Getting Started in Commodities
08/01/2007 12:00 am EST
Pork bellies, orange juice futures, gold, sugar, and oil—the world of commodities has always been enticing, albeit frightening, to me. And while I’ve logged hundreds of hours researching commodity stocks, such as energy and metals, I’ve managed to successfully avoid learning about trading the very esoteric physical goods that are the basis of those securities.
However, my ignorant and innocent days are now behind me! After reading George Fontanills’ wonderful explanatory tome on this complicated subject, I must admit that I have now been bitten by the curiosity bug to learn even more.
Mr. Fontanills is famous in the world of options, as the founder of Optionetics, the global leader in options education. And now, he has brought his brand of comprehensive, yet very understandable, education to the commodities arena.
Whether you are a novice or an experienced commodities trader, in this book, you will find an incredibly thorough A-Z manual that will undoubtedly help you increase your commodity trading success.
Mr. Fontanills provides detailed coverage of each element of the commodity marketplace, including an in-depth explanation of each tradable commodity, as well as an introduction to the exchanges on which they are traded. No detail is ignored. Types of orders, margins, contract size, and pricing, are all thoroughly examined. And a multitude of factors that will affect commodity prices, including economic, market, weather, cyclical, and seasonal events are analyzed.
Both technical and fundamental parameters are explained in relation to their impact on the commodity buying and selling decision, and supported by a multitude of charts and graphs. Considerable attention is given to the most crucial elements of technical analysis, including moving averages, Bollinger Bands, relative strength, stochastics, and many more.
Mr. Fontanills gives specific examples of how to trade each commodity, including entire chapters devoted to Elliott Wave Trading and an array of options strategies to help you leverage your investment dollars, with the minimum of risk.
For investors desiring commodity exposure but not yet ready to jump wholeheartedly into trading the physical commodities markets, the book offers additional methods to participate, such as exchange-traded funds, mutual funds, exchange-traded notes, HOLDRs, and common stocks. In each circumstance, Mr. Fontanills offers analysis of specific investments in each category. Additionally, he explains the fundamental and technical factors that will help you select commodity stocks that offer the greatest growth potential.
And ensuring that readers do not just plunge into the commodity world helter-skelter, practical risk management and money management guidance is offered, as well as an entire chapter discussing how to avoid some of the common mistakes—especially the mind games—prevalent in commodities trading.
Although the book is lengthy, it is easy to read and understand. And I believe that readers who take their time with it, learning about commodities on a step-by-step basis, will be amply rewarded by this fabulous introduction into the commodity realm.