CONTENTS Part I. An Overview ............................................... 1
1. Introduction: A Fortune In Commodities ........................ 3
What Are Commodities? ........................................ 3
Futures ...................................................... 3
Speculative Positions ........................................ 4
The Attraction of the Game ................................... 7
The Trader's Life ............................................ 8
Profits ...................................................... 9
Simplicity .................................................. 15
Commodities and the Real World .............................. 16 2. How Fortunes are Made ........................................ 18
To Win You Simply Must Have This Ability .................... 27 3. Some Thoughts about the Commodity Markets .................... 28
Part 1 ...................................................... 28
Part 2 & 3 .................................................. 29
Part 4 & 5 .................................................. 32
Part 6 & 7 .................................................. 33
Part 8 & 9 .................................................. 35
Part 10 ..................................................... 39
Part 11 ..................................................... 40 4. Stocks and Commodities ....................................... 41
An Old Confusion ............................................ 41
Leverage .................................................... 41
Timing ...................................................... 43
Honesty ..................................................... 46
Doing Business .............................................. 47
Strategy .................................................... 49
Price Moves ................................................. 52
The Cast of Characters ...................................... 54 5. Futures Trading: A Brief History ............................. 56
Trading Through The Ages .................................... 56
Chicago ..................................................... 58
The New Age ................................................. 61 6. Exchanges And Trades ......................................... 67
The Exchange ................................................ 67
The Chicago Board of Trade .................................. 69
The Chicago Mercantile Exchange ............................. 71
Other Exchanges ............................................. 72
The Traders ................................................. 73
The Hedger .................................................. 74
Pit Traders and Scalpers .................................... 77
The Public Speculator ....................................... 78
Commitment of Traders ....................................... 80
Women In Commodities ........................................ 84 7. Commodity Contracts .......................................... 86
Making A Contract ........................................... 86
Pricing ..................................................... 93
Premiums And Discounts ...................................... 95
Contracts Currently Traded .................................. 96
New Contracts ............................................... 97 8. Brokers and Accounts ........................................ 101
Selecting A Broker ......................................... 101
Types Of Accounts .......................................... 105
Managed Accounts, Pools, and Funds ......................... 106
Margin ..................................................... 110
Commission ................................................. 117 9. Mechanics ................................................... 121
Trading Floor And Pit ...................................... 121
The Pits Limitations ....................................... 128
Hour, Units, Ticker Symbols ................................ 130
Minimum Fluctuation and Daily Trading Limits ............... 131
The Clearinghouse .......................................... 135
Order Variations ........................................... 139
Stop Loss Execution ........................................ 141
The Commodity Futures Trading Commission ................... 142 10. Commodity Options ........................................... 148
Fools Rush In .............................................. 148
Carr's Capers .............................................. 153
Definitions And Mechanics .................................. 157
The London Markets ......................................... 160 Part II. Pricing ................................................ 161
11. The Random Nature Of Market Price ........................... 163
Random Walk Theory ......................................... 163
Discounting ................................................ 166
Profits, Prices, And Discounting ........................... 169
Thin Markets ............................................... 170
The Model .................................................. 170
Implications Of The Theory ................................. 174 12. Cash Commodity Pricing ...................................... 176
Cash Price ................................................. 176
Supply And Demand .......................................... 177
Functions And Fundamentals ................................. 178
Supply Determinants ........................................ 182
Demand Determinants ........................................ 186
Intercommodity Relationships ............................... 188
Government Policies and Programs ........................... 191
Government Disposal ........................................ 197
Pricing Information ........................................ 197 13. Futures Contract Pricing .................................... 203
Futures Prices ............................................. 203
Futures Quotations ......................................... 204
Basis ...................................................... 206
Price Floor ................................................ 209
Price Ceiling .............................................. 210
Intermonth Basis ........................................... 211
Spread Positions ........................................... 212
Intercommodity And Intermarket Spreads ..................... 217
Cash Price Effects Of Futures Trading ...................... 223 14. The Major Commodities: A Few Fundamentals ................... 226
How Much About What Should I Know? ......................... 226
Wheat ...................................................... 227
Corn ....................................................... 234
Soybeans, Soybean Meal, and Soybean Oil .................... 240
Cotton ..................................................... 245
Hogs And Pork Bellies ...................................... 249
Cattle ..................................................... 254
Metals: Gold, Silver, And Copper ........................... 260
Financial Futures .......................................... 267 Part III. The Trading Program ................................... 277
15. The Art Of Price Forecasting ................................ 279
Fundamental Forecasting .................................... 279
Fundamental Errors ......................................... 281
Technical Forecasting ...................................... 282
Chart Construction ......................................... 284
Reading Chart Formation .................................... 287
Channels ................................................... 290
Support And Resistance Levels .............................. 291
Resting Areas .............................................. 293
Chart Events ............................................... 294
Moving Averages And Oscillators ............................ 299
Volume And Open Interest ................................... 301
Limits Of Technical Forecasting ............................ 305 16. Seasonals And Odds .......................................... 306
Seasonal Trends ............................................ 306
Cash And Futures Seasonals ................................. 308
Charting Seasonal Prices ................................... 309
Calculating The Odds ....................................... 315
General Cash Odds .......................................... 316
Specific Cash Odds ......................................... 319
General Futures Odds ....................................... 320
Specific Future Odds ....................................... 323
Playing The Odds ........................................... 324
A Note On Nonagricultural Seasonals ........................ 325 17. Picking the Turns ........................................... 327 18. Managing The Commodity Account .............................. 346
Thoughtful Planning ........................................ 346
Position Management ........................................ 347
Rules To Play By ........................................... 348
Stop Orders ................................................ 351
Placing Stop Orders ........................................ 353
Adding To A Winning Position ............................... 355
Organization ............................................... 359 Glossary ........................................................ 363 Appendix I - Sample Commodity Orders ............................ 373 Appendix II ..................................................... 375 Information Sources ............................................. 383 | 
