DashRiprock
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Seeing it is said that 95% of traders lose.
Why don’t we do the world a favour and all go long on wheat tomorrow morning?
buy wheetabix instead, it puts hairs on your chest!
Seeing it is said that 95% of traders lose.
Why don’t we do the world a favour and all go long on wheat tomorrow morning?
Is this a serious question?
"Trading FX is ethical, trading commodities isn't"
Do you think "the poorest 25%" would be better off if commodities were not freely traded? Are you proposing price controls (that ALWAYS works), and if so, how would this function in practice?
How is the price to be set? Should people be forced to buy and sell at a price not of their choosing?
The Onion Futures Act (7 U.S.C Chapter 1 § 13-1]) is a United States law banning the trading of futures contracts on onions. It was passed on August 28, 1958, and remains in effect as of 2010[update].
This law is notable as the first and only ban on the trading of futures contracts of a specific commodity in United States history, and as a unique modern case with which to study the effects of the existence of an active futures market on commodity prices. In particular, proponents of futures markets often claim that they serve to stabilize otherwise volatile commodity supplies (and thus, prices) by providing a market-driven consensus mechanism for future price estimation. The conclusions drawn in subsequent studies of the effects of the Act upon price volatility have been mixed.
Mon, 04/19/2010 - 00:11 EDT The financial reform bill being considered in the US Senate aims to impose stricter supervision of all derivatives and prohibit futures based on box-office receipts and the price of onions
Wed, 04/21/2010 - 16:55 EDT A proposed ban on betting on movie box office receipts took one step closer to becoming law. A U.S. Senate committee on Wednesday passed a financial regulatory reform bill that supports Hollywood in outlawing the trading of futures contracts based on predicted movie ticket sales.
Change, yes. Trend, no. The consequences of believing models that are internally inconsistent but are nonetheless worth using as the basis of making major economic decisions should cause everyone pause. Science, like any other profession, has its share of scoundrels.
The theory of futures markets is that they create price stability. In actual fact, there is plenty of evidence that they do the reverse. Look at oil price fluctuations. They fluctuate because of 'supply & demand' for futures contracts (although strictly speaking there is infinite supply), not supply & demand for oil itself.
As futures markets create price instability, they cause the problem they are supposed to resolve. Hedging becomes necessary because of the instability created. Futures markets are a tax on the underlying commodity. It is a huge money spinner for the people running the markets. Sure - people that hedge lose less money than if they didn't - is that what constitutes a free market nowadays?
Errrr...No it wasn't sunshine...Errr...no-one has even claimed that it is sunshine...Errr...not even Al Gore or Jim Hansen sunshine
Errr...even if it was errr sunshine...which errrr it isn't sunshine...errr...the "man-made" element of my post is quite important...sunshine...the contribution of mankind's activities to climate change is...err sunshine...the subject of err sunshine...some debate to put it errr mildly sunshine.
my $0.02 is that there shouldn't be a question of what it is or isn't ethical to speculate on... but there is a difference between ethical and unethical regulation.
what I mean is things like the leverage available, cash settled instead of physically settled, routes to market and things like that.
Surely trading anything is as likely to drive its price down as up? (I'm not saying low prices are better for the worst off than high prices)
Sigh.....
Supply & demand will set prices in the absence of a futures market. Your argument appears to be that there are 2 choices - price fixing and futures markets.
The theory of futures markets is that they create price stability. In actual fact, there is plenty of evidence that they do the reverse. Look at oil price fluctuations. They fluctuate because of 'supply & demand' for futures contracts (although strictly speaking there is infinite supply), not supply & demand for oil itself.
As futures markets create price instability, they cause the problem they are supposed to resolve. Hedging becomes necessary because of the instability created. Futures markets are a tax on the underlying commodity. It is a huge money spinner for the people running the markets. Sure - people that hedge lose less money than if they didn't - is that what constitutes a free market nowadays?
Here is a question I posed on the forum a while back:
"Would we all be happy for the very trustworthy Goldman Sachs to run a futures market to which the price of future home supply would effectively be pegged ?"
Still - they tried to bring it back in...
The more markets created, the more money the people running the markets skim off the top.
More here : http://www.trade2win.com/boards/general-trading-chat/86726-minus-sum-game-mk-ii-derivatives.html
I'm in complete agreement. Futures trading was created on the theory that it would stabilize prices which was correct at one time. The futures markets and exchanges were never designed to be traded by enormous hedge funds or large institutional speculators who can effect the underlying price simply by taking on huge positions never intending for delivery.
Peter
The futures markets and exchanges were never designed to be traded by enormous hedge funds or large institutional speculators who can effect the underlying price simply by taking on huge positions never intending for delivery.
Peter
I'm sure commodity prices would be much more stable if they were priced in gold rather than $US.
Very interesting comment (although still waiting for proof that markets are non-random).
I was recently shown a graph of S&P rebased in gold over the last five years.. if gold is a "real" currency (some debate on that I know), then the recent rally in stocks is a pure mirage.
...
I'm sure commodity prices would be much more stable if they were priced in gold rather than $US
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So the interview I saw with a former finance minister from an african country when he was discussing economic foreign aid, specifically how economic aid was used to subsidise commodity production, must have been staged then.
Frankly the EU's Common Agricultural Policy is a disgrace, and worth remembering next time you hear some self-righteous EU bureaucrat banging on about the dangers of speculators.