Williams L.R. Trade Stocks and Commodities with the Insiders

Hoboken: John Wiley & Sons, 2005. — 209 p. — ISBN: 978-0-471-74125-1.What we know as the commodity markets of today came from some humble beginnings. Trading in futures originated in Japan during the eighteenth century and was primarily used for the trading of rice and silk. It wasn’t until the 1850s that the United States started using futures markets to buy and sell commodities such as cotton, corn, and wheat. A futures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. If you buy a futures contract, you are basically agreeing to buy something, for a set price, that a seller has not yet produced. But participating in the futures market does not necessarily mean that you will be responsible for receiving or delivering large inventories of physical commodities – remember, buyers and sellers in the futures market primarily enter into futures contracts to hedge risk or speculate rather than exchange physical goods (which is the primary activity of the cash/spot market). That is why futures are used as financial instruments not only by producers and consumers but also by speculators. Before the North American futures market originated some 150 years ago, farmers would grow their crops and then bring them to market in the hope of selling their inventory. But without any indication of demand, supply often exceeded what was needed, and crops that were not bought were left to rot in the streets! Conversely, when a given commodity – for instance, wheat – was out of season, the goods made from it became very expensive because the crop was no longer available. Bread was cheap in the fall and dear in the springtime. In the mid-nineteenth century, central grain markets were established and a central marketplace was created for farmers so they might bring their commodities and sell them either for immediate delivery (spot trading) or for forward delivery. The latter contracts – forward contracts, contracts dealing with the future – were the forerunners to today’s futures contracts. This innovative concept saved many a farmer the loss of crops and profits and helped stabilize supply and prices in the off-season. While futures are not for the risk-averse, they are useful for a wide range of people trying to break out of the humdrum 9 to 5 job syndrome, people like me who believe we should remain independent of any source of income that will deprive us of our personal liberties.Meet Your New Investment Partner and Adviser
Watching the Commercials
Understanding the Commercials: A Record of Their Buying and Selling
The COT Index
For Every Insider There Is an Outsider
Large Traders... Not Quite As Good As You Think
The Facts on Volume
The Breakthrough: Getting Inside Volume and Open Interest
Opening Up on Open Interest
A Unified Theory of COT Data
A New Twist on the Commercials: Using Them for Stocks
Pointers and Thoughts on Trading
The One-Minute Commodity Trader
Charts: What They Are, What They Mean
Putting Theory to Work: Practicing What I Preach