Copper Futures


Copper Futures, a popular commodity market also known as the "poor-man's gold" is one of the most actively traded markets in the world. If you are interested in trading, it may be helpful to get some background information on how the market works.

More About Copper Futures

Continue reading to learn more about:

How are copper futures traded?
How do you read copper futures?
How much copper is in a futures contract?
How do you buy copper futures?
Is there a high demand for copper?
Additional information about copper futures


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How are copper futures traded?


Copper futures trade on the New York Mercantile Exchange (NYMEX) and on the Commodity Exchange (COMEX). The standard contract is 25,000 pounds of copper. The underlying value of this massive contract is significant and changes daily as the underlying price of copper fluctuates. Copper futures contracts allow dealers to hedge against rising or falling prices by locking in a forward sale for delivery at some point in the future.


 
 

How do you read copper futures?


Copper futures are an age-old measurement of the current state of the market for copper.; when the price is up, it's a good time to buy because there is confidence in the economy – and when the price is down, it's a good time to sell because sellers are afraid that prices will go even lower.

 

How much copper is in a futures contract?

The first thing to understand with this question is that a futures contract is a standardized agreement between two parties. The agreement specifies the delivery month, quantity and quality of the commodity. For example, one contract for copper might be for 50 metric tons of 99.99% pure copper in December 2013. Some contracts for copper are for 25 metric tons, but this does vary by market.

How do you buy copper futures?

You buy copper futures by placing an order through your online broker. A copper futures contract is a commitment to purchase or sell a specific quantity at a specific price on a specified future date. Copper futures are standardized, exchange-traded contracts that can be purchased on margin to trade copper and other metals in the commodity market for hedging or speculation purposes. Similar strategies can be used to trade options, ETFs and mutual funds.
 
  • Is there a high demand for copper?

    Copper futures are hedging instruments that provide a variety of market players with copper price mitigation alternatives. They also provide worldwide price discovery and portfolio diversification opportunities, as well as offshore investment, hedging, and trading options. Copper futures provide significant portfolio diversification advantages since their prices tend to move in the same direction as industrial metal and oil prices.
  • Additional information about copper futures

    Copper is an industrial metal used in manufacturing products from cars and buildings to electricity lines and plumbing. Copper futures are mainly used by industry speculators to hedge future price fluctuations they face as they commit to buying or selling the metal. Copper futures fluctuate much more than spot pricing because of the size of the metal market, with its daily trading volumes representing over 100 tons per day. The biggest users of copper futures are aluminum smelters, steel companies, electrical utilities and commodity traders. A lot of computer servers also use copper because it's a good conductor.