There are good reasons to believe that option trading is a great opportunity to make money. On the other hand, how to make money trading options is a different field. If you are ready to negotiate options compare with other populations or settings, you can say that option trading is not as risky. In fact, some market experts still believe that the success or failure in the negotiation of options not only in trends or strategies, but luck also. 

Future options trading set a new trend that is attracting more and more investors to the stock market. The stock promoters and other stakeholders have an effective support to traders who are active in the stock market. It also lets you operate in a wide range of products such as cotton, gold, bonds, to name a few. The index values ​​are another concept that is gaining popularity and is today a much sought after practice. 

With futures trading brokers best option to connect to real situations. Get quotes easier. It provides traders and had access to a wealth of information. Studies and predictions are based on several models and practices. They try to interpret with the help of models like the “Black-Scholes,” and also to involve the various calculations as gamma, delta, theta and vega. Operators before entering the negotiation of future options, however, must have a thorough knowledge of how the market and a good idea of ​​the technical terms related to studies making different decisions. 

Shareholders and even choice of futures trading broker would be aware of new schemes and better brokerage services, and to meet all requirements, the cards are useful quotation, regular and the like. Over time, tools and methods used for analysis have undergone a major improvement. Brokers and even investors in the stock market and option trading analysis tools better, compared with what was available years ago. 

This seems the right time to make an entry in the negotiation of future options that you can actually use the knowledge gained. Take advantage of market movements and develop your investment strategy in order to make a profit. There are several tools available for study and could try to understand the different tools and how they can be used to make the most of market conditions. 

The strategies used today are also an evolved version of what was being used for some years. Equip yourself with knowledge and make an entry to practice their skills. Read all the material available to improve their knowledge base. Any news or information to the market also makes a difference in your investment strategy and how the market would react. It would be better to keep abreast of the latest developments and to maximize the opportunities available and enter the world of options trading for the future. 

The Johannesburg Stock Exchange (JSE), through the South African Futures Exchange (SAFEX), offers exposure to various in the futures market. Traders of all sizes have an equal opportunity to participate in the market and benefit from rising and falling international . This opportunity affords traders the chance to open “long” or “short” positions in these underlying commodities.

A “long” position in involves purchasing the commodity futures contract and selling it at a later stage, hopefully after the commodity price has risen. A “long” position therefore makes money in a rising market. A “short” position in trading is the reverse – selling a contract first and buying it back later. Behind the scenes, your market maker will borrow the shares commodities on your behalf, allowing you to sell them even though you do not actually own them. If you manage to buy them back at a lower price, you will make money. A “short” position therefore makes money in a falling market.

The commodities available for trade are Gold, Platinum, Silver, Copper and WTI Crude Oil.

Investors can use these products for a variety of reasons, ranging from hedging to diversification and the enhancement of trading strategies. For example, a trucking fleet could seek insulation against rising fuel prices or a jeweller could hedge themselves against adverse movements in precious metal commodity prices.

PSG Online is suited to provide this service on a standalone basis as well as integrating it with a variety of alternate markets providing you with a single broker with access to all the South African markets. The single online access point offers you a far more integrated commodity trading platform and perspective.

We offer world class risk systems and an expert team of professional commodity traders who will provide you with regular trading information to analyse and decipher market movements.

Commodity futures can be traded outright or included in a variety of trading strategies. Strategies could for example include:

Getting direct exposure to the underlying commodities, thereby reducing equity market risk.
Trading the spreads between commodities.
Using the commodity future to extract the effect of the commodity’s price movement on a company’s performance, thereby focusing a trading view.
Commodities can be used as proxies of market sentiment allowing the trader to indirectly trade market sentiment.

A crucial aspect of trading is that they are Rand settled. This means the Rand is the transaction currency for international commodity futures. This removes the requirement of physical settlement whilst still offering exposure to the underlying commodity. A further benefit is that although offering exposure to international commodity markets, entering a contract has no impact on an individual or corporate entities foreign allowance.

These contracts are based on and linked to COMEX and NYMEX listed equivalents adjusted to suit the local market. This enables South African investors to benefit from the liquidity of the international markets.

Commodity futures are standardised contracts that are traded on the JSE’s futures exchange, SAFEX, with a centralised order book. This means buy and sell prices are posted in real-time onto the central market by the relevant market makers, which allows for transparent pricing.

Being a listed product, trading commodity futures has numerous benefits:

Futures are geared products, which means traders do not have to deposit cash to cover the full value of the position.
Futures allow individual traders to take a view on the movement of the price and provide them with access to favorable exchange rates and product prices usually reserved for larger corporate clients.
Tight spreads and low trading costs allow you to enter and exit positions in the knowledge that profits are not being paid away each time there is a trade on the account.
The daily mark-to-market process allows clients the ability to track their profit or loss situation and to adjust their portfolio accordingly.
Once the position has been closed out all settlement occurs in Rand.

source: http://www.psgonline.co.za/trade/commodity.php

There are many traders who are interested in Futures Options. This is essentially an option on a futures contract.. Futures’ trading takes place when futures contracts are both bought and sold. Amateurs in futures will need to learn many specifics when it comes to achieving success in this arena. One of the popular strategies being used today are credit spreads using delta neutral trading.

One of the primary focuses with futures Options is decreasing risk. This is true here, as well as, with other types of trading. Seasoned traders have opted to institute delta neutral trading strategies. This neutral position is exactly what it says. It doesn’t focus on the direction of the market. These strategies can be used, however, to take advantage of the market’s movement.

Credit spread options play an instrumental role in this process. When the market trends are up, you can place a bullish future option spread. This is different when the trends are moving downward. In this scenario, you can place a bearish future option spread. Delta neutral trading uses the delta in trading decisions. Let’s take a look at some of the ways that this affects futures trading.

What is the delta?

In futures trading the delta is important. It is in essence a ratio figure. This figure actually compares the change in the price of an asset with the change in price of a derivative. This is also referred to as the hedge figure or hedge ratio. When traders use delta neutral strategies the total delta figure is zero.

Credit spreads factor

Credit spreads can be used in Futures Option. These situations are created when you buy an option. At the same time, you will sell a related option to the one that you sold. There are many complexities to this type of procedure. When executing properly, this process can provide the best risk to profit scenario for traders. You do not have to buy an equal amount of options that you sell. You can actually put on what are called ratio spreads where the number of options you buy is different than the number of options you sell.

Commodity trading is the trading in commodity derivatives, where commodity refers to any bulk goods traded in the exchange. Mainly Bullion, Energy, Metals and Agricultural Commodities are trading in the commodity market. Derivative is a kind of financial security whose price is depend upon or derived from one or more underlying assets. The derivative assets may be in the form of stocks and bonds of corporate, commodities and currencies of various countries. Commodity trading basically refers to trading where investors buy or sell commodities, through future transactions or contracts.

A future is a standardized forward contract that requires delivery of a commodity at a specified price on a specified or predetermined future date. In this case the buyer is obligated to fulfill the terms of the contract. The buyer and seller have the option to square up their position before expiry of the contract subject to other conditions governing each contract. Although the commodity trading pattern is quite similar to equity share trading, it involves smaller margins and is lot easier to understand. A commodity trader can start with commodities like gold and grains, which attract very low margins. As well, the time limits for commodity trding stretch from morning 10 O’clock to mid-night. Hence it is possible to trade after completing day-to-day work.

Find a broker/sub-broker to open account to trade with commodity. The broker if satisfied with the economic standing of the person, they may ask pan card, demat account, bank account and margin money for opening account with him. After completing these formalities, the person allowed for commodity trading.  Margin is the upfront money payable to broker before taking a position in the market. Like equity trading activity, the commodity trading requires the easy accessibility of information and liquidity facility. The trader can easily reduce risk by effective diversification. The low risk trading strategies include both delivery spreads and spot-futures arbitrage. The trader can take advantage of the low margins and take directional calls on the markets. The market is diverse in nature, and it is suitable for the day trader/speculator, long-term investor, hedger and arbitrageur.

Higher the return there is risk also high; lower the return the risk is also low. Based on the risk-return appetite, the trader can enjoy benefit or return. Commodity trading is basically futures trading giving rise to leveraged positions. For this sake, mostly the wealthy and knowledgeable traders campaigning towards commodity trading place. Risk is inherent in any investment, by proper entry and exit strategy can safeguard from loss. The uncertainty and risk are part of all derivative markets and risk factors in commodity futures trading are similar to futures trading equity markets. The key difference is that the information availability on supply and demand fluctuations in commodity markets may not be as tough as the equity market. The return from the commodity market is also handsome, if the trading strategy of the trader worked out properly. The understanding about the technical and fundamental factors of global as well as domestic economy helps to earn superior returns from the commodity trading. Inflation is the big problem in the present economy; commodity is the good tool of investment strategy to beat inflation risk. Commodities are the hedge against inflation because unlike equity, commodity prices move in tandem with inflation. Besides, buying commodities make your investment truly global and there are no issues with company management or cash flow involved, all of which make commodity trading a pure demand and supply match.

Delivery based trading is now becoming popular. Each contract has a lot size and delivery size; it varied from asset to asset. Market participant are required to negotiate one the quantity and price of the contract, as all other parameters are predetermined by the exchange. Delivery is in dematerialized form and can be rematerialized at time at the request of the trader with the depository organization.

The markets are very lively and dynamic. A systematized and cautious moving will help to being a successful trader. Patience, discipline and knowledge are all important qualities to develop successful and fruitful commodity trading.

Trading can be a lot of fun and profitable or a nightmare and very costly. It really just comes down to understanding the key areas, which will make or break your trading.

I have received a few emails asking me to explain more about how I stay disciplined, making sure my emotions don’t get the better of me. Some questions asked are:
How do I pick a trading strategy, which will work for me?
What reading material and habits do I recommend for keeping focused?
What are some of my experiences?

I will cover all this for you below because trading discipline and managing emotions is by far the most important and difficult aspect of trading.

Your strategy should be inline with your abilities to read the market also focuses on a time frame, which suits the time you have available to trade each day, week or month. In other words, you should not be trading ETF options if you cannot profit from trading ETF’s without leverage. Also if you don’t understand how options work in depth, then you need to spend some time learning about this type of trading vehicle before you ever place a trade using options. Simply put, if you don’t understand everything about what you are trading, then you will eventually give all your money to the market, leaving you with an empty account, decreased trading confidence and a frustration.

The point I am trying to make here is that you should focus on trading the types of vehicles where you understand the daily price action, how to trade that investment, what makes it move, is there leverage, and what time frame you should focus on, so that it works with your schedule. If you can only look at the charts at night, after the markets close, then you should not be focusing on day trading. So pick something you like, understand or want to trade and learn everything about it. Then find a trading system or create one yourself, which is profitable using the time frame and risk tolerance that fit your personality.

Over the years my trading strategy changed, as will yours. The more time you spend trading, the better you will become the more you will find yourself trading more of one type of investment that consistently makes you money. When I started trading back in the late 90′s I focused on stocks, but as time went on, my strategy evolved and now my main focus is on trading indexes and gold with a hybrid intra-day and swing trading strategy that I created. My focus is on ETF’s, because you can select different levels of risk/reward with the 1,2 or 3x leveraged funds. While ETF’s are fantastic to trade, they do have some limitations. Because the indexes and gold trade 24/7, you are limited to only regular market hours, 9:30am – 4pm ET. That leads me to the topic of Futures and CFD trading.

Depending on the type of trade and time of day a setup occurs, I will jump from ETF’s to futures or CFD’s. Let me explain, if there is a setup early in the morning before the regular market opens, or after the close late in the evening, then I trade futures or CFD’s because it allows me to trade 24/7 catching moves which would not even be seen by most North American traders. There are not a lot of these trades per year but enough to make it worth trading.

In short, virtually every trader will eventually reach the tipping point. What I mean here is you will either lose enough money and/or become so frustrated that you will debate whether or not you should continue trading.

I reached this level many years ago and I still remember it crystal clear. I lost most of the money in my account, almost every trade was going against me and I had never been so frustrated and upset in my life. I’m sure many of you know what I am talking about… Unfortunately trading does break a lot of people down financial and emotionally, causing them to give up. But others reach this point and realize that if they can be wrong all the time, then someone who knows what they are doing should be making good money and that they just need to learn what they are doing.

This is the point at which you decide whether to give up a life long dream of trading full time to go back to your day job or you step back to re-evaluate your situation and seek profession help. All successful traders have or had a mentor at one point in their life and it does not matter which career you are in, learning from someone who knows how to do what you want is the fastest and most effective way to learn.

Those who decide to continue and take things serious shift their mind set from Trying To Trade to Learning To Trade. It is at this point, where trading becomes fun and profitable again. My point here is that trading is not something you can learn quickly on your own. You should get help from someone who is successfully doing exactly what you want to be doing, then shadow their every move and seek mentoring from them. This usually costs more than say just buying a book or mini e-course. There is no comparison between what you get out of them or obtaining practical experience. This is what I provide at

There is no easy answer, as everyone absorbs information differently. Some prefer reading and studying charts, listening to audio, watching videos and some prefer or need live mentoring and real-time examples.

I learned charting from the well known annalist, John Murphy, through his book “Technical Analysis of the Financial Markets”. This is a massive book with over 500 pages explaining technical analysis. This book is a lot to digest, but there is a lot of great free information online, which will allow you to read about the basics of trading including: chart patterns, volume, candle sticks, support & resistance levels and trend lines. Once you understand these key concepts and are able to read the charts, then you are literally ready to start paper trading and applying or creating a trading strategy, which manages entry, exits, scale out prices, and manages your money.

As most of you know, I am a very patient trader waiting for risk setups in the investments, which I understand best and have consistently traded for many years. Because of my strict trading setups and rules, which I have set for myself, it does cut down on the amount of trades the market provides. My focus is on low risk, high probability setups, which I completely understand, and that’s all I trade. This trading strategy works on any time frame allowing me to use it for day trading and swing trading.

The question everyone wants to know is how to stay so disciplined and keep emotions from taking over?

This takes me back to the Tipping Point mentioned earlier. I always ask myself if the trade meets my setup criterion, which is a simple yes or no answer because my setup criteria is clear in my head. Either it has the characteristics I am looking for or it does not. Sometimes the setups are very close and I will admit it is very tempting to take the trade, but I always step back (walk away from the computer) to clear the emotions flying around in my head and ask myself, do I want to break a rule, which almost broke me financially and emotionally once before? The answer is always No. So I pass on the trade and wait for another one to unfold.

When I was first learning to day trade, I quickly learned that I did not have to take every setup that looked like it had potential. I realized that no matter what condition the market was in, there would always be another trade just around the corner, so its not a big deal. I admit, I hate to see an investment make a large move without me like this 7 day rally in gold happening right now, because my setup criteria was not met. But I know there will be many more trades through the year in gold and other investments, which will provide me with great returns. People who think they need and must catch ever big move in the market in order to make big money on yearly basis, are looking that things completely backwards. It only takes 5-10 good trades per year to out perform the market so I don’t understand people when they panic about every zig and zag the market makes.

Ok, lets take a look at the gold chart, which I have overlaid with two cycles, which I use to help time gold.

9 Day Gold Cycle

The daily chart of gold below has my 9-day cycle overlaid. You can see how this cycle relates to the price movements of gold. After the recent low cycle, we saw gold continue to move higher and this is because the trend of gold turned up in March and the long term cycle is also moving up at the same time. These two bullish forces can over power the short term 9-day cycle at times.

That being said, the 9-day cycle will be topping in 2 days (Tuesday) and that should put some selling pressure on gold. I expect to see a pullback or consolidation (sideways movement) in the coming week.

29 Day Gold Cycle

This cycle allows us to see the big picture and underlying trend for gold. This larger more powerful cycle of gold will top in one day (Monday) and that should put a damper on this rally. You can see how I think gold will play out from the lines on the chart.

Combined Cycles on Gold

This chart clearly shows how both cycles will top this week which should put some selling pressure on gold and silver and one of the reasons I have not chased the price of gold higher buying in a panic.

Gold Trading Discipline Conclusion:

In short, trading discipline is something you can become educated about from books, but the only way to actually take control of your trading, is to be honest with your self. Think of it this way, every time you break a trading rule, you are setting yourself up for failure. Do you really want to sabotage the most important person in your life, which you will have to live with every day (You)? If you cannot trust yourself from sabotaging and lying to your self, what type of person would you be? Do you want to lose money by taking positions, which are proven not to work and cost you money in the long run? Of course you don’t!

So the next time you see a trade, which is close to your setup but no exactly what you are looking for, just walk away and wait for the next one.

As for the current price of gold, I think we are about to see lower prices, or at least a pause, which will last for 5-15 days.

If you would like to please check out my service: www.TheGoldAndOilGuy.com

Chris Vermeulen

A while back, I received several emails from readers wanting to know if they should short the crude oil market because of its lofty price levels. I responded that I don’t give specific trading recommendations, but I certainly do want to help my readers succeed at the difficult task of trading futures markets. Given the sharp runup in crude at the time, and the rising volatility of the grain futures during that same timeframe, it was a good time to discuss trading options on futures–specifically buying puts and calls. You can also sell options, but your financial risk is not limited like it is when you buy an option. I won’t get into selling options in this feature.

I know that many beginning (and even veteran) traders think options trading is too complicated, and they don’t have a clue about the vega, theta, delta and gamma pricing formulas–or the strangles, straddles, butterflies and other such options trading methods. Well, don’t worry. I’m not going to get into those complex strategies in this column.

Entire books have been written on options and options trading strategies, but I will only focus on basic low-risk and limited-risk trading strategies for beginning traders (and veterans, too). I’ll also talk about using options to “hedge” winning trading positions in volatile markets. I do suggest that if you are interested in trading options, you should read a book or two on options trading. Again, you don’t have to be a rocket scientist to employ simple options trading strategies.

First, I am going to assume readers know the definition of an option on a futures contract, and also the difference between a put option and a call option and “in the money” and “out of the money.” (If you don’t know the meaning of these terms, that’s okay. Just go to one of the big futures exchange websites, and you can find a glossary of trading terms, digest the options terms and then read this article.)

Back to the big runup in crude oil recently. It certainly is tempting to want to short that market at present levels. However, remember that to successfully trade futures you not only have to be right on market direction, you also have to be correct on the timing of the market move. Furthermore, you can be right on market direction and very close to being right on timing the trade, but still lose your trading assets because of market volatility. In crude oil, for example, a trader could establish a short position two days before the top in the market is in, and still be stopped out and lose his trading assets because of the high volatility.

Read the rest of this article

Trading in commodities requires you to regularly track quotes, frequently place orders unlike the usual buy-hold strategy used in stocks, mutual funds. Hence managing your commodity trading assumes a lot of importance.

Track Your Portfolio – Commodity trading usually involves you taking multiple positions; hence it is imperative to keep track of your portfolio. If you have invested in multiple commodities, regularly monitor price variations, your profit levels or loss and go for suitable orders. It is advisable not to start off with a huge margin amount and a gradual build up is often seen as safe approach for small and new traders.

Trade with the Trend- Following the trend of the market not only enables you to get acquainted with the futures trading process without much risk but also enables you to make profits. Various news reports, charts, tools provided by futures brokers etc are extremely beneficial in determining the trend of market. In an uptrend market, buy breakout, buy pullback strategies are beneficial.

Monitor Portfolio Returns- Maintain record of your orders, trades, winners, losers, profit made or loss incurred. Regular assessment of your actions and their yield in the form of profits or losses should allow gauging your trading abilities, return on your investment, breakeven point etc.

Ensure Liquidity – Though presence of a liquid market to offset futures contract is mostly certain, it cannot be guaranteed. Hence, before entering into any commodity futures contract ensure that it is actively traded and offer liquidity to you. Newspaper reports, futures brokers can provide this crucial information.

Time Your Contract- Timing your entry or exit from the futures contract plays a very crucial role. Price fluctuations are imminent in futures market on a day-day basis and entry, exit decisions at the right price hold the key to maximize profits or minimize losses.

Trading strategies- Frame suitable trading strategies as per your targets. Use of valuable tools like stop orders, spreads etc helps you to safeguard your money allowing you to survive in the futures market for a long time.

Begin your commodity trading with a sound trading plan and by sticking to it with proper management helps you to last in the complex futures market.