Privy to High Finance and Futures
Only those in the know, so to speak, are privy to the world of high finance. Though the triumphs and monumental failures of Wall Street are well documented every day — either by radio or scrolling ticker on any number of news or financial television programs. We have become de facto fans of the market. When it rises, we are supposed to be elated. When it crashes, we are supposed to be mortified — and perhaps for good reason.
Thriving on a parallel plane, is the world of high finances that manages to avoid the glare of the spotlight while still enjoying a steady following. This, of course, is the world of the commodities future. To be sure, the futures market fails to garner the spotlight — and perhaps that is for the best.
What is the futures market, you ask? The futures market, regulated via the Chicago Mercantile Exchange, follows the highs and lows of commodities. The trading is conducted in increments known as electronically traded futures, or e-minis. E-minis futures trading contracts represent a portion of the so-called normal futures. These portions are “papers” that are traded day in and day out. However, to obtain access to e-minis, you must ensure your margin for any specific commodity has been satisfied.
Therefore, should your futures fall short on wheat by a margin of X, then you would be responsible for paying that margin before you could qualify for a new e-mini docket. For the sake of convenience, the e-mini has become the standard for futures trades. Of course, buying and selling e-minis requires a fair amount of skill and research.
The definition of the term “futures” is derived from the simple fact that you are betting on or against the future price or value of a commodity. What will wheat sell for tomorrow? What will the price of sugar be in a week? You see, this requires a great deal of study and the refinement of some kind of predictive logic. The optimal futures trader is one who has familiarized himself — or herself — with the complex terminology and methodology of the trade.
The world of emini futures trading is not for the faint of heart or the dull of wit. It takes a commitment to research and in-depth analysis few have the patience for. Prepare wisely.
Posted on March 1, 2010
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