It seems that some of the most successful traders out there have attained their riches by trading the commodities markets... why is that? If you wiki them, you will see that most trade commodities... is there something special about this market?
Most of the most successful traders seem to trade futures which include commodities. I think the advantages of futures (low tax rates, mark-to-market trading) make it attractive to these traders.
commodities futures have high leverage and you can trade LARGE and more predictable and isn't manipulated like stocks can't be manipulated any market makers/broker or any trader. if you have 10 million dollars to trade..forex and oil futures gives you the liquidity to daytrade them.
Massive leverage and mongo trends. There are some equity traders in the same group though. Stevie Cohen comes to mind. Its amazing how guys like Paul Jones do it year after year.
The ability to go long or short any time? If all stocks have been borrowed to short, then you can't short.
Most good traders trade anything that can make money. Not trading commodities is like not trading equities, FX, bonds, or options - i.e. stupid as hell.
Commodity futures (including ES, YM, ER2) are called 1256 contracts by the IRS. They are taxed using the 60/40 rule - 60/40 rule. Under the marked to market system, 60% of your capital gain or loss will be treated as a long-term capital gain or loss, and 40% will be treated as a short-term capital gain or loss. This is true regardless of how long you actually held the property. Jack
Congress is debating killing that right now, before they go on recess. Won't happen that soon, but may definitely happen. its all fallout from the speculation paranoia about crude. I have posted a link to this bill under the politics group of threads. This will affect me directly as almost all my income falls under this rule.
commodities futures, basically not random...when the liquidity is good, the trend is clear is crystal. Very global market, so the movement is very reliable.... very suitable for position trading...the brokers cost can be very low. Seasonal play is predictable. index futures, eventhough is very liquid, sometimes the movement is random and suitable only for daytrade or scalping. forex, eventhough very liquid, is very politically motivated to certain coubtries... however, certain commodities are quite difficult to play if the liquidity is not very good.