Commodities Futures Charts

Reviewed: November 17, 2014
By FinanceWeb

Web-based and Software Systems

Commodities futures charts are important tools for developing positions when trading futures. The charts set out the past monthly histories and current month’s daily trends on a commodity-appropriate basis. Some commodities such as currencies require an hourly breakdown. The required forward projection can be for one or more months depending on the commodity, and current and accurate information is a necessary foundation. Web-based charts offer the advantage of easy access. Downloaded or stand-alone models require maintenance, updating, and depend upon maintaining a non-corrupt status on every machine. Web-based information systems reduce many tasks and risks associated with download software systems.

Paper Trades

Beginning traders can benefit from a period of paper trading using real-time data. This learning exercise is the essential test of readiness to pursue trades using assets. Commodities futures charts provide actual data and a real-time trading environment. Paper trades help develop accurate reading of prices and trends. When setting a put or call as part of a strategy to profit from a strike point, one needs actual data and a real-time trading situation to determine the effectiveness of a short or long approach. The online charts feature simple moving averages and exponential moving averages ranging from ten to 200 days. They offer data analysis to determine points of support and resistance. Some systems have interactive features to permit questions and discussions and private messaging.

Charts as a Primary Resource

Commodities futures charts can be a primary resource for futures trading. They show historical and latest price movement. The typical futures contract period is ninety days, or less, and historical and trend data is important to determining volatility and direction. Commodity charts can be comprehensive on historical data, and the current price and volume information is essential to making accurate predictions. The source information for many chart services is official information such as from the U.S. Government or its authorized information portals. Many private groups are official sources of information such as agricultural commodity boards or cooperative organizations.

Working Off-Charts

The charts do not provide all of the information needed to make and carry out effective strategies. For example, charts may note news and events and provide some analysis. Business news analysis is information that a trader should consider. However, it is likely not enough information to support a particular strategy. The trader must use research as a means to determine a position on future changes and the time frame. Setting a strike point is a key part of profit-making strategy, and this can be an event or news driven decision. Common examples are announcements of mergers in a financial index trade or the date of an official report in a commodity like soybeans.

Trends and Consensus

News and events have spawned an industry of financial analysis. This source of information can be a very helpful way to digest large amounts of data. However, one must be aware of the distinctions between news and information on one hand and opinions on the other. Sometimes blurred, the distinction is important when sifting data to make decisions. It is fine to choose to follow opinions, but one should not do so under the mistaken belief that it is factual or the only likely view. Many experts advise that it is important to notice trends; some suggest it is beneficial to make decisions that follow trends. Strategies can go against trends, and one can base them upon strong research or information about a particular company or commodity. The trends ultimately are a market factor; they can determine the price of options contracts.