New guy with a few questions!

D

Daniel Resler

Hi everyone!

I've been lurking the forum for a bit reading and learning around! I've never done actual trading myself since i've been trying to learn as much as possible before diving into it.

I had a few questions for anyone that has a minute to help!

  1. When someone says they're selling corn or soybeans or wheat or any kind of commodities, where are most of these being traded and how can one trade them?
  2. When traders talk about trading the S&P500, are they talking about choosing an ETF (i.e. VOO) or can you actually trade the S&P directly?
  3. Same question as 2 but with currency. Do you trade the currency directly or do you buy funds? Is there a way to trade the actual JPY/USD?
For now i think those are my main questions!

Thank you in advanced to anyone who takes the time help me out!
 
The answer to all three questions is :

Derivatives

From a financial trader point of view you are entering into a contract for difference on a derivatives contract... you never actually buy corn, beans, indices or currency.

You enter a trade at price X, you exit a trade at price Y, and the contract says that the difference between X and Y is your profit (or loss !). You never actually own anything, but the contract is derived from the underlying "real" price of something ... hence the term derivatives.
 
Tim Smith said:
The answer to all three questions is :

Derivatives

From a financial trader point of view you are entering into a contract for difference on a derivatives contract... you never actually buy corn, beans, indices or currency.
More...

Thank you for being the first answer!

I understand that i don't actually own them, but where and how are those contracts traded was my question
 
Hi Daniel,

In general I would say it is best with a small account to focus on either equities or futures. For your questions, I'll focus on futures.

1-In the US, the CME offer these http://www.cmegroup.com/trading/agricultural/
2-You can trade the S&P 500 with the ES futures http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500.html
3-You can trade the FX pairs on the CME too http://www.cmegroup.com/trading/fx/

FX pairs are also traded in the SPOT market and with non-deliverables.
https://en.wikipedia.org/wiki/Foreign_exchange_spot
https://en.wikipedia.org/wiki/Non-deliverable_forward

Good luck...Bob
 
Daniel Resler said:
but where and how are those contracts traded was my question
More...

A salesrep for one of those places has already replied ! (@Robert Morse)

Google "CFD" or "Spreadbet" .... any place that comes up is a place that you could trade those things.

As for where they are traded, its a bit complicated but it depends what you are trading. But in an oversimplified nutshell:

If you are trading currencies then there's no central exchange, you'll be trading against a specific counterparty, and they will set the prices.

For other stuff where there will generally be central exchanges and so the prices displayed by your counterparty will be reflective of the exchange prices.
 
amazing information!

Thank you everyone for pitching in.

If anyone feels like something is missing or would like to provide any word of warning or FYIs i'll be around the forum often!
 
Another question,

how do you calculate a market dollar volatility? I was reading about richard dennis and that concept came up and I'm not sure how that works or how to calculate it for 2 things as different as oil and the S&P
 
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