COMMODITY TRADER: Trading Signals for Commodities
by: missingSTEP • 0
Commodity Trader is a tool for investors, traders, and industrialists who take positions in the worldwide commodity futures markets in the segments including metals, energy, and agriculture. Based on a complex mathematical model, this tool provides daily buy and sell recommendation signals for commodity futures contracts.
This is the second app that missingSTEP built in partnership with EMI Ltd, the two companies previously partnered on the highly successful and effective iPhone and iPad application Stock Arbitrage Trader.
Emerging Markets Intrinsic (EMI Ltd) is a boutique portfolio management and advisory services firm. It manages Alternative Investments and specializes in Quantitative Methodologies to analyze and trade Asset Classes.
- Trading Signals
- Commodity Charts
- Futures Calendar
- Commodity News
- Commodity ETFs
Featured Commodity Futures Contracts
Gold, Silver, Copper, Platinum, Palladium, Crude oil, Heating oil, Gasoline, Natural gas, Corn, Wheat, Soybean, Lean hogs, Live cattle, Cotton No.2, Cocoa, Coffee ‘C’, Sugar #11, Lumber
How does it work?
Commodity Trader examines historical data of selected commodities and constructs correlation/dispersion and volatility maps. A complex computerized mathematical model continuously checks prices and compares them to these maps by using various algorithms. If the price of a commodity future contract falls below its character map, it generates a buy signal. If on the other hand the price goes above its character map, the tool generates a sell signal. As these anomalies occur, trading and significant profit opportunities arise.
It is important to note that this commodity trader app is NOT AN ARBITRAGE tool, meaning that some futures analysis tools provide recommendation signals based on discrepancies between the spot (today’s prices) and futures (in a future time period) prices of the same instrument (e.g., Gold spot price and the price of Gold May contract) . Commodity trader DOES NOT provide such an analysis and only looks at the futures prices.
Who can use Commodity Trader?
Commodity Trader is a tool for investors and professional traders with medium to advanced level of futures market knowledge and trading experience. First and foremost, users must be strongly familiar with the risks associated with trading on margin. Trading on margin, can be basically defined as taking a position of which notional value is higher than the actual money put upfront. So, for example, if your stockbroker allows up to 50% margin on your stock trades, that means you can buy up to $100,000 worth of stocks by putting up $50,000 of capital.
With commodity futures contracts, however, the above rate of margin is much lower (typically 5-15% of notional value of the contract). For a typical commodity futures contract the initial margin (money required to open a position) can be around $5,000-$10,000 whereas that same contract’s notional value usually represents an amount at the range of $100,000-$120,000. This means for a $100,000 notional value position, if the trader is wrong only by 1%, the position actually loses 1%*$100,000= $1,000 or $1,000/$5,000 = 25% of the money initially invested.
Commodity Trader is especially designed for:
- Intermediate to advanced level traders who are familiar with the concepts of trading on margin, margin maintenance requirements, short-selling, and characteristics of momentum trading
- Professional asset managers who manage commodity related funds
- Professional commodity traders who possess extensive level of knowledge in risks associated with commodity trading
- Industrialists who either produce commodities (revenue generator) or use commodities as raw materials (cost management) for their manufacturing of products and actively take positions to hedge operational risks
- Researchers who analyze commodities markets