Cotton Futures Trading

What are the basics of cotton futures trading?

The cotton futures are standardized and traded contracts in exchange.

Trading in the cotton commodity is alike to trading in any other non-agricultural or agricultural commodity.

When two parties trade a futures contract, then the buyer is in agreement to take the delivery of the commodity from the seller.

The quantity, price and time of delivery are decided in advance. In order to buy cotton futures, you will first need to open a commodity trading account with a registered brokerage firm.

You can then commence trading in the cotton futures listed in the commodity exchanges in India.

The cotton futures price changes when there is a disproportion of supply and demand.

In you wish to trade these agricultural commodities, you need to understand the seasonal trend of the commodity as well the force of any news on it.

What are the basics of cotton futures trading?

In order to manage the risk, the consumer as well as the producer of cotton will trade in cotton futures.

Those who produce cotton take a short hedge which lets them lock a selling price for the cotton that they produce.

The consumers of cotton take a long hedge in cotton futures to protect the purchase price of the cotton commodity which they require for their business.

Speculators also trade in cotton futures to profit from the price risk that hedgers try to avoid.

They buy when they are cheerful on cotton and sell when they assume that the price of cotton may fall.

Open a commodity trading account with a registered commodity brokerage firm is the primary step to trade in cotton futures.

Expert Guidance is required to trade in cotton as Cotton is only traded in futures.

In order to take a trade in cotton futures, seasonal effects, as well as the impact of news, need to be considered.

What are the Technical charts?

In addition to the fundamental aspects of this agricultural commodity, it is necessary to find out the supply and resistance levels of the commodity by using technical charts.

Trading indicators like RSI and moving averages will be helpful to increase the prospect of your trades.

Comparatively, Trading in cotton futures is less unpredictable and for this reason less risky than in trading in stocks

On the other hand, money management is vital to make profit and secure your capital when trading the cotton futures.