How would i go about investing in commodities?
Question by punjabi_94901 : How would i go about investing in commodities?
I would like to invest some money into commodities like wheat, milk, soybeans etc. Can somebody tell how an individual with 00 can do that. Thankyou
Give your answer to this question below!
Tags:
in comparison with equity, commodities are very risky for small investors.
initially i would suggest your trying in equity
best of luck
You need to do extensive research before even thinking of doing this.
Commodity trading (future options) is done by opening an account at a brokerage house that will take your money. It will probably be hard to impossible with the amount you have. The reason for that is that, in commodity trading, you can make very high returns (1000% or more, even) IF you guess right. But the downside is that, unlike equities, you can lose MORE than your initial investment (much MUCH more). So the brokerage will need to see substantial other assets you’re willing to risk, and most have fairly high qualification limits for income and assets.
If you don’t know what you’re doing, you’ll almost certainly lose your money. The previous poster is right, stick to equities.
Unfortunately, 2000 is way too little to invest in commodities using futures. With such an amount the best and probably the only way is to invest in ETFs such as DBA, for example, which holds corn, wheat, soybean and soybean oil.
Michael M, sure you can open an account with 2000, but it’s not nearly enough to develop a reasonable trading strategy. You can neither have wide enough stops nor trade enough instruments to diversify your positions a bit.
I’ve compiled my Best Answers to this question at:
http://commonsensetrading.googlepages.com
by the way, I disagree with other responders.
I called optionsxpress.com and they said you can open up an account with them for $2,000 to trade commodities.
Also, people who say commodities are more risky are confusing “leverage” with “risk.” The two are not the same.
ALL types of trading have roughly the SAME amount of risk. The only difference is that with higher leverage, you may see your money disappear quicker.
I ask: what’s the difference if your money disappears in one month, or one year?
The answer: none.