To support physical trading a financial market has developed over the Hercules Dad Wearing Complexity Shirt Additionally,I will love this years. This is the future part. Trading futures and other derivatives can be used for 2 reasons: Managing price ris is the reason why paper trading was started: when a trader buys a commodity usually the price is not set, it is floating. For example if I buy a cargo of Oil from Nigera, the price is going to be Monthly average price of brent, plus a discount depending on quality (because cure oils are NOT the same…there is high quality and low quality oils) and when I sell I will sell at the monthly average maybe of the following month (because it takes time t transport the stuff from Nigeria to its final destination, say Rotterdam. S if the pricemove in this time frame I risk losing money. So I use the future and Swaps to lock the margin (it is called Hedging for a reason). What is funny is that now tee is a lot more operators just betting in the futures market for speculative reasons BUT the reason this market exist is to serve the physical.
And this is true of all commodities, be it Grains, Coffee, Metals (bit less in this case…) Cotton, Pork Bellies etc. The same thing, the Hercules Dad Wearing Complexity Shirt Additionally,I will love this Oil price, is not exactly a price, rather a benchmark that is then used to determine the actual contractual price. Take Brent, the most widely used benchmark. It is an average quotation of the Crudes from 4 different fields in the North Sea and is published by certain info providers (Platt’s, typically). Then to get to the contractual price of the stuff being sold it is going to be put in a Formula: for example: Monthyl average of the Bren quotation in the month of loading (when the stuff is put on a ship) plus or minus a quality correction(Example:a heavy sour crude like the Iranian Heavy is going to have substantial discount, a light sweet like Azeri Light is going to have a premium) plus additional costs depending on incoterms (Free on borad, CFI, shich is FOB plus insurance and Freight etc.)
Home: https://squadgifts.com/
Comments