What are commodities?

What are commodities?

Oil, gold, wheat, livestock. Commodities are the basic building blocks of the global economy. Natural resources traded on dedicated exchanges around the world. Commodities come in two types: soft, which are typically agricultural like rice or sugar, and hard, those made up of metals or energies like silver and gas. The production and consumption of commodities depends on many factors, including: supply and demand, the weather, economic and political events and the dollar, as commodities are normally priced in US currency, meaning commodity prices can fluctuate significantly.

So, how do you trade them? Commodities are bought and sold on a number of exchanges specialising in particular markets. For example: NYMEX, in New York, LIFFE, in London, or the SHME in Shanghai. They are generally traded as futures contracts, which are simply agreements to exchange an asset at an agreed price and date in the future. future. This enables you to trade the contracts themselves without ever having to own the underlying asset. But remember, commodity prices can be very volatile, so it’s vital to keep an eye on the potential downside when placing a trade.

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Top 3 Technical Analysis Indicators (Ultimate Guide)

Top 3 Technical Analysis Indicators (Ultimate Guide)

Hey everyone, this is Kirk, here again from optionalpha.com. And in this video tutorial, what I want to do is help you guys figure out where a stock may or may not go in the future. And I think as we start to talk a little bit more about technical analysis, it's important to realize that it's not the end-all(?) tool. And even in my own progression of trading, I used to use technical analysis a lot more than I do now. But it still serves a really good purpose because you can get some insight into where a stock again, may or may not go in the future, and I think if you have technical analysis set up the right way on your charts, it's very easy to again, just use it as a little bit of an edge. Now, one quick comment on setting up too many technical indicators: I often find that when I coach people that they have 45 different technical indicators they're looking at, and you get into this mode of analysis paralysis where you're just looking at this indicator and that indicator and whatever.

So, I'm definitely a fan of setting about three to five technical indicators that you like to use, that you found to be successful, and sticking with those long-term, and getting to know how they work and how they move, and what kind of signals they give. So, that's my suggestion on the types of trades that you should be making and how you should be using technical analysis. Now, what we're going to do today is we're actually going to show you how to set up three of the different technical indicators that I use, including MACD, CCI, and RSI. And I'll show you how to set them up in . And obviously, you're a broker if you're using some way different, might have a different set up. But it's all basically about the same. So, the first thing that we're going to do is we're going to start with this base chart. And today, we're just looking at IWM. So, we're just looking at one of the major market index ETF's.

And you can see we've got pretty much nothing on this chart. That gives us an idea of where the stock may or may not go, we can draw lines and all that stuff, but no real technical indicators. So, what I want to do first is I want to go up to here where to studies. And I want to edit studies. And so, you can see, there's no studies on here right now, but I'm going to add a study. So, on the left, I'm just going to search for the first one which is MACD. So, I want to use MACDTwoLines. And there's a bunch of different ones you can use � Histogram, Crossover, TwoLines, just regular MACD. But I like to use TwoLines. And then, inside MACD, you can see that there's a couple of different settings. So, the first setting that I want to do is I want to change the fast length which is this one right here.

Fast length which is currently at 12. I want to change that to 15. So, that's the first change I'm going to make, and then I'll explain what these different lengths mean. And then, the slow length is currently at 26. I'm just going to even that out just a little bit more to about 30. So, here's what they mean. With MACD, basically, what you're looking at is two different moving averages, and you're using a faster moving average which in this case is about 15 days, and a slower moving average which is 30 days. And what we want to see with these two moving averages is this convergence and divergence in them, meaning is the momentum and the security. Does shorter term momentum relative to the longer or slower term momentum? Is that increasing or expanding against itself? All right, so is it momentum coming into the security or is momentum coming out of the security? And so, once we actually put those on our charts, you'll see all I do is hit apply.

And go here and hit apply. And you can see that now MACD is on the bottom side of our screen. Now, once we have these on these charts, you can see that the green line which moves a little bit faster and is kind of a little more edgy, it moves quicker with the market because it's a faster moving average, it's only 15 days. This one is going to move much quicker with the market as opposed to this purple line which is our slower moving average at about 30 days. And you can see, they generally both move in the same cycle, but there's periods in which we see a cross of the slower term moving average which is green that crosses above or below the purple line.

Now, in our case, we are looking for specifically that cross in the moving average. So in this case, the one that I'm pointing to right now on the screen, this is the moving average that has now crossed under the purple line, and that gives us a very clear sell signal. So, when we see that shorter term moving average, that green line, cross under or below the purple line which is our longer term moving average, that means that short term momentum is getting sucked out of the security relative to long term momentum, and therefore, we should be out of the security or at least be weary of a selloff. Now, in this case, that ended up being a pretty good signal, right? And we look back historically with IWM, and that signal really carried us until the next buy signal that we had down here in August.

So, you can see now we got a new signal where that shorter term moving average, the green one, crosses above the purple line which is our longer term moving average. And that right there gives us a very clear cut buy signal. And you can see that again, that was a very good signal because that buy signal here carried us through to the next sell signal, and so on and so on. So, MACD is one of my favorite ones to use because it is just a little bit more reliable in just judging where a stock may or may not go in the future.

Now, as I say that, I'll point out, and even on this chart right now with where stocks are trading right now, we had a point in time where the signals weren't that clear. So, there's obviously flaws to technical analysis, and this really kind of drive some of the point here that these signals weren't 100% clear at this time. You can see we had a couple of different crosses as MACD was continuing to move lower. But as that happen, the stocks just basically stayed sideways. There's a lot of volatility in there, but the stock really stayed sideways, heading towards the future. And so, it's important here to just as always, take this with a grain of salt. What's really important with technical analysis is just where a stock may or may not go, and how relatively overbought or oversold it is. So, if you start to see MACD really, really starting to extend like this and just run for a month in a half, it might be best to start again, pairing down your positions or at least getting a little bit bearish in some of your trades.

So, that's the way that I use it. And again, it's pretty reliable on those stocks, but you'll have to go back through and back test a lot of those. So, as we go through here, let's add a different study. So, we're going to keep this one up here, and we're just going to add another study to it which is my second favorite, and that is CCI. So, CCI is a little bit different. We're going to change this one as well. The length of CCI's is similar to MACD, and then it judges timeframes in the past. It's currently set at 14, and we're going to widen this out to 31.

And what that does by widening it out to 31 is just takes in more data, and gives us a smoother transition. So, if you have a 14 day setting on your CCI, you're going to get a lot of signals because it's based on data going back and forth about 14 days. And sorry if you're heating a bunch of those alerts. That's just trades that are going off as I'm doing this video. So again, with a shorter term indicator of 14 days, you're going to get a lot of signals back and forth. Moving out to 31 days and changing that timeline just gives you a lot more smooth data and a lot less signals, but more defined signals. So, the way that I use CCI is for basically, trend analysis, judging to see where the market is relative to an overall trend. So, what I'm going to do here is I'm just going to take the oversold and the overbought. I want CCI to be in blue. So, I just want it to be a little bit more defined here. Okay, so here we are with CCI. What's important to notice about CCI is that the most important line on this chart is actually the zero line.

Now, on here, I do have the 100 and the -100 because that's what defaults in the indicators. On my particular charts, I like to take those off if I can because I'm not looking at that line. I really want to be focused on kind of this zero line, and that's where we get our buy signal or sell signal. So with CCI's, basically an indication of continuing momentum in the security, and so, what we want to see is we want to see a cross of the indicator above or below that zero line. And that gives us an idea of where a stock might go in the future.

So, you can see, we got a cross back here in - This is in October, if you can't see the date here. And you can see that that cross in CCI did lead to some nice rallying in the stock as we kind of headed towards the end of the year. And it's not all about being overbought or oversold. So, just because CCI gets to extremes does not mean that that creates an opportunity necessarily to buy our sells. So, that's one difference with CCI's opposed to some other indicators, it's that it's not about being overbought or oversold, it's about crossing that zero barrier. And here on the charts, you can see that we had a CCI kind of cross or go to an extreme here back in December, and it dropped low to an extreme. And although it was a slight little buying opportunity, it wasn't some huge bottom because the stocks obviously haven't bottomed out and have reversed since. So, don't use it as the extreme. You want to use it kind of right along this zero barrier.

Now, what's really cool about CCI is that if you go back in time, and especially with SPX - So, let's look over at S&P 500. What's really cool again, about CCI is that it's a trend indicator. So, on the left hand screen, you see here we have CCI that's over here. That cross above that zero barrier gave us a buy signal. It never gave us a sell signal until we got to the point of August when stocks actually did decline. So, even though it had all of this overbought, oversold that was moving all over the place, it still remained the entire time above that zero barrier which just means that we're in a bullish or upper trending market. And it wasn't until we got into August that we got that sell signal which was pretty defined, not only on the charts, but also in the indicators that told us to get out of stocks temporarily. So, a really good indicator. I love using CCI as well.

There are my top two. All right, let's add one more to the charts here, so let's go here and go to the studies. And we're going to go to edit studies and we're going to add RSI. And we're going to add RSI right to the chart. So, we can just leave RSI exactly as it is. And now, we have RSI down below. So, I'm just going to try to minimize these two here, so you can see RSI down below. Now, RSI is a little bit different. RSI is a judge of relative strength in the index or the stock that you're looking at, and you are with RSI looking for these overbought and oversold ranges. So, you can see here that the overbought range is about 70 reading on RSI and the oversold range is about 30. Everything in between is relatively useless because you are really looking for those extreme points at which stocks become overbought or oversold. Now, when we look back in time again, with CCI and MACD � And let me just kind of try that, swoosh this down just a little bit.

Here's the look at the S&P 500. You can see that we did get a reading all the way down here on RSI below 30 which ended up being almost a perfect buy on the market because stocks really bottomed out from that point and continued to move higher. Likewise, as the market was moving higher, we got an oversold reading towards the end of November, beginning of December, and that ended up being a pretty good signal to get all the stocks because they did experience a nice little decline afterwards. So again, with RSI, you're looking at the extremes and only trying to trade the extremes in this security and ETM indicator. Now as always, every indicator has its flaws.

Here are a couple of times in June and July where it signaled a bunch of market extremes, and we didn't see that at all. In fact, we saw stocks over that time period start to increase a little bit more. And eventually, they did fall off, but it wasn't quite as pronounced as some of the other indicators that we've seen here before with the market bottom here and the market top here. So as always, these indicators have flaws. It's important to kind of use them in conjunction with one another. So, as we go back to IWM, I wanted to show you just how I would use indicators and how I do use indicators and technical's with my trading. And it's this idea that they all have to be in some sort of agreement, okay? And so, I think that's the key here. It's that if you look at all three of these indicators, they all are moving in about the same ebb and flow. And it's just incredible how these markets move in the same kind of flow and cyclicality. And you can see, all three of these indicators are moving in about the same ebb and flow.

So, it's just important when you look at something that you kind of draw a line in the center and say, �Okay, relatively speaking, where are all of these things pointing? Are they all relatively high? Are they all relatively low? What does that mean for my trade? Do I go bullish? Do I go bearish? Whatever the case is�� But again, don't get caught up in analysis paralysis. Just look at the general picture, dissect each individual, one of these by themselves. But then, kind of gleam some inside into the fact that they are all pointing in one direction or another direction or whatever the case is. As we look at the markets today to kind of wrap up this video, you can see that we've definitely reached high and we're kind of coming off of that high on the market. MACD is continuing to point down because we don't have a buy signal.

CCI has just crossed back under that zero barrier, so we definitely have a bearish market that we might be heading into. And RSI is definitely not oversold and it's not overbought either, and it's definitely pointing towards the downside. So, at least at this point, without knowing exactly where the market is going, we're going to air on the side of caution that stocks may continue to fall here until we see something that tells us that they might turn around. So, I hope you guys really enjoyed this video. This was a lot of information. It took a long time to get through, but this is really all what technical analysis is about. It's about adding a couple of different indicators to your charts, making sure that they're customized to fit your trading timeline. In our case, we like to have a longer timeframe in most of the indicators just so that it smoothes out a lot of the data that we see. But then, also using a couple of these to make sure that they're kind of in agreement or congruence with each other as we look to find out where a stock may or may not go in the future.

So, if you have any questions or comments, please add them right below this video lesson. And I'll make sure I get back to all of those in a timely manner to get your questions answered. Until next time. Happy trading! .

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How to trade the oil markets?

How to trade the oil markets?
There are several ways to trade and invest in the oil markets oil as a commodity oil ETFs oil and gas industries and shares in the individual companies trading the price of oil is the most common way there are many classifications covering varying degrees of quality and sulfurous content but two benchmarks are widely used brent and us light crude brent is the classification that covers oil that's been produced in Europe since 1976 it was named after the Brent field off the northeastern tip of Scotland which was run by shale and the company that became ExxonMobil us light crude a mixture of oils that come from North America the most prominent being west texas intermediate or WTI the disparity between brands and US light crude has been kept steady over the years with US oil mostly at a small premium to brent but this has been flipped in recent years because of the Libyan crisis in 2011 led to an increase in supply from North America oil ETFs or exchange-traded funds are often used to gain exposure to the oil market unlike buying into a single stock an ETF charges fees which will eat into the overall fund performance the indices are a way to trade a group of similar companies such as oil and gas producers or the equipment service companies and finally company shares themselves selecting which shares can be a complex process as there are different sorts of businesses an upstream companies involved in exploration and production these companies are vulnerable to a drop in the price of oil midstream is processing storing and transportation and downstream concerns itself with refining the crude these companies tend to make more money when the oil price is low the big multinationals are often exposed to all areas that some of the smaller businesses are specialists there are traditional oil companies that drill and recover oil in a conventional way then there are those that employ new technologies like fracking that are also the oilfield service companies that provide and operate the rigs because of the complexity and vast array of options spread betting is often a good way for traders to speculate on crude price volatility without a direct relationship to the underlying asset and so no oil contract to worry about leaving the trader to focus on pure price action but whichever way you choose it's a sector with a wide variety of opportunities

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Stocks, Indexes & ETFs - What's The Difference?

Stocks, Indexes & ETFs - What's The Difference?

Hey everyone. This is Kirk, here again from optionalpha.com. In this video tutorial, I want to talk about stocks, indexes and ETFs. We know there’s three main types of underlying securities that we will trade options on. Regardless of your trading experience, it's important that you really understand the benefits and drawbacks of each of these three different types, stocks, indexes and ETFs. That’s what we’re going to go over in this video. With stocks, here are the main benefits. First, there’s thousands of possible companies to trade and I think the keyword here is “possible companies to trade.” That doesn’t mean that they’re all great trading opportunities, but there are so, so many different securities out there that we can trade when it comes to stocks, so there’s a lot of choice. Earnings trading opportunities are huge with stock because they don’t happen on ETFs and indexes, so the ability to trade a stock every quarter around earnings and profit from that implied volatility crush is actually a huge benefit to trading stocks.

Number three is that there always are new players to trade, so there’s always new companies that are coming out and they’re going to be hot stocks and they’re going to have a lot of open interest and volume and liquidity and they’re going to be really great trading vehicles. Things like right now that are new and still hot are still Twitter and GoPro. Tesla is relatively new to the market, still a very hot stock. These new stocks and companies that come out, they give us more trading opportunities in the market. Obviously, some of the big drawbacks to trading stocks is the unsystematic risk, so that risk of immediate bankruptcy overnight or a company getting bought out in an M&A deal, something like that that might cause the stock to make a huge gap in one direction.

The lack of liquidity in most cases is actually a really big problem. Like I said before, there's a lot of companies out there, but they’re not all great trading opportunities. In fact, probably less than 1% of the market has enough liquidity that we would even be interested in trading that stock and the options on it. Fewer trading opportunities because generally, there’s just less companies out there that have options and of those companies that have options available, even less of those companies have options that are really liquid and highly traded, so there’s a lot fewer opportunities in stocks. Then we also do have earnings to contend with, so that throws things through a loop every quarter when we go through that earning cycle. When we talk about index benefits, I think the biggest benefit to trading indexes is that they’re usually huge and liquid markets.

Everybody trades them, they have a lot of liquidity because they’re used from with institutions and hedge funds and private equity shops, so there’s a lot of market players in there which creates a very deep market. They’re easy because most of them settle to cash. Indexes like SPX and RUT and NDX all settle to cash, so there’s not a lot of trouble that you have to go through at expiration if your position is in the money or out of the money. It’s just all settled to cash, so there’s no underlying stock to trade hence. The other major benefit is that it gives us a lot of hedging potential. We often will use in our own portfolio the SPY or SPX as a hedge against some of our other positions. If we get a little bit too overbalanced in one area or another, a little bit too bullish or too bearish, we’ll come in and use one of the major indexes as a way to hedge some of our positions because it’s very liquid, easy to get in and out of and it’s settled to cash.

Some of the major index drawbacks are that option contracts are just larger in value. On the SPX we know this is true, on the RUT we know this is true, NDX we know this is true. Those are just larger valued contracts, so they tend to scare away some of the smaller retail traders. We also tend to see lower implied volatility because these are index options and they’re baskets of securities. They’re not making dramatic moves up and down every single day, we’re not seeing 5% or 10% moves every other day, so they tend to have overall lower implied volatility which just makes it a little bit harder to trade with regard to getting an edge in the market. They don’t have the ability to trade earnings on and that can sometimes be a good thing, but if markets are really calm and implied volatility is really low, then it's really bad because we can’t trade a lot of stocks, we also can’t trade indexes because implied volatility is low.

We don’t have that potential to trade earnings throughout that low implied volatility market. When we talk about ETF benefits, the first and major benefit of trading an ETF or a basket of securities is that it has less tail risk compared to a single stock. When we talk about tail risk, that’s the risk that we mentioned earlier in this video, the risk that a stock just has a huge move up or down because of a bankruptcy or an M&A deal. With ETFs, since they’re baskets of securities, they don't tend to see huge moves in one direction or another and that's why people like to trade them and that's also a really big benefit.

They’re mostly liquid and have deep markets because if you focus on some of the bigger ETFs, (and there are bigger ETF markets than others) they’re pretty liquid and they have pretty deep markets, meaning there’s a lot of participants at different strike prices, it makes it really beneficial for options traders. Number three is you can have focused risk across different industries. If we wanted to go in to say financials and just trade financials, instead of doing it in 10 different securities, we could go into an ETF like XLF and trade just focused in the financial sector. I think that's a really big benefit, is you can target different industries and sectors in your portfolio. Obviously, some of the major drawbacks to ETFs are some of the double and triple inverse choices. Some of those securities aren’t priced well and most people don't understand how they're actually priced, we’ve got a video tutorial inside the membership area that goes through how some of those are priced and the errors that are made in pricing that people don’t understand and I think that’s a huge drawback if you trade just those double or triple inverse choices.

In most cases, there’s too many illiquid options. Like we said, the ones that are really popular have great liquidity, but the ones that are not so popular because there’s a lot of choices, don't have good liquidity at all. Number three is that re-pricing often occurs and what we tend to see is that in some of these double or triple inverse ETFs, when the security gets so low that it becomes almost non-tradable, they’ll re-price it back up to a higher level, reset the clock all over again and that just creates a lot of confusion with some of your positions and some of the strike prices that you have and definitely creates a lot of capital requirement issues because now you’re trading a stock that’s 10 or 5 times higher than where it was before. That's a major drawback that you don't see with stocks or indexes.

I hope you guys enjoyed this video just going through these three different categories of underlyings that we can trade, both the benefits and the drawbacks. As always, if you have any comments or questions, please ask them right below this video on the lesson page. Happy trading! .

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Securities, Commodities, and Financial Services Sales Agents

Securities, Commodities, and Financial Services Sales Agents

Scrolling by on the side of a building… or at the bottom of the news… the stock exchange update can look like random lists of numbers. Securities, commodities, and financial services sales agents use their knowledge to translate those numbers into investment advice for their clients. These sales agents make trades, advise clients, and sell securities. Sales agents spend much of their time with clients, and deal with a wide range of products. Products they sell include commodities— usually an electronic transaction rather than a face-to-face sale— of agricultural products like wheat or cocoa, or resources such as oil and gold; securities—different types of tradable assets such as stocks, bonds and options; and financial services— essentially, the service of investing clients’ money to increase it, using a variety of investments. These agents differ based on the types of products they trade, the services they provide and the licenses they hold: Brokers sell directly to individual clients and give financial advice. Investment bankers connect businesses that need financing with investors, and may travel extensively.

Investment banking sales agents and traders buy and sell stocks, bonds, and commodities for clients and make trades on behalf of firms. Floor brokers make trades directly at a securities or commodities exchange. All of these sales agents closely monitor and analyze markets to stay informed and make strong decisions. They usually work full time and many work overtime, including weekends. Entry-level positions require a bachelor’s degree in business, finance, accounting, or economics. An MBA is helpful for advancement. .

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