Keep Your Eyes on The Horizon With Achievers!
Vince Lombardi has said, “Leaders aren’t born they are made. And they are made just like anything else, through hard work. And that’s the price we’ll have to pay to achieve that goal, or any goal”. Correctly striving the above quote are Rocco Amide, Richard Amble and Christian Ambjørn.
Rocco Amide is CME Manager Clearing Information Technology. CME Group is a combined entity formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT). The hard work of Rocco Amide and team has led the firm to be the largest and most diverse financial exchange in the world for trading futures and options. Rocco Amide believes that Accountability, Awareness, Ethics, Multidisciplinary, Proportionality and Integration are key features required for the running of successful firm Rocco Amide strongly believes that, “If people always did naturally what was best for the enterprise, then there would be no need for administration”.
Richard Amble is Blumenthal Uniforms Store Manager. Richard Amble is crowned with many qualities like balancing multiple priorities of store, giving equal attention to all aspects of operations, Identifying ways for stores to be special or different from competition and Identify innovative ways to reduce expenses. Richard Amble strongly believes that, “We must adjust ourselves to the customers –never the customers to ourselves”.
Christian Ambjørn is Camco Chemicals Vice President; Camco is a world-class chemical manufacturer that can support your sales and marketing efforts with material processing, powder or liquid blending, packaging and distribution needs. If you have the formula, Camco can (and will) do the rest. They can connect you with a ready cadre of affordable development chemists, chemical engineers, process development specialists, label artists – even intellectual property and patent counsel; in short, every possible assist you might need to initiate your project and get it to market in record time. They have experience in the broadest imaginable range of chemical production, packaging, processing and business operations. The bottom line: Camco can assist you where others simply cannot. Christian Ambjørn strongly believes, “One grain of sand at a time, one task at a time”.
Futures Trading – The Past and Present of Futures
Futures trading is one of the most difficult concepts for novice investors to comprehend. To better understand the present of futures, it’s best to look back into the past.
Back to the Futures Part I – The Origins of Futures Trading
Futures has its roots in forward contracts. Although forward contracts date back to the Middle Ages, they became most popular in 18th and 19th century America. Way back then, farmers from across the American mid-west used to bring their grain to Chicago with each harvest.
Since there was a surplus of grain available at that one time, the stockyards were able to bid down the price paid to farmers. Then later in the year, as supplies dwindled, the stockyards would sell grain at a healthy premium.
Understandably, the farmers thought that this was unfair. Grain consumers also thought it was unfair. In the modern age, farmers and large grain purchasers can engage in futures trading in order to hedge their risks, but back then, there was no such thing as futures.
Instead, farmers and large consumers established forward contracts. In these arrangements, farmers would agree to supply a grain purchaser with an agreed-upon amount of grain at an agreed-upon price, and at an agreed-upon date and location – thus, eliminating the middleman.
Back to the Futures Part II – Why Futures Trading is Necessary
So why do we need futures when forward contracts seem to solve the problem? Well, while forward contracts solve some problems for farmers and consumers, they create new ones. First of all, there was no guaranteed way of enforcing the forward contracts.
Secondly, the market wasn’t very fluid. Prices could go up and down for little or no reason, and buyers and sellers had a hard time finding one another. Futures trading eliminates these problems.
For one, futures establishes standardized contracts. On the Chicago Board of Trade, for example, a futures trading corn contract is standardized to 5,000 bushels of U.S. No. 2 yellow corn, with delivery dates of either March, May, July, September, or December.
If a farmer wants to guarantee his price for corn, he can sell a futures contract today, and make delivery on the date specified in the contract.
Back to the Futures Part III – Futures Trading for Hedging or Speculating
In reality, few futures contracts are ever “delivered.” This means that a farmer who sells a May corn futures trading contract is unlikely to eventually deliver 5,000 bushels of No. 2 yellow corn to the Chicago Board of Trade, and the investor who buys the futures contract is unlikely to actually take possession of the corn.
Instead, people involved in futures trading typically “close out” their positions before they take delivery. For example, the farmer would most likely later buy a May contract, and the investor would most likely later sell one.
In the above case, the farmer would be using futures as a “hedge.” After all, the farmer may live hundreds of miles from Chicago, and delivery would be impractical if not impossible. In all likelihood, the farmer would sell his actual corn at a local market. His futures trading would be just to guarantee a given price.
For example, if the current price of corn were $2.40 per bushel, but the farmer feared it might drop, he could engage in futures to hedge by selling a later delivery of one contract (5,000 bushels) at $2.40 per bushel. Then, as the delivery date of the contract came near, he could buy an offsetting contract, thereby closing out his position.
If the price of corn went up, the farmer would lose money on his futures trading. If the price of corn went down, he would turn a profit, but either way, he would be hedged.
On the other hand, there are speculators. These investors aren’t participating in futures in order to hedge; they’re simply trying to make a profit. The good thing about speculators is that they help make markets more liquid.
This means that there is less volatility, and prices remain more accurate. For example, if the price of corn fell too low, speculators would come in and buy contracts in order to push the price back up. If the price of corn skyrocketed due to a short-lived panic, speculators would begin selling contracts and thus, driving the price down.
Speculators get a bad name in the mainstream media, but that’s because most newsmen and women don’t understand how financial markets work. If you’re a speculator engaged in futures trading, pat yourself on the back for doing our country and the world a great service.
William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Futures Trading (All is Free)
Futures Exchanges – Knowing Where To Do Business
Good for you! You’ve been reading, you’ve put together a trading rules to lay the foundation for your futures trading plan and you’ve even been paper trading to prove your trading plan. Now you are ready to learn more about where you will be doing your business; it’s time to talk about the futures exchanges.
General Futures Exchange Information
As you know at this point, you will not actually do business with the futures exchanges listed below. You will work with your broker who will take your futures orders to the exchange floor for you. Since you have been paper trading, you probably have already established an account for commodities trading so we won’t go over that again. While there are futures exchanges throughout the world, we will focus on the ones in the US. The markets we will outline are in Minneapolis, Kansas City, New York and Chicago.
History of Futures Exchanges in the US
The modern futures trading began in Chicago, IL in the early 1800s. Chicago, with its location at the base of the Great Lakes, is close to the farm of the U.S. Midwest which made it a natural center for transportation, distribution and trading of agricultural produce. Gluts and shortages of these products caused extreme changes in price. An exchange was needed that would bring together a market to find potential buyers and sellers of a commodity instead of making people bear the burden of finding a buyer or seller. In 1848, the Chicago Board of Trade (CBOT), the world’s first futures market, or futures exchange, was formed. Trading was originally in futures and the first contract was written on March 13, 1851.
Futures Exchanges
Different futures exchanges trade different commodities. In addition, each future exchange accepts different futures orders. Since not every exchange allows every order it is necessary to talk with you broker about which orders are permitted in the markets you trade. The following is a list of the major commodity exchanges, their commodities, and the orders that they accept:
Chicago Board of Trade
Location: Chicago, IL
Commodities
o Corn
o Oats
o Soybeans
o Soybean Oil
o Soybean Meal
o T-Bonds
o T-Notes
o Muni Bonds
o 5 Year Notes
o 2 Year Notes
o DJIA Index
Acceptable orders: Market, Market on Close, Limit, Stop, and Fill or Kill Orders
Chicago Mercantile Exchange
Location: Chicago, IL
Commodities
o Live Cattle
o Lean Hogs
o Lumber
o Feeder Cattle
o Pork Bellies
Acceptable orders: All futures orders are acceptable.
Index and Option Market
Commodities
o S&P 500
o Mid-cap 400
o NASDAQ 100
Acceptable orders: All futures orders are acceptable.
International Monetary Exchange
Location: Chicago, IL
Commodities
o T-Bills
o Euro Dollars
o Canadian Dollar
o Euro Currency
o Australian Dollar
o Mexican Peso
o Euro Yen
o Japanese Yen
o British Pound
o Swiss Franc
Acceptable orders: All futures orders are acceptable.
New York Comex
Location: New York, NY
Commodities
o Copper
Acceptable orders: For Copper only, acceptable are Market, Market on Close, Limit, Stop, and Fill or Kill.
Commodities
o Gold
o Silver
Acceptable orders: For Gold and Silver, acceptable are Market, Market on Close, Limit, Stop, and Fill or Kill. Stop Limits are acceptable only on a not-held basis.
New York Cotton Exchange
Location: New York, NY
Commodities
o Cotton
o Orange Juice
o Dollar Index
Acceptable orders: Market, Market on Close, Limit, Stop, and Fill or Kill.
New York Coffee, Sugar & Cocoa Exchange
Location: New York, NY
Commodities
o Coffee
o Sugar
o Cocoa
Acceptable orders: All futures orders are acceptable.
New York Mercantile Exchange
Location: New York, NY
Commodities
o Unleaded Gasoline
o Platinum
o Palladium
o Heating Oil
o Crude Oil Natural Gas
Acceptable orders: All futures orders are acceptable.
New York Futures Exchange
Location: New York, NY
Commodities
o New York Stock Exchange Index
o CRB Index
Acceptable orders: All futures orders are acceptable.
Kansas City Board of Trade
Location: Kansas City, MO
Commodities
o Kansas City Value Line
o Kansas City Mini Value Line
Acceptable orders: All futures orders are acceptable.
o Kansas City Wheat
Acceptable orders: Market, Market on Close, Limit, Stop and Fill or Kill.
Minneapolis Board of Trade
Location: Minneapolis, MN
Commodities
o Minneapolis Wheat
o Minneapolis White Wheat
Acceptable orders: All futures orders are acceptable.
Author: Stephen Bigalow
Article Source: EzineArticles.com
Provided by: Duty tariff
The Futures Markets
One hallmark of a free market system is risk. Most producers (as well as consumers) face the risk that prices of goods (or commodities) they produce will change between the time they invest their resources to produce the goods and the time they are ready to sell their output. While in some cases long-term supply contracts at prearranged prices can be made, most prices, especially those of financial assets, commodities, and raw materials, are subject to almost constant fluctuations. Futures markets reduce the uncertainty and risk associated with these fluctuations by allowing market participants to enter into contracts, called futures contracts, which fix the price of a specified asset at a future date.
Futures contracts help the realmarket participants by facilitating hedging and help investors by making speculation easier. A futures contract is an agreement between two traders to exchange an asset at a predetermined future date (called the delivery date) at the “futures price.” In the case of futures markets, the “asset” has been standardized as to the quantity, quality, the delivery point, and the date of delivery. The trade may take place at a “futures exchange” or “over-thecounter” (OTC)-a service provided by many financial institutions. OTC market allows large transactions to take place at lower cost and without the risk of moving the market price. Almost all transactions now take place over the phone or electronically, replacing the close physical contact that used to characterize trading on exchanges.
A futures contract differs from a “spot” contract mainly in terms of the date of execution of the contract: A spot contract is executed immediately after the contract is made whereas a futures contract is executed at a prearranged future date. A futures contract differs from a “forward” contract in that the futures contract is for a standardized asset whereas the asset in a forward contract can be tailor-made. The oldest futures exchange in the United States, the Chicago Board of Trade was established in 1848. Futures contracts in tulips, however, were traded in Holland in the 17th century. Commodities, raw materials, and financial assets including interest rates and currencies form the bulk of the assets traded on the futures markets. There are, however, futures contracts for many exotic assets like weather.
The Chicago Mercantile Exchange offers futures contracts on snowfall, “cooling” or “heating” degree days in the United States, Canada, Europe, or Asia-Pacific, and even a future contracts on hurricanes. Futures markets facilitate the process of “price discovery” by providing information on current and possible future prices as assessed by market participants based on available information. This process is facilitated because futures markets provide improved liquidity and reduce counterparty risk for buyers and sellers of contracts over alternative arenas where comparable contracts could be traded. Improved liquidity comes from standardization of contracts, which makes trading easier for speculators.
Since all the characteristics of an asset have been standardized, a speculator can focus on the single element of the assets that is of interest to him/her-the price. Futures markets reduce the risk for traders by a practice called mark-to-market. Futures exchanges reduce the counterparty risk for a buyer or a seller in two steps. First, the buyer (or seller) of a futures contract enters into a contract to buy (or sell) a futures contract with the futures exchange, not with the trader who may enter into the opposite side of the transaction-in this case, the entity who may sell (or buy) the futures contract. This reduces the nonperformance risk, or the counterparty risk, from that of an unkown (and sometimes a higher-risk) seller to that of an exchange. As long as the buyer believes that the futures exchange will not become illiquid, there is no counterparty risk.
Second, the exchange reduces the nonperformance risk for itself by taking two related steps. First, every buyer (as well as every seller) deposits a “margin” usually equal to 10 percent of the value of the contract with the exchange when the futures contract is bought (or sold). Second, every contract is “marked-to-market” every day. At the end of every trading day, the exchange calculates the current value of the contract. If the price movement during the day has resulted in a loss of the value of the contract, the loss is deducted from the margin and the buyer is sent a “margin call.” This margin call requires the buyer to add funds to the margin so that it once again equals 10 percent of the value of the contract. Similarly, the exchange pays the day’s profits to the buyer of the contract should the price movement have been in favor of the buyer.
Should the buyer not respond to the margin call, the exchange can liquidate the contract on the following trading day and prevent any further losses on the contract. With this practice of marking every contract to market every day, the exchange faces no performance risk unless the price movement during the day exceeds 10 percent against the buyer and the buyer decides to default. Futures markets are regulated by Commodity Futures Trading Commission in the United States. The objective of the regulation is to protect public and market users from fraud, manipulation, and abusive practices. Futures markets contribute to the economic welfare of a society by increasing efficiency through centralization of services to all users of an asset.
They help users of assets in reducing risks by being able to hedge future transactions. They also help the economy by lowing “synthetic securities” to be created, which allow better management of risk, especially of financial risks associated with changes in prices and interest rates. Futures markets, however, are subject to manipulation by large traders. A humorous example of such potential manipulation was illustrated in the Hollywood movie Trading Places, which was released in 1983.
Author: Francesco Zinzaro
Article Source: EzineArticles.com
Provided by: Canada duty rates
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