Posted on 27 October 2011. Tags: futures month
The futures month of an individual product can have an impact on the price and controls when the product is available to be traded. Doing a load of research could all be for naught if the product becomes unavailable. The type of trader also has an influence on what futures will be available to them. Trying to identify the market trends is common with investing, but the delivery months and dates of availability can have just as large an impact.
A futures day trader is only worried about the day. If a product is not available for trading on a specific day, then it will not even be on his or her radar. The long term and position traders are who have to keep an eye on the calendar. When dealing with low volatility stocks, one major trending model involves time. A stock that takes a few months for the price to rise would be a bad investment if all the futures month will come and go before that time period can pass; should such a situation occur, the future will have to be sold or the owner needs to accept delivery of the goods. Most people do not have their own grain silos sitting in the backyard ready for a few tons of grain.
The futures month only affects a certain type of product; things like pork bellies or corn have a set number of months they are available for delivery. There are many commodities, such as oil, that have a delivery month every single month, which makes them unaffected by seasonal trading. The concept of a futures month may seem scary at first, but a seasoned investor just accepts that it is another piece of the puzzle to consider.
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