Tuesday May 24, 2022

What you need to know, don’t buy your first commodity

FND (first notice day) is the day you will be notified that you have a contract to buy a commodity. If you do not get rid of this contract, you will have to take the delivery in full.

Commodity trading is built on a buying and selling futures contract, which allows stock exchanges and brokers to buy and sell absolutely everything. It is therefore possible to speculate (guess) whether the price of commodity taxes will rise or fall in the future, and to buy and sell such assumptions in the future, commodity futures contracts.

The drain of such a contract then gives the trader a profit or loss. If a trader buys a futures contract and the price of a commodity increases, the trader immediately sells the futures contract at a much higher price and thus collects a patin profit.

Therefore, if we know that we will need to buy and sell futures contracts for our store, we can now look at what such a futures contract will renew.

First of all, you first know what commodity we want to buy or sell. On the American commodity exchanges it is possible to buy and sell a whole range of commodities: wheat, oats, corn, beef, pork, building yard, gold, silver, cotton, cocoa, sugar, kvu, ri, soybeans, various currencies and many, many dalch…

For our trades, we will choose such commodities, which we offer on the basis of technical analysis of the graph of profit, ie such commodities, in which there is a certain probability that the price will go in the near future in the opposite direction. And, of course, we will choose such commodities, which will depend on the size of our furnace, only other commodities are traded by small speculators and other commodities by large investment funds.

So if we know what commodity we want to trade, we must know how we will want to trade the contract. Individual commodities can be purchased with different terms additionally: e.g. We can buy corn with a delivery date in December 2008 or calmly with a delivery date in May 2009. Individual commodities can be pre-sold through a futures contract for several years ahead.

The only thing that matters to us is that for our traders we will always want to choose the contract month that trades most often. The most widely traded trades are usually the closest contract months (so-called front months). Of course, all of the names of commodities and contract masses will be published in English, so it will be necessary to learn at least the English nomenclature of MSc.

Here are some specific examples of commodity futures contracts:

  • CORN DEC 2005 futures contract for the delivery of maize with a delivery date in December 2005
  • RICE MAR 2006 futures contract for delivery with term delivery in March 2006
  • COFFEE MAY 2006 futures kontrakt na dodn kvy s termnem dodn v kvtnu (may) 2006

Now, many of you are sure to ask a question: if I buy a futures contract for additional corn with a term delivered in December, does that mean that a truck will stop in front of my house in December and 10 tons of corn will go on the sidewalk? Don’t worry, nothing like that vs neek.

When the futures contract has, in addition to its name and term, add the term term LTD and most of the contract is also called FND. These are abbreviations that you must always observe in order not to get into an unexpected situation, and which mean the following:

  • FND first notice day, or the day when you are notified that you have a contract to buy a commodity, and if you do not get rid of this contract (by selling it to someone else), you will soon have to take over the contract to transfer the supply in full vi.
  • LTD last trading day, or absolutely the last day when you can go to a contract to sell a commodity tax to someone else and get rid of your obligation to get a physical commodity.

Therefore, if you buy a commodity futures contract, you should find out from your broker when I have a FND and LTD commodity contract (this information is widely available for free on the Internet).

The condition, of course, is never to terminate the commodity futures contract according to the date of FND. As soon as the FND starts to flash, you need to get rid of the commodity contract immediately by instructing the broker to close the position. This will definitely get rid of the bundle of physical transfer of a given commodity.

In the crushing vtin case, the bag will not have to suffer from the futures contract to FND. This is because the strategies you can use in a commodity trade can very often hold a commodity contract for only a few days, or even just a few minutes.

ryvek is from the book
“Trading on commodity markets”
vydan nakladatelstvm
City Publishing,
For more information, visit
www.grada.cz

ryvek is from the book
“Trading on commodity markets”
vydan nakladatelstvm
City Publishing,
For more information, visit
www.grada.cz

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