The world of trading commodity futures can be both exhilarating and depressing. Trading can bring you riches and can drive you to financial disaster. Interested but don't know a thing about commodities? Well commodities are all of those items bought and sold as foods and manufacturing items like corn and hogs and oil. In addition, there are non-physical issues like the S&P 500 but we won't talk about them here.
To trade, you enter into a contract to either accept or make delivery of a particular commodity at some time in the future (thus a commodity futures contract.) Where the excitement comes in, is that you need deposit only a fraction of the worth of the contract, called margin, to make the commitment--$800 might be required for a 5,000 bushel corn contract which could be worth $15,000. As a point on information, the mast majority of contracts are liquidated before delivery--traders are generally not in the business dealing with the delivery of 40,000 pounds of live hogs.
With only $800 invested, you could profit or lose quickly as the worth of the contract changes on the market. A 5,000 bushel contract will grow or decrease in value by $50 for each 1?change in the price of a bushel of corn. That change, in the worth of the contract, is added or subtracted from your trading account at the end of each day--a 10?bushel change would add or debit your account by $500. While this is going on, you are required to keep your account above a minimum balance for each contract to which you have committed--maintenance margin. If it drops below this level, you will receive a call (the dreaded margin-call) to deposit more funds or your contract will be liquidated.
Needless to say, you should do some practicing before betting with your hard earned money. This software can provide an easy-to-use tool in testing your trading techniques and to provide some useful trading information.
