Options Trading Strategies-Commodity-Currency Spread And Carry Trading
Feb0
Take your Options Trading to the next higher level by trading with the pros at the Live Trading Labs. Turn $200 into $100K in just 3 months with this Penny Stock System. Win your FREE COPY of the High Velocity Market Master HVMM System ($2,997) by taking this quiz. Don’t forget to get your FREE copies of the Ultimate Day Trading System that can trade stocks, forex and futures and the Universal Capital Growth Trade Tool!Many currency traders don’t know much about options. Currency options are a highly profitable method to make money from a trend in the currency market. Many traders simply focus on spot trading. If you combine spot trading with currency options, you can multiply your portfolio return many folds. There are some currencies that are popularly known as commodity currencies. You can trade these currencies with commodities using options!
For example, South Africa is the world’s largest exporter of gold. Its currency Rand is intimately correlated with gold prices in the international market. When you find the spread between gold prices and RAND to be unusually wide and out of its historical relationship, you can simultaneously trade a gold call and a rand put in case the spread between RAND and gold prices is negative or the other way around.
Now, Australian Dollar (AUD) also has a strong correlation with gold prices as Australia is also a major exporter of gold in the world markets. Now AUD is one of the commodity currencies that you can trade with Reuters Commodity Index if you find the spread getting wider than the historical relationship.
Ever thought of carry trading. Many trader do it. You too can try it. Hedge funds are the expert in carry trading. One of their popular trading strategies is carry trading. You see noone want the money to sit idle without making any return. Carry trading is a nice way to profit with the interest rate spread between two currencies. You look for a currency pair that has one currency offering a much higher interest rate as compared to the other. You buy the high interest rate currency and sell the low interest rate currency.
In the last decade, Japanese economy was facing stagflation. This forced the Japanese Central Bank (JCB) to lower the interest rate to almost zero. So carry traders started selling Japanese Yen (JPY) and buying other high yield currencies like British Pound (GBP) or the New Zealand Dollar (NZD) that were offering a much higher interest rate. Now, carry trading like any other currency trading strategy is risky. The risk is of a sudden large drawdown when the risk aversion of the carry traders increases all of a sudden on hearing a breaking news.By taking put and call positions in the two currencies, you can hedge the risk of a large drawdown.
Now, in the last decade when JPY was popular with the carry traders, GBPJPY was one of the popular carry trading currency pair. But many carry traders faced larged drawdown by taking this carry trading position. If you know a little bit about spread analysis, you can study the historical correlation between the two currencies and accordingly take a put and call position to hedge against a drawdown!
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Secrets Of Trading Gold!
Feb0
Discover the High Velocity Market Master System that can trade gold, silver, crude oil, forex, futures, stocks, options, ETFs almost all market with the same suite of technical indicators. Turn $200 into $100K in just three months with this Penny Stock Trading System. Read the 40 page FRWC insider report on the potential of automated trading and how easily you can do it. Recently gold prices touched almost twelve hundred dollars per troy ounce breaching the historical barrier. Many people only think of stock as a way to invest. Recently people have also talking about currency trading. How about gold trading? In this article, I will show you how you can invest in gold. Gold investing can hedge your investment portfolio. Gold prices are expected to do much better in 2010. Though, you cannot rule out a temperary retracement but the trend in gold prices has been up for many years now. Now, gold is a commodity. Unlike other commodities like crude oil, coal, cotton, soybean, coffee, pork bellies or live cattle, you can easily store gold. Gold in storage over time appreciates in value. So one of the best ways to invest in gold is to buy it directly in shape of bars, bullions or even jewelry. You can wear gold jewelry and enjoy the status this gives while at the same time this gold jewelry can come handy when you want to sell it. You can even buy gold coins. Remember the time of yore, when gold coins used to be the universal currency. So direct investing in gold can be a good way to invest in gold. Now, try to invest in crude oil, coal, coffee, cotton or other commodities directly. First you will need a large storage hall for storing that commodity.
One of the easiest ways to invest in gold is to buy gold coins. Gold coins are better than gold bars as you can buy or sell them in smaller units. Most popular gold coins are the Gold Eagle (issued by the US Government), Gold Maple Leaf (issued by the Royal Canadian Mint) and Gold Krugerrand (issued by South African government).
As said before, people especially women love gold jewelry. Apart from that you can buy gold certificates. These are hybrid certificates that gives you the ownership of gold but you don’t have to take physical possession of your gold. Gold is stored in a safe location by the company, firm or the authority that issued the certificate.
Trading gold futures contract is what I like. Futures trading is interesting. You can profit from the volatility in the underlying assets. Gold futures is one of the direct methods to profit from the volatility in the gold market. But you need to know how to trade futures contracts if you want to do it. Futures trading is not difficult. There are some differences as compared to stock trading but you can learn futures trading by paper trading it first. The most popular futures contract is the COMEX Gold Futures. These futures contracts get traded on the New York Mercantile Exchange (NYMEX). COMEX Gold Futures are the most liquid gold contracts in the world. There are some traders who are specialists in trading gold futures.
The other is the CBOT Mini-Gold. This contract gets traded on CBOT and is popular for its smaller size that allows many retail investors to profit from the gold market plus you can trade it electronically on the CBOT electronic trading platform. Now many investors don’t want to mess around with gold futures! For them, Exchange Traded Funds (ETFs) offer a good investment opportunity in gold. There are two gold ETFs to choose from. One is the StreetTracks Gold Shares. This fund is a good way to profit from gold without actually owning it. The other gold ETF is iShares COMEX Gold Trust. Now both these ETFs track the gold prices in the spot market making their performance almost identical most of the time.
Another method to get exposure to the gold is by investing in gold mining companies. A few popular gold mining companies are Barrick Gold Corporation, AngloGold Ashanti Limited and other. Newmont Mining Corporation is one of the largest gold mining companies in the world!
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Trading Gold Futures Can Make You Rich
Jan0
Recently gold prices breached the historical barrier of ,200 per troy ounce. Then a retracement took place and gold prices have come somewhat down. Gold market has been in a secular uptrend for the last decade. Gold is still the unofficial international currency. But there are some shocking secrets about the gold market that you should know. Central Banks all over the world are concerned primarily with fighting inflation. Now speculators see rising gold prices as a sign of inflation. This makes many Central Banks in the world nervous. So when they see gold price rallies going out of hand, most of them step in and start selling gold from their huge stockpiles to make the prices fall.Get the Ultimate Swing Trading Software and learn this 10 minutes a day swing trading strategy that works for forex, stocks, futures, options and ETFs. Get this FREE Penny Stock Trading Report that tells the story of James Connelly and how he turned $1K into $1M in just 30 days with only 38 trades investing in penny stocks. Learn how you too can repeat this feat! Know this shocking Dow Futures secret that can make you rich.
This is precisely what happened when gold prices breached the historical barrier of ,200 per ounce. However, this fact that central banks tend to be sellers of gold during rallies in the gold market doesn’t mean that gold prices cannot rally for a significant period of time. What this means is that the days of straight up advances in gold prices though likely aren’t as likely as they once were. Bottom line gold is a tricky market.
Gold prices are heavily influenced by political crisis and political upheavals. In times of political crisis, gold prices tend to rally higher. South Africa is the world’s largest gold exporter. It accounts for more than 25% of the gold exports in the world market. South Africa is followed by Russia, United States, Canada, Australia and Brazil. Remember the California gold rush of 19th century. Many people went, many kept on digging and only a few found gold. Now the days of gold rushes are over. Almost all the gold mines have been discovered.
Inflation is considered to be bad for the economy. It makes prices go up. When prices go up, money loses it’s value. So many wealthy investors start converting their cash assets into gold and other assets that have a negative correlation with inflation. US Dollar and gold prices tend to move in opposite direction. Gold is popularly known as Anti Dollar. However, this negative corraltion relationship maynot hold in the short term but it definately does hold in long run.
There are many exchanges in the world where gold gets traded. The most popular is the New York Mercantile Exchange (NYMEX). The second most popular is the Chicago Board Of Trade (CBOT). GOld futures on CBOT have relatively low margin requirements. This makes trading gold futures highly attractive for retail traders. The international benchmark for gold is the London Price Fix. London Price Fix is quoted in troy ouncestwice daily known as A.M Fix and the P.M Fix and is set in US Dollar.
Mini contracts also get traded on CBOT. These are smaller versions of the regular contract with much lower margin requirements. Mini contract hold 33.2 troy ounces of gold as compared to the 100 troy ounces in the regular contract. However, the general characteristics and fundamentals of the market are the same. Gold trading combined with forex trading can be a lucrative combination!
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Investing In Gold: The Perfect Shining Investment
Dec0
How many times have you been surprised with those invest in gold advices by the so called experts? Usually u find that gold prices stay at top even if everything else is nosediving. Investing in gold essentially defies the common investing laws and questions. Up and down, when does it happen? Not quite often.
Gold investment whether considered as commodity or as a currency is the sure way of stable investment. Gold value will continue to rise, till the time experts recommend otherwise. On the other hand, if the stockmarket plummets, the Feds is compelled to feed the economy with stimulus to encourage investment and the much needed growth. Which, basically leads to higher inflation rate, giving way to higher gold value.
Are they huge words? If you’re just starting out, here’s the thing: experts cannot agree more in saying that gold is one of, if not, the most important tool to protect your wealth against something inevitable – inflation. Unlike stocks, gold has the power to defy market cycles.
Have you been looking for long to buy gold, then how good it can work in your advantage? Long time research have clearly brought out that investment in gold is a safe bet as it beats out any kind of recession and has been able to maintain a decent purchasing power. Gold can give you impressive returns in case you are the one who generally looks for short term buying.
Everyone tries to increase the stock of gold supply, that has been the practice since ages. The answer to the “why” question is essentially obvious – investing in gold increases power. Gold is actual wealth and helps those who have to wield power over thos who don’t. Gold is the price after a war, after defeat. The victors, the spoil. In earlier days, no one used to value paper as it is done today. Price of gold can be seen in every public office. Today each individual is yearning for it. The actual money if u ask me is gold.
Every country knows it well. They invest in gold to secure their place in the world. Treasuries of each nations gets stockpiled with gold. Many monetary agencies across the world leads their way in stocking up piles of gold as an investment method. Recently, India made it to the headlines when they just completed a huge transaction of buying IMF gold. It does prove many a times that it races against you.S. China is a major investor in gold, as it buys out major portion of gold from markets and it can continue to do so for years.
Are you still thinking whether it is right to do investment in gold. No better investment decision than this. Those who dont wait for money get to them faster.
For the latest stockmarket news and articles go to : http://www.stockmarkettoday.biz/
Barry Watts resides in Melbourne – Australia and has over 30 years experience in the stock market as an investor,trader,broker,financial planner and gives advices on investing in gold
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Buying High Still Makes Gold a Sound Investment
Oct0
Leading coin and precious-metals dealer from Beaumont, Texas, Jason Whitney, CEO and President of First Fidelity Reserve has some answers as to why gold prices seem to be climbing. As per Whitney, every investor questions the logic behind buying gold at high prices. There are various factors that investors need to consider when prior to investing in gold. The first factor is to compare the current price of gold in dollars with that of the past years.
Whitney emphasizes the fact that the $1500 mark is not far way. A corresponding price of 0 in 1980 is more like ,500 in today’s market. The growth rate has been phenomenal and there is every reason for the trend to continue. Past history shows that there has always been a substantial increase in demand for gold, which makes it almost certain for prices to go higher. A drop in dollar value, or growth in private ownership of gold has always found prices to surge even higher.
Mr. Whitney brings more light to the fact that gold supply if finite and human nature to hoard the yellow metal will only add to its rising price. In fact this plays a major role in the fluctuation of the dollar’s value and the selling price of gold. The secret is that the more unstable the dollar gets, the more likely are gold prices to rise.
Higher gold prices will result in gold and bullion dealers scrambling for advertisements. The price for an ounce of gold may be easy to determine, but this is not the case when determining the value of a gold coin. It is obviously worth more than gold, and requires more knowledge than that required for simple trading. Mr. Whitney requests those with rare gold coins to realize their worth, otherwise they may end up with less than they bargained for. Just by believing commercials doesn’t mean that investors ought to put their money on coins that may have little or no real collector value in the end. This is where First Fidelity Reserve can help educate investors and get them the right price for their investments. Several issues may arise, however, gold seems to be a precious investment. For more information log on to the company’s website at www.firstfidelityreserve.com, or call them at 1-800-336-1630.
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