what is futures trading - 0 views
started by Lowell Forbes on 24 Apr 12
started by Lowell Forbes on 24 Apr 12
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started by Lowell Forbes on 24 Apr 12
5. Broker agent provide extensive research coverage
6. Online brokerage firms are expanding into futures with lessened commissions
What's driving demand?
Investors always seek new opportunities beyond traditional equity offerings, but there have always been barriers to their participation in commodity markets. A standard lack of understanding, inefficient access, and high agency costs for commodity investments have caused investors to consider opportunities in more traditional asset classes. However, those barriers are quickly disappearing, and commodity investments are needs to be considered mainstream investment strategies. Contributing to this influence are financial media outlets, the brokerage community, together with growing concerns about ongoing events.
Financial media outlets have grown to be a source of information for retail investors, but have also become a source with entertainment. Some financial news channels may seem more professional than some others, but they all have content that appeals to a wide range of viewers - from the novice investor to the sophisticated trader. Those media outlets guide popularize commodities by focusing on spot prices, economic data, and exchange activity all every day.
In addition to financial news reporting, media outlets provide continuing coverage of geo-political tension and natural catastrophes occurring globally. Investors can quickly get detailed news about such events via the online market place and television, allowing these phones develop logical conclusions the near-term impact on confident commodity prices. Those variables, combined with the underlying perception that emerging economies will require greater commodity consumption, will result in accentuated volatility in share prices.
Explore coverage of commodities as a result of major brokerage firms additionally helps promote commodities. Whether that coverage is in the form of equity-based sectors (as i. e., stocks that derive their revenue primarily from action in specific commodities) or in a variety of instruments that provide contact with commodity prices, investors will be the target audience. Sell-side research holds very influential even following your Internet stock craze outlined conflicts of interest. That is because such conflicts do not exist, or are quite a bit less apparent, in commodity markets.
Competition with brokers will also enhance the promotion of commodities as investments. That competition will be based on their ability to produce customers with access to new investment opportunities, and tools that allow customers to make informed investment decisions. Commodity investment represents a new frontier for brokers since it allows them to expand beyond their traditional share and bond offerings and to a complementary asset class. Brokers can expect to identify a very receptive audience since investors are growing weary of stock performance.
Just how do we gauge demand?
Demand for commodities has become easier to quantify than ever before. It is exhibited with the success of "proxy" products, including mutual funds, collateral index funds, equity catalog options, and commodity futures. Popular investments in the U. S. include your PIMCO Commodity RealReturn Strategy funds (symbol, PCRDX), the force Select Sector SPDR (icon, XLE), StreetTRACKS Gold Shares (symbol, GLD), and more recently, commodity pools like north america Oil Fund (USO). On the trading side, there are dozens of derivatives ranging from traditional commodity futures contracts, to options on equity search engine spiders that track the effectiveness of specific commodity areas.
The PIMCO fund can be a traditional mutual fund that passively tracks the performance in the Dow Jones AIG Share Total Return Index. The index covers the combined performance of an basket of commodities as a result of their associated futures selling prices. The fund uses derivative instruments to find direct exposure to which index. As of December 2008, the PIMCO funds had assets of above $7 billion since their inception about 4 ½ issue, (1) well off its highs of over $12 billion earlier this coming year when commodity prices were rising together, but still an impressive amount. As of December 2008, there were at the least 132 commodity-focused mutual funds with total assets of over assets of above $35 billion. commodities