Global Macro and Commodity Trading
The typical image of the floor of the Mercantile Exchange being filled with a bunch of guys that couldn't get jobs anywhere else is very outdated and wrong. Instead commodity traders are increasingly becoming some of the most sophisticated investors on earth.
One of the main types of upstairs traders in the commodity markets are the CTA or commodity trading advisors. They typically do a lot of long term trend following. The second major commodity trader is the global macro trader.
Global macro traders are the next major group of players in the commodity markets. Some are heavily involved and some barely trade them but all macro traders track the commodity markets to give them a better look into the worlds macro economic situation.
For instance if oil is rising like we saw in 2008 then you have to look to see what businesses are going to get hurt and what will benefit from higher oil prices. Obviously oil companies will make more money but what about shorting airlines? Or maybe even going long railroad companies. As you can tell there are endless ideas of who is affected and who is not.
Precious metals are another area of great concern. Long looked as a fantastic inflation gauge gold and silver are also looked upon more and more as alternative currencies since most fiat currencies are looking like junk these days. As you can see precious metals are very useful to key in on currencies and inflation.
Industrial metals are also a big deal as almost everything you buy or use has some type of metal in it. Copper for electrical wires, lead for batteries, aluminum for cans, etc. The list is virtually endless and between the MERC, the NYMEX, and the LME you can trade basically all of it. If you aren't tracking industrial metals then you are not pricing out the number one cost for most manufacturing and industrial companies.
Agricultural commodities are the last major group of commodities and the ones that tend to get the shortest thrift. This is a mistake as the worlds economies continue to grow and more and more people become more prosperous they eat better and better. This coupled with the fact that there is less water on earth and you have the potential for a large increase in the price of food worldwide.
Obviously commodities are huge part of the global economy. If you are not using and monitoring them you are missing out on some of the biggest puzzle pieces out there. If you are a global macro trader you need to be monitoring all the commodity complexes. - 23199
One of the main types of upstairs traders in the commodity markets are the CTA or commodity trading advisors. They typically do a lot of long term trend following. The second major commodity trader is the global macro trader.
Global macro traders are the next major group of players in the commodity markets. Some are heavily involved and some barely trade them but all macro traders track the commodity markets to give them a better look into the worlds macro economic situation.
For instance if oil is rising like we saw in 2008 then you have to look to see what businesses are going to get hurt and what will benefit from higher oil prices. Obviously oil companies will make more money but what about shorting airlines? Or maybe even going long railroad companies. As you can tell there are endless ideas of who is affected and who is not.
Precious metals are another area of great concern. Long looked as a fantastic inflation gauge gold and silver are also looked upon more and more as alternative currencies since most fiat currencies are looking like junk these days. As you can see precious metals are very useful to key in on currencies and inflation.
Industrial metals are also a big deal as almost everything you buy or use has some type of metal in it. Copper for electrical wires, lead for batteries, aluminum for cans, etc. The list is virtually endless and between the MERC, the NYMEX, and the LME you can trade basically all of it. If you aren't tracking industrial metals then you are not pricing out the number one cost for most manufacturing and industrial companies.
Agricultural commodities are the last major group of commodities and the ones that tend to get the shortest thrift. This is a mistake as the worlds economies continue to grow and more and more people become more prosperous they eat better and better. This coupled with the fact that there is less water on earth and you have the potential for a large increase in the price of food worldwide.
Obviously commodities are huge part of the global economy. If you are not using and monitoring them you are missing out on some of the biggest puzzle pieces out there. If you are a global macro trader you need to be monitoring all the commodity complexes. - 23199
About the Author:
If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro trading advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.
posted by X - Men @ 1:59 AM
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