buy commodities without the actual items

[vinboy]

hi
I'm very new to investment.
This may not be the place to ask such question but it is currently the only place that I know of.

So here it goes:
What is the "thing" that you buy when you expect something to go up in value?
Lets say I expect rice to go up in value and I want to invest in it, but I do not want to go to the market and buy 10 tonnes of rice because they will expire in no time.
Also, if I expect something to go down in value, can I buy the "thing" too? kind of like short-selling in stocks/shares.

thanks in advance.

Please don't shoot me for posting inappropriate content

[rhodytrader]

Sounds like you're talking about commodity futures, though commodity ETFs can be traded in the stock market.

[Andrewunknown]

Rhodytrader is right on - the only thing to add is that you buy or sell contracts. These contracts put the holder under obligation to buy or sell a specific quantity of a commodity when the contract settles. Most who trade futures (for any class of instrument, not just commodities) cover their positions shortly after opening them, often during the same session, other than those involved in farming who have reason to use futures contracts, holding them for delivery to lock in specific price for sale or purchase of corn, or soybeans or whatever. So, if you go long on a contract, you'd flatten your position by selling; and if you were to short (sell), vice-versa.

[rhodytrader]

Originally Posted by Andrewunknown

Rhodytrader is right on - the only thing to add is that you buy or sell contracts. These contracts put the holder under obligation to buy or sell a specific quantity of a commodity when the contract settles. Most who trade futures (for any class of instrument, not just commodities) cover their positions shortly after opening them, often during the same session, other than those involved in farming who have reason to use futures contracts, holding them for delivery to lock in specific price for sale or purchase of corn, or soybeans or whatever. So, if you go long on a contract, you'd flatten your position by selling; and if you were to short (sell), vice-versa.

If we're going into specific here then when trading futures you don't buy or sell anything unless you actually go through the delivery process at expiration. Just like in forex, you go long or short, but never actually take possession of anything.

[Andrewunknown]

Sure - in trading parlance, "buying" and "selling" are thrown around loosely, but that's true; all that is really going on is holding, long or short.

[Yarcofin]

Originally Posted by Andrewunknown

Rhodytrader is right on - the only thing to add is that you buy or sell contracts. These contracts put the holder under obligation to buy or sell a specific quantity of a commodity when the contract settles. Most who trade futures (for any class of instrument, not just commodities) cover their positions shortly after opening them, often during the same session, other than those involved in farming who have reason to use futures contracts, holding them for delivery to lock in specific price for sale or purchase of corn, or soybeans or whatever. So, if you go long on a contract, you'd flatten your position by selling; and if you were to short (sell), vice-versa.

My dad told me that a friend of his got into futures, but he didn't sell in time...... he ended up actually getting a train-load full of corn or wheat (whatever he ordered) delivered to the local train station and he had to take possession within 48 hours of it arriving or something.... he had to sell it at a huge loss.

So DEFINATELY double-check and make sure you sell well before the scheduled delivery!!

I don't know if this has been changed since then, I think this took place in the 80's or 90's, but definately something to consider.

Personally I use ETFs (indexes) to trade things like Gold, Energy (Oil), etc. In this case I don't think you're owning the commodity though, it's a group of companies that produce it.

[Jamaicafx]

Hi Guys, Ireally needhelp with the code for this expert advisor i have been working on. i'm new to programming and was wondering if anyone here could look at my code and correct it so that it buys an sell . currently it only executes short trades. i'm going crazy..haven't left home in three days. If the expert is profitable lets all have it

Iattached the expert, thanks in advance.

[Andrewunknown]

I could be wrong but there's probably not many (if any) who know MQL here (assuming this is for MT4) - at least not who frequent the newbie area. You might check over at forex-tsd.

[rhodytrader]

Originally Posted by Yarcofin

My dad told me that a friend of his got into futures, but he didn't sell in time...... he ended up actually getting a train-load full of corn or wheat (whatever he ordered) delivered to the local train station and he had to take possession within 48 hours of it arriving or something.... he had to sell it at a huge loss.

So DEFINATELY double-check and make sure you sell well before the scheduled delivery!!

I don't know if this has been changed since then, I think this took place in the 80's or 90's, but definately something to consider.

It hasn't changed. If you don't offset your position before contract expiration you'll be in a delivery situation.

Personally I use ETFs (indexes) to trade things like Gold, Energy (Oil), etc. In this case I don't think you're owning the commodity though, it's a group of companies that produce it.

Some ETFs are companies. Others are plays on the actual commodity. For example GDX is an ETF of Gold Miners, while GLD is actually gold.

[andyfx]

Hi there James the guy i got my system from currently holds a Live SKYPE chat for anyone with trading problems. He has a programmer in the room who has written for the Automated championships. Think it might be worth checking out.