Benefit Commodity Future Paper Research

Benefit Commodity Future Paper Research-15
(* indicates significance at the 5% level.) Over all horizons except monthly, the total return for the equally-weighted commodity futures index correlates negatively with those for stocks and long-term bonds, suggesting that commodity futures effectively diversify an equities/bonds portfolio.

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As the name suggests, you only write the buy and sell orders down on a piece of paper and track how well you would have done if you were actually trading with real money.

Of course, you can keep a running spreadsheet on your computer if you prefer.

The slightly lower variance and positive skewness for commodity futures indicates relatively less downside risk than for equities.

The next table, also from the paper, summarizes the with stocks, corporate bonds and inflation over the sample period.

When your exit is hit, you'll record the profit or loss you made on the trade.

After a series of trades, you'll begin to see how well you might have done if you were actually placing real trades with a commodity broker.

There's a difference of opinion among many experienced traders as to whether paper trading is useful.

Some say that it's not completely realistic because you don’t have any money at risk.

Many commodities have pronounced price/volatility seasonality. In this paper, the authors compare and contrast the basic properties of commodity futures, equities and corporate bonds.

Using monthly returns for stocks (the S&P 500 index), corporate bonds and a broad equally-weighted index of for commodity futures over the period July 1959 through December 2004, of stocks (S&P 500 index), corporate bonds and an equally-weighted commodity futures index over the sample period.

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