Commodity Futures and Options. Commodities are basic agricultural products and materials we all depend on. Some examples are corn, wheat, soybeans, coffee, sugar, oil, copper, cattle, hogs and pork bellies, to name a few.
And cocoa pods, the agricultural product that chocolate is made out of. That makes it the most important commodity of the bunch, don’t you agree?
There is a huge commodity market in the United States, sixteen times the size of the stock market, that trades in these necessary goods. And large sums of money can be made (and lost) quickly trading them as futures contracts or options.
It takes some real trading expertise and nerves of steel to invest in these successfully. I’ve read that only 5% of the traders make money, which means the other 95% lose. And most new traders blow up their account (as in lose ALL their money) within the first year.
I started trading them in the early 90’s and did not blow up any of my accounts, but can attest to the nerves of steel thing (my trading partner nicknamed me Steely Dan).
Suffice it to say we will not be getting into commodities in this book. There are many profitable opportunities in stocks that will go much easier on your nerves.