It's a big component of the commodity bull!

This article is mainly about the basics and has little to do with quantity, but it is important to understand the basics and choose the right strategy, related to commodity futures.

I've been doing futures since 2000, and I've been doing it for almost 16 years. I've been in the futures business for almost 16 years. I didn't get into the futures business smoothly, and before 2009 I had to die to live. I joked that I couldn't die either, because my wife and children were dead. To find the big market, you must study the basics, which is unquestionable. Without studying the basics, before the big market comes, you can't find it. You want to do the big market, only to thoroughly study the basics, you can catch the big market. There is also the big market, most of the time, is a multi-head market. Why? The market of a cycle, a wave of heads, a wave of heads, the benefits of both are completely incompatible and unequal. For example, iron ore, from 1000 points listed, the lowest to 278 points, two years falling by 72%, falling by 1000 points, that's even 250%, the benefits are not exactly the same. Today I will share how to do more. In November, someone joked that the market has four big heads with more free sliders, respectively, free heads, free heads, free heads, free heads, free heads, saying that this is me, free-fingered master Liang (Liang Ryan), free-fingered paid patriot, free-fingered one futures, without hair, call him free. Commodities have their own value law, a pricing system. To understand how commodities are priced, one is supply-demand pricing. Supply is greater than demand, so prices tend to fall, but this is in the case of companies that are still profitable. This is to be clear; supply is less than demand, so prices tend to go up, this is to be established in the case of less profitable production, but if the money is earned to the sky, then no one is going to do much, or to see the price. Remember that supply and price are complementary and interdependent. Supply is divided into stock supply, stock supply, capacity supply. Stock supply is the supply of stockpiled merchants. Stock supply refers to the normal stock of an enterprise, like a mercury company, where the original stock of mercury oxide was at least 25 days, now only 3 or 5 days, indicating that its stock has been released. Supply is the supply in production. Demand is divided into three large blocks: consumption demand, which is real demand; stock demand, when prices continue to rise, stock demand will rise dramatically, and all links are increasing stock, like a mercury surge. So the first element is to study the national policy, especially the policy related to national industrial products. The so-called excess capacity, supply is greater than demand, as long as the state guides the demand, the production is insufficient, and the price is rising. Do not listen to some experts ignoring, the other market is dominated by the state. The state policy has a correct understanding of the state policy, it is very important to do. The second factor that affects demand is the expectation of the market participants on the price of goods, that is, confidence, good confidence, the same supply and demand relationship, prices tend to rise; lack of confidence will have to fall. Good confidence will increase inventories, and people will consume; lack of confidence will reduce inventories, not dare to consume, causing more supply than demand, enterprises will lose money, the less money the enterprises lose, the less wages the less the consumption, a vicious cycle. Thirdly, the demand for goods is inversely proportional to the rise in prices. This is simple: demand decreases as prices rise. Fourth, the price of alternative flours will also affect demand, the first two days I went to research the starch industry, I didn't know what starch was at first, only that it was made from corn, its processing costs, by-products are not clear. So I went to Shandong to research, because 70% of the production capacity of starch is in Shandong. At first glance, I realized that the enterprise had no stock, the start-up was almost full. The factors affecting supply, one is price, which means efficiency, supply will increase, loss of money supply will decrease. Second is the price of the production cost factor, which is the price of raw materials, it changes at any time. This also requires constant knowledge of the industry, otherwise you do not understand. There are agricultural products, there are industrial products, the focus is different, for two reasons: agricultural products look at the supply, industrial products look at the demand. The demand for agricultural products is relatively stable, there is no industrial product gap. The food to eat, the drink to drink, unlike the house, now the state regulates the real estate policy, it is not covered, but the food is how to eat or eat. So the demand for agricultural products is relatively stable, but the supply will be very large, generally due to two reasons: not good crops, and also affected by the weather. Industrial products are based on demand, which is the opposite of agricultural products. Their production is relatively fixed and is not affected by weather. Demand is heavily influenced by national policy regulation. In the case of agricultural futures, there are seven rules, which I summarize as follows: In the large market, the plunge in agricultural futures is often not as large as the spot price, so do not make a futures do not say that the futures demon, the spot price rises stronger than the futures, the futures have a plunge stop, a day at most 4%, 5%, the spot price may rise by tens of percent a day. The second is that the price of agricultural products is lower than the cost in the long term, and once the supply and demand imbalance, there is often a doubling of the increase in the market. This is well understood, for many years without making money, without planting, and stocks are small, there will definitely be a serious supply and demand shortage, the price increase at least twice. The third is that agricultural products in the absence of supply and demand, the price is also in a lower position, the first period is not sour or small, then the market replenishment will be very strong, this is very simple, you calculate a few years there is a gap, it is not sour, then the market must be sour, because the price is constantly consuming, the first period is consumed, the latter is not. Fourth, the historical supermarket of agricultural products often occurs during the harvest season, and its flash point starts from the harvest. The fifth is the case where the price is much lower than the cost, and over time, if there is a lack of supply and demand in the future, the price increase will inevitably exceed the cost. Sixth, the price movement of agricultural products often depends on the level of supply. Seven, the different characteristics of the various varieties of agricultural products themselves determine the intensity of their market volatility. This is a targeted view, wheat and corn are not the same, garlic and soybeans are not the same, each agricultural product has its own different volatility characteristics. The following seven factors are required for a super bull market in agricultural products: a sharp decline in national inventories, a sharp decline in cultivated land, a significant decrease in the year's output, prices are relatively low, the external economic environment is good, the value of the commodity is underestimated, energy accumulation over a long period of time. The factors affecting the demand for industrial goods, the direction of national policy and the loosening and tightening of monetary policy are the first factors, demand or supply of money. The following are some of the key elements of the Super Bull Market: If the industry is at the extreme point of production, the enterprise does not make money, loses money, then it reduces production, it has been bad, then it goes bankrupt. When a large number of enterprises go bankrupt, the price is definitely the lowest, will it fall? The second is the country's dominant demand and the easing of monetary policy. The third is the phased development of the economy and the increase in the level of consumption, such as aluminum, why it is raised to 400,000 a year, because the economy is developing, its demand is high, it was not able to use stainless steel, now the economy is developing, all stainless steel, the demand for aluminum has exploded, a year raised to 400,000. Fourth is that demand must exceed production capacity, demand for industrial products does not exceed production capacity, then there is no bull market. The factory has been fully opened, to increase the supply is also a matter of a year or two later, once the supply is not demanded, it is not surprising. There is a case, there is a teacher, make futures is great, home to a billion, he did the year of the potatoes how did he find out the situation?

The copyright belongs to the author. For commercial reproductions, please contact the author for authorization. For non-commercial reproductions, please specify the source.