Stocks, Options and Commodity Futures

When people think about “playing the market,” they generally think in terms of the New York Stock Exchange. They envision purchasing publicly traded stocks in notable corporations, waiting for them to grow in value and then selling them at the right time for a profit. That simple view of stock trading is only one way to profit within the markets and it isn’t always the most lucrative.

Stocks can be traded in a variety of ways. Yes, the tried and true traditional method outline above does have potential and hordes of adherents. Others prefer the faster-paced activity of day trading and swing trading. They enjoy playing the markets more quickly and posting faster gains when their investment gambles pay off.

Others prefer to deal in stocks that you won’t even find listed in the financial section of your morning paper. They prosper by successful identifying low-priced speculative stocks in other markets and holding them until massive growth occurs. These penny stock traders have found their own way to “play the markets.”

Some investors don’t even deal in stocks. Instead, they trade in stock options. Those options and there values are derivatives of the actual instruments, but they can be traded at a profit without ever actually owning the related stock at any time. Some use these futures as a way of creating favorable sell and purchase situations for the actual stocks. There is a variety of ways to make money with stock options.

Others focus their attention on commodities futures. Commodity futures are contracts for future sales and purchases of commodities at a future date. Commodities trading can be quite lucrative, but the practice does have a reputation for substantial risk. Commodity futures buyers and sellers work from a different perspective than do traditional stock buyers. They recognize that the chaotic futures markets are less predictable than other investment opportunities. They bank on overall trends and establishing multiple positions to increase the favorability of their overall odds. Notable commodity futures traders like George Soros prove that there is an amazing opportunity for profit within commodity markets.

There are many ways to enter the marketplace. Each individual investor should acquaint himself or herself with the variety of investment opportunities and select a route that appeals to their desires, skills and needs. One certainly shouldn’t limit his or her perception of “playing the market” to the traditional stock market. Opportunities abound, and well-informed market participants invariably have a greater opportunity for success.

Now that you have a better idea of just how diverse trading opportunities are, you can begin to explore options that you find particularly attractive!