Global Macro and Commodity Trading
While most people think of commodity traders as just a bunch of guys in Chicago the truth is that many different types of investors participate in the commodity markets. Obviously we have floor traders but we also have several types of upstairs traders.
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.
Some global macro traders are always involved in the commodity markets while others don't actually do a ton of trading. But one thing that all global macro funds do is track and forecast commodity prices. This is so that they have a better grip on raw materials cost as well as where on earth are things growing fast and slow. It basically gives a great picture of the macroeconomic landscape.
In 2008 for example we saw oil climb to record highs. During this time the macro trader was busy looking for what companies will benefit and what companies will get hurt by this. Yes, oil companies made out well but so did companies like MLP's and railroads. On the other hand airlines and fleet services got absolutely hammered as their fuel costs started to cut heavily into their sales.
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.
Another huge piece of the economic pie is that of industrial commodities. Industrial commodities comprising aluminum, zinc, lead, tin, nickel, iron, copper, etc are used in everything for everything. If you drive it, plug it into the wall, or live in it then you have industrial metals all around you. And you only need to have accounts with access to three exchanged to trade 95% of all this.
Next up are the agricultural commodities. While some gloss over this section they are actually a huge part of the economy. Do you eat food? Do you drink water? If you answer was yes to either of these questions then you need to pay attention to the ags. If you answered no then call the hospital please. Anyways the ags are important and can be traded based off of the demographics of different nations. Emerging markets are rapidly emerging which is changing the entire supply demand situation of food and water. Monitor and profit from this, or stay ignorant and get unpleasantly surprised.
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. - 23208
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.
Some global macro traders are always involved in the commodity markets while others don't actually do a ton of trading. But one thing that all global macro funds do is track and forecast commodity prices. This is so that they have a better grip on raw materials cost as well as where on earth are things growing fast and slow. It basically gives a great picture of the macroeconomic landscape.
In 2008 for example we saw oil climb to record highs. During this time the macro trader was busy looking for what companies will benefit and what companies will get hurt by this. Yes, oil companies made out well but so did companies like MLP's and railroads. On the other hand airlines and fleet services got absolutely hammered as their fuel costs started to cut heavily into their sales.
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.
Another huge piece of the economic pie is that of industrial commodities. Industrial commodities comprising aluminum, zinc, lead, tin, nickel, iron, copper, etc are used in everything for everything. If you drive it, plug it into the wall, or live in it then you have industrial metals all around you. And you only need to have accounts with access to three exchanged to trade 95% of all this.
Next up are the agricultural commodities. While some gloss over this section they are actually a huge part of the economy. Do you eat food? Do you drink water? If you answer was yes to either of these questions then you need to pay attention to the ags. If you answered no then call the hospital please. Anyways the ags are important and can be traded based off of the demographics of different nations. Emerging markets are rapidly emerging which is changing the entire supply demand situation of food and water. Monitor and profit from this, or stay ignorant and get unpleasantly surprised.
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. - 23208
About the Author:
If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investing advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.
posted by X - Men @ 1:33 AM
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