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  Commodity Trading By Alex Weis I should begin this article by disclosing the fact that I have never traded commodity futures and my acquaintance with this topic is through research. Most investors are familiar with stocks, bonds, and mutual funds as forms of investment. Too often commodity trading is ignored even though it has many advantages over other types of investments. In addition
to buying futures on products like wheat and corn, one can buy futures
in currency and market indices. An advantage of trading futures
on market indices is that you have to invest a lot less money than
you would if you were buying stocks. For instance, a $10,000 futures
contract on the S&P 500 is equivalent to about $350,000 dollars
in stock. Let's say you are expecting the stock market will
go up in the short term, you could buy many of the stocks that compose
the S&P 500 stock index (the route most people take) or you
could buy an S&P futures contract . If you invested $350,000
in stocks in the S&P 500 on the first trading day of September
1996 and held the investment for two weeks you would have made a
profit of $20,000. If you, instead, bought a $10,000 futures contract
on the same time period you would have made the same $20,000, a
two hundred percent gain.
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