Gambling with Commodities
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Gambling with Commodities
I am thinking of getting into a very small time sideline hobby gambling in commodities with my "can afford to lose 100%" pot of money.
I know only a little about commodies, what I've gleaned from friends and from watching "Trading Places "
Options Express has some beginner education tools, so I will start there.
Can anyone make any other recommendations? blogs? websites? books?
Thanks, BFG
I know only a little about commodies, what I've gleaned from friends and from watching "Trading Places "
Options Express has some beginner education tools, so I will start there.
Can anyone make any other recommendations? blogs? websites? books?
Thanks, BFG
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.
- cheese_breath
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Re: Gambling with Commodities
Egg futures?
http://www.imdb.com/title/tt0641755/
To impress a girl, Dobie invests more than he should in his economics class project. He buys stock in an egg company and ends up with a room full of eggs.
http://www.imdb.com/title/tt0641755/
To impress a girl, Dobie invests more than he should in his economics class project. He buys stock in an egg company and ends up with a room full of eggs.
The surest way to know the future is when it becomes the past.
Re: Gambling with Commodities
You don't need to gamble with real money to learn about trading commodities.
You can open a Paper Trading account at IB, TradeStation, and use resources available to University students.
Student Trading Lab
You can open a Paper Trading account at IB, TradeStation, and use resources available to University students.
Student Trading Lab
Re: Gambling with Commodities
Look up the literature on trend following strategies (momentum trading), managed futures, commodity trading advisers (CTAs). Also backwardation, contango, and roll return. Historically, momentum trading commodities has produced positive returns over time, as has exploiting whatever has given positive roll return (and shorting whatever has negative roll return). All this definitely doesn't work all the time, just more often than not in the past, obviously with no guarantees for the future.
Long-only broad commodity exposure may also be a diversifier for an overall portfolio, with returns that have more often than not do better than stocks and bonds toward the end of a business cycle, when the economy is overheating and inflation picks up. Even without market timing skills (always difficult...) long-only commodities held indefinitely and rebalanced can and have improved overall portfolio risk/return a bit.
Note that the initial and maintenance margin for even single futures contracts may be uncomfortably large relative to the amount of money you're looking to squirrel away for this purpose, so trading strategies may not really work. Long-only exposure to a diversified basket of commodities (futures contracts) can be had through ETFs, though, and you can access some alternatives strategies via funds if you don't want to or don't have enough money to do the dirty work yourself.
Long-only broad commodity exposure may also be a diversifier for an overall portfolio, with returns that have more often than not do better than stocks and bonds toward the end of a business cycle, when the economy is overheating and inflation picks up. Even without market timing skills (always difficult...) long-only commodities held indefinitely and rebalanced can and have improved overall portfolio risk/return a bit.
Note that the initial and maintenance margin for even single futures contracts may be uncomfortably large relative to the amount of money you're looking to squirrel away for this purpose, so trading strategies may not really work. Long-only exposure to a diversified basket of commodities (futures contracts) can be had through ETFs, though, and you can access some alternatives strategies via funds if you don't want to or don't have enough money to do the dirty work yourself.
Last edited by lack_ey on Thu Jul 23, 2015 10:14 pm, edited 1 time in total.
Re: Gambling with Commodities
If you want to gamble, part of the fun would be learning the rules. Lots of books and information out there about the different histories/characteristics of commodities, what normal backwardation/contango means for your returns, when you can earn a positive roll return, etc.
It's really fun.
It's really fun.
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Re: Gambling with Commodities
IAU, GLD, and other ETF are commodity funds that are well known and transparent information.
stay away from miners.
Read up on option trading or take a free course from TDAmeritrade, OptionsHouse, CNBC.
stay away from miners.
Read up on option trading or take a free course from TDAmeritrade, OptionsHouse, CNBC.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
- StormShadow
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Re: Gambling with Commodities
Frozen concentrated orange juice. Stock ticker is FCOJ.
Trust me, I have a copy of the crop report.
Trust me, I have a copy of the crop report.
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Re: Gambling with Commodities
I worked a killer deal on train cars full of coal. I really lucked out with the price of 10 train cars where I only have to store two of them at my house. Once the price goes up, I'll make a killing!
Bogle: Smart Beta is stupid
Re: Gambling with Commodities
If you don't think you have an edge, you definitely should not trade. Even if you think you have an edge, you probably do not, and you should not trade. If you want to learn about futures, I recommend the Market Wizards books of Jack Schwager. Amazon has books on "futures trend following". You can find academic research on commodity futures by searching SSRN http://papers.ssrn.com/sol3/DisplayAbstractSearch.cfm . Learn what "contango" and "backwardation" are.Barefootgirl wrote:I am thinking of getting into a very small time sideline hobby gambling in commodities with my "can afford to lose 100%" pot of money.
I know only a little about commodies, what I've gleaned from friends and from watching "Trading Places "
Options Express has some beginner education tools, so I will start there.
Can anyone make any other recommendations? blogs? websites? books?
Thanks, BFG
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Re: Gambling with Commodities
Where to begin?
Derivatives can be used to either hedge or speculate... they're not inherently evil, just depends on what you're trying to accomplish.
"Momentum" is a pretty well recognized "factor" these days; how much do you know about the background and underpinnings of factor investing?
Do you have "investment edge"? Read/listen to Lars Kroijer.
How will you differentiate between luck and skill? Read/listen to Michael Mauboussin and Campbell Harvey.
My advice: you'd be much better off spending your time reading about personal finance and investments and "staying lazy" with your investment portfolio.
On the other hand, we live in a great country with mucho personal freedom and liberty.
What's that famous line in the movie "A Christmas Story"... "You'll shoot your eye out kid!"
Best of luck with that gamblin' jones!
Derivatives can be used to either hedge or speculate... they're not inherently evil, just depends on what you're trying to accomplish.
"Momentum" is a pretty well recognized "factor" these days; how much do you know about the background and underpinnings of factor investing?
Do you have "investment edge"? Read/listen to Lars Kroijer.
How will you differentiate between luck and skill? Read/listen to Michael Mauboussin and Campbell Harvey.
My advice: you'd be much better off spending your time reading about personal finance and investments and "staying lazy" with your investment portfolio.
On the other hand, we live in a great country with mucho personal freedom and liberty.
What's that famous line in the movie "A Christmas Story"... "You'll shoot your eye out kid!"
Best of luck with that gamblin' jones!
Last edited by scottj19707 on Fri Jul 24, 2015 7:08 pm, edited 1 time in total.
“To acquire knowledge, one must study; but to acquire wisdom, one must observe.”-Marilyn vos Savant; “If you can’t explain it simply, you don’t understand it well enough.”-Albert Einstein; VTI/VXUS/BND
Re: Gambling with Commodities
I think commodities markets are manipulated and most futures market action (including metals) is instigated by the big brokers and little of it is related to its function of locking in prices for producers and consumers. Wish I knew how to exploit that.
- Maynard F. Speer
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Re: Gambling with Commodities
If I was going to get into something now, it would probably be currencies .. I think it may offer useful diversification for a balanced portfolio
Slowing global growth is probably the long-term risk to market returns at the moment (estimates of 0-0.5% returns in 60:40 portfolios may be pessimistic, but probably not implausible), and as such demand for commodities is likely to be leading the way down
But one thing you can probably bet on is global diversion, as governments/banks try to devalue their currencies and stimulate their economies .. So being able to go long and short on currencies could be a useful tool
Slowing global growth is probably the long-term risk to market returns at the moment (estimates of 0-0.5% returns in 60:40 portfolios may be pessimistic, but probably not implausible), and as such demand for commodities is likely to be leading the way down
But one thing you can probably bet on is global diversion, as governments/banks try to devalue their currencies and stimulate their economies .. So being able to go long and short on currencies could be a useful tool
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes
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Re: Gambling with Commodities
Here's some more to think about/read...
"Are We Nearing Peak Commodity Hatred?" (Pragmatic Capitalism/Cullen Roche, 07/20/2015): http://www.pragcap.com/are-we-nearing-p ... ty-hatred/
"My Views on Gold: Setting the Record Straight" (TheReformedBroker.com/Joshua M Brown, July 20, 2015): http://thereformedbroker.com/2015/07/20 ... %2Ffeed%29
"A History of Gold Returns (A Wealth of Common Sense/Ben Carlson, July 21, 2015)": http://awealthofcommonsense.com/a-histo ... d-returns/
"Let's Get Real About Gold: It's a Pet Rock" (WSJ - The Intelligent Investor/Jason Zweig, July 17, 2015): http://www.wsj.com/articles/lets-get-re ... 1437174733
If you decide to give it a shot, let the folks know how the experiment turns out.
"Are We Nearing Peak Commodity Hatred?" (Pragmatic Capitalism/Cullen Roche, 07/20/2015): http://www.pragcap.com/are-we-nearing-p ... ty-hatred/
"My Views on Gold: Setting the Record Straight" (TheReformedBroker.com/Joshua M Brown, July 20, 2015): http://thereformedbroker.com/2015/07/20 ... %2Ffeed%29
"A History of Gold Returns (A Wealth of Common Sense/Ben Carlson, July 21, 2015)": http://awealthofcommonsense.com/a-histo ... d-returns/
"Let's Get Real About Gold: It's a Pet Rock" (WSJ - The Intelligent Investor/Jason Zweig, July 17, 2015): http://www.wsj.com/articles/lets-get-re ... 1437174733
If you decide to give it a shot, let the folks know how the experiment turns out.
“To acquire knowledge, one must study; but to acquire wisdom, one must observe.”-Marilyn vos Savant; “If you can’t explain it simply, you don’t understand it well enough.”-Albert Einstein; VTI/VXUS/BND
Re: Gambling with Commodities
A broad commodities holding can add diversification, as lackey said.
The frustrating thing about commodities is that the commodities marketplace makes little sense with all the stuff about futures and rolls. It's also more vulnerable to political manipulation. You'd expect commodities to be an asset class largely driven strictly by supply and demand, but it's actually one of the least driven strictly by supply and demand.
The frustrating thing about commodities is that the commodities marketplace makes little sense with all the stuff about futures and rolls. It's also more vulnerable to political manipulation. You'd expect commodities to be an asset class largely driven strictly by supply and demand, but it's actually one of the least driven strictly by supply and demand.
Re: Gambling with Commodities
Just call Duke & Duke. "Mr Valentine has set the price."prudent wrote:I think commodities markets are manipulated and most futures market action (including metals) is instigated by the big brokers and little of it is related to its function of locking in prices for producers and consumers. Wish I knew how to exploit that.
There is no free lunch.
- Rx 4 investing
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Re: Gambling with Commodities
"The Barron’s Gold Mining Index has made several new lows in 2015, but it recently at a new all-time low of 11.59 grams of gold, 21% below its long-standing 14.74 gram low set back in April of 1942....I think we are approaching a once in a lifetime opportunity for profits in the gold mining sector."
http://pricedingold.com/
“Everyone is a disciplined, long-term investor until the market goes down.” – Steve Forbes