Stock Investing Strategies

Stock investments

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Comodity Investments

One way to invest your money is to simply invest into something called a commodity. What is considered a commodity? These are simply items that have a growing demand and a limited supply.

Things like water, gold, silver, corn, and cattle would all be considered commodities and they all offer a way to trade them.

You can trade commodities by buying them to be delievered in the future using future contracts. Here is how it works.

Farmer John is expecting to get 100 bushels of corn in the next couple of months. One option he has available to him is to sell the corn to someone to be delievered in the future. Anyone can go out and buy these contracts. The contracts are then constantly affected by the demand of the contract.

Of course if you are just interested int trading commodities you do not want to receive that 100 bushels of corn, so instead of holding it all the way through till you receive the commodity you can always sell it in advance.

The idea behind buying and selling commodities is that you can buy a future contract as the commodity is about to increase and sell it at a later date for a profit.

Contracts do tend to expire within a relatively short period of time, so it is not ideal for long term investing. If you hold a contract for too long it will end up expiring and you will have a ton of corn lying around the house.

So before you buy a commodity or start looking at trading commodity options it is important to have a firm understanding of how to make money in the short term. It can be a very profitable market place, but it is not really the best place to start if you are just learning.

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