 23305
About the Author:
If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investing advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.
posted by Mr. Forex at
9:27 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home