Parallel to Wall Street

By Nelson Pellew

The world of high finance is a world seldom visited by the uninitiated. Though the triumphs and monumental failures of Wall Street are well documented every day -- either by radio or scrolling ticker on any number of news or financial television programs. We have become de facto fans of the market. When it rises, we are supposed to be elated. When it crashes, we are supposed to be mortified -- and perhaps for good reason.

Of course, there is a parallel world of high finances that, though it does manage to be reported on, is not as readily consumed or followed by the masses. This, of course, is the world of the commodities future. To be sure, the futures market fails to garner the spotlight -- and perhaps that is for the best.

The futures market, regulated via the Chicago Mercantile Exchange, follows the highs and lows of commodities. The trading is conducted in increments known as electronically traded futures, or e-minis. E-minis futures trading contracts represent a portion of the so-called normal futures. These portions are "papers" that are traded day in and day out. However, to obtain access to e-minis, you must ensure your margin for any specific commodity has been satisfied.

This means if your futures fall short on wheat by a margin of X, then you would be responsible for paying that margin before you could qualify for a new e-mini docket. For the sake of convenience, the e-mini has become the standard for futures trades. Of course, buying and selling e-minis requires a fair amount of skill and research.

The optimal futures trader is one who has familiarized himself -- or herself -- with the complex terminology and methodology of the trade. You see, they are called futures because in essence, you are betting on or against the future price or value of a commodity. What will wheat sell for tomorrow? What will the price of sugar be in a week? You see, this requires a great deal of study and the refinement of some kind of predictive logic. - 32177

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