Commodities and Futures – Understanding the Hype That Goes Into Market Swings

It is amazing sometimes how fast the oil futures will move, sometimes the commodities market moves the opposite direction of what you believe they should do, based on the news and the reality of the marketplace. This is because commodities run through an incredible hype cycle, and traders of commodities can move the markets and get the momentum going in any given direction.

If you are a smalltime investor there is not much you can do about this. Sometimes you get lucky and you are in good as your trade moves along with the market maker commodity trading speculators in Chicago. However, if you think you’ve made a good trade because of some world event, extreme weather, or something you see that should move the markets a given direction, be very careful because commodity markets do not necessarily move the way they should based on the reality of the market place.

Often the commodity market is more like a gambling casino than anything else. Likewise, you should be very careful about the hype that goes into some of these Market Swings based on the news cycle.

Perhaps, you heard about rebels attacking a Nigerian pipeline and you believe this will affect the supply of oil and people will fear that the price will go up and therefore, the oil prices will start moving up. But be very careful, sometimes they will do exactly the opposite of what you think they should, or the conventional wisdom of that particular commodity.

If you’re going to play with oil futures or risk your money in the commodities market you must understand the difference between reality and hype, market momentum, and the market makers who make it so. Please consider all this.