Electricity can be traded in the financial marketplace like any other commodity.

Electricity futures trading offers an alternative investment that can help traders diversify their investment portfolio. Commodities can be found the world over and are traded like any other asset. The business of commodities trading is one in which billions of dollars are invested from one day to the next.

Commodities can be traded in real time at spot prices but are much more commonly traded in the futures markets as a contract and made available for purchase or sale within a given time frame. One of the appeals of futures trading is the ability to go long or short with equal ease and without the short-selling restrictions common to stock trading.

Commodity futures trading offers the opportunity to invest directly in raw materials, such as cocoa or cotton, if an investor can withstand the market's volatility and learn to manage trading with a high degree of leverage.

Primary differences between futures trading and stock trading include the much greater degree of leverage available in futures trading, trading in standard size contracts as opposed to shares and the fact futures trading involves investing in basic commodities rather than in companies. Electricity as a tradable commodity is relatively new. One of the first commodity exchanges that got involved with offering electricity trading was the New York Mercantile Exchange NYMEX.

Other exchanges also trading electricity as a commodity include the Multi Commodity Exchange MCX , the European Energy Exchange and the Australian Securities Exchange. As of , there are 10 electricity futures contracts available for trading on the NYMEX, where the standard contract size is 5 Megawatts hours, or MWh. The most widely traded contract is the PJM Western Hub Day-Ahead Off-Peak Calendar-Month. The contracts available for trading represent electricity in a variety of geographic "hubs" across the United States, and traders can trade both "peak" and "off peak" electricity prices.

PJM, a Regional Transmission Organization RTO , oversees a large electric grid and provides electricity to over 50 million customers in the U.

European Power Futures

Dictionary Term Of The Day. A hybrid of debt and equity financing that is typically used to finance the expansion Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin?

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How can electricity be traded as a commodity by an individual investor?

Maverick July 6, — 9: Commodity Trading Commodities can be found the world over and are traded like any other asset. Electricity as a Commodity Electricity as a tradable commodity is relatively new.

Learn about the commodities trade and several different ways investors may participate.

Power Futures - Nasdaq

Find out about some of the advantages Learn how investors can use commodity mutual funds to diversify their portfolios, and discover why mutual funds may be less Explore the history of futures trading and the origin of the major commodity futures trading exchanges in England and the Learn about hedge funds that invest in commodities. Read about Commodity Trading Advisors who focus specifically on trading Even non-professional traders can participate in the commodities markets.

There are currently 50 physical and virtual commodity markets worldwide where almost primary commodities trade through the exchange of ownership rights. You might hear 'liquid commodities' and think of an auction, but they're actually a high-volume, fast paced financial product suitable for day traders.

When will it be safe to buy commodities and which ones? A closer look at the commodities markets and how they move. General Electric is generous to its shareholders, but that's not the only factor to consider.

These diverse asset classes can provide downside protection and upside potential. Find out how to use them. Find out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts. ETFs have made commodities investing easier, but look before leaping.

Understanding The World Of Electricity Trading | Investopedia

Contrary to popular belief, speculators are important for the market. Find out exactly what they do.

Products - Futures & Options | ICE

A physical or virtual marketplace for buying, selling and trading A commodity traded on the spot market. That is, with the expectation A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other.

A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator.

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