Trading strategies commodities futures

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Trading strategies commodities futuresHow do investors make money by trading in commodity futures?

Investors take advantage of movements in commodity prices in order to gain profits. Below is a general description of trading outright commodity futures contacts.

For instance, an investor thinks that Crude Oil can go higher due to certain fundamental or technical reasons, which he/she believes will play a vital role in effecting supply or demand of crude. He/she then decides to buy one crude oil futures contract by placing an order through the brokerage company that he/she is associated with. Let us assume the crude futures was bought at a rate of $29.10 / barrel, and the price rose to $30.10 / barrel in a couple of days time. He/she then decides to sell the futures contract at $30.10, which will fetch a profit of $1000.

At another occasion, an investor thinks that crude can go down soon. He/she then decides to sell one crude oil futures contract. Let us assume the crude oil futures was sold at $30.10, and the price dropped to $29.10 in a few days time. This will again result in a profit of $1000. In this way, investors make money both in a rising and a falling market.