HOW TO GET STARTED TRADING
Trading futures and options gets you back to the basics. You're in touch with the real world when you trade world markets affected by interest rates, exchange rates, floods, sweltering heat, and by what people decide to eat and what type of house in which they want to live.

THE SECRETS OF TRADING
Buy low/sell high, or vice versa. Now, what is the secret to trading? "Buy Low, Sell High" is the answer you'll get from a crusty veteran. If you buy something at one price and sell it at a higher price, you make money. If you buy something at one price and sell it at a lower price, you lose money. But remember, in futures and options you can buy and sell in whatever order you want; It's just as easy to "sell high, buy back low,: as it is to buy low, sell high. If you think prices are going up, establish a "long" (buy) position, and if you think prices are going down, initiate a "short" (sell) position.

THE POWER OF LEVERAGE
In the markets, leverage means that you need only commit a little money to control a lot of product. In other words, when you initiate a futures position, you usually only put up an initial margin (also known as performance bond") of about 5% to 10% of the value of the position.
Here's how quickly a substantial move can occur: In April and May of 1994, June live cattle futures plunged $11 per hundredweight (cwt) over 32 trading days. As the number and weight of cattle on feed increased, a trader who sold a June cattle contract at $0.74 on a margin of $700 earned close to $4,000; as prices fell to $0.63 ($0.11 gain/cwt X 400 cwt,) a return of 628% was earned on the initial investment in little more than a month.

Conversely, when supermarkets featured more beef just prior to the July 4th holiday, a trader could have bought an August live cattle contract at $0.62 and sold that contract back in mid-July for $0.69 for a gain of close to $2,800 on an initial margin of $700, or a 400% return. (Of course, remember that It's just as easy to sustain a loss as it is to realize a gain in these markets.)

GET IN AND GET OUT
Futures contracts are seldom held very long. Usually they are offset by an equal, but opposite, futures transaction that takes you out of the market. Because most commodity markets can move significantly from one trading day to the next, futures traders often get in and out of the market in a single trading day. However, if you hold your position until the contract delivery month, you can choose to make delivery (if you had sold a contract) or take delivery (if you had bought one) of the underlying commodity, unless it's a cash settled contract (ask your broker for further information).

MONEY MANAGEMENT
The initial margin requirement is relatively small compared to the value of the contract, and the resulting leverage can lead to quick and substantial profits (or losses. In fact, it's possible to lose more than the amount of money you've deposited.) A good rule of thumb is to use only funds that you can afford to lose without affecting your lifestyle. And, only a portion of these should be devoted to any one trade. Remember, not every trade will be a "winner." Some very successful traders may only "win" on 30% to 40% of their trades. The key is to cut your losses short, and to let your profits run.

• Do YOU have what it takes?
• Are you a decision maker?
• Do you like a good, intellectual challenge?
• Are you independent minded?
• Can you afford to take risk?

If you answered "yes" to these questions, then contact your Global Trade broker to discuss how leveraged contracts can increase the possibilities of every trade you make.

THE TRADING PLAN
A well organized trading plan and the discipline to follow it are essential elements of a successful trading program. That's because futures and options on futures are not long term investments that you can just buy and forget. They may require monitoring on a daily (or even an hourly) basis because of the large impact a small price move can have on your account. your commodity broker is key in helping you develop your plan and stay alert to important market changes.

THE TRADING PROCESS
Trading decisions typically are based on the opinion that a commodities fundamental or technical outlook is going to change. Fundamentals include the product's supply and demand forces; Technicals encompass a wide range of charting techniques involving a commodity's price, seasonal cycles or volatility. Most traders define their approach as primarily fundamental or technical, but often use elements of the other approach to reach a well grounded trading decision. Your Global Trade broker is well-versed in either approach and can help guide you in developing your trading strategies and decisions.

HOW AN ORDER IS EXECUTED
Once you've made your trading decision, you would then contact your commodity broker. After you give the broker the buy or sell order, it is transmitted directly to the floor via telephone or electronically. Upon receipt, the order is time stamped and delivered to the trading area, or pit, by an order clerk or runner. The trading pits are each divided into a number of sections designated for trading in particular contract months. No trading may occur outside an assigned pit. Nor is trading permitted at any time other than during those hours which have been designated by the Exchange.

FLOOR BROKER RESPONSIBILITIES
An individual floor broker is responsible for executing your order. Floor brokers are licensed by the federal government to execute trades for the public.

ORDER TYPES
There's lots of variety in the instructions you can give to the floor broker that will help you get exactly the type of order execution you want. Rely on your broker for expert advice as to which instructions you should use in a particular market situation.

PRICE LIMITS
Markets have daily price limits, which means that prices can move only a certain amount in any trading day. These limits are determined by the Exchange Clearing House (with Commodity Futures Trading Commission [CFTC] approval) on the basis of variations experienced in the underlying cash markets, and are adjusted from time to time as price volatility changes. In some commodities, the contract month trades without limits for a short period before its expiration. Your commodity broker can provide the most current information on these limits.
"What's the current price?" is the first and most important question you need to answer when you're trading. Price information is available from:

• Your broker
• Quote vendors
• Major daily and weekly newspapers
• On-line computer information services
• Private advisory services
• Financial programs, television and radio

ABBREVIATIONS
You'll have to become familiar with the abbreviations used to identify the markets and contract months if you get your information from a broker's ticker. Also, you may want to use them as a type of shorthand when writing down prices as you hear them on radio, television or from your broker.

THE CLEARING PROCESS
The exchanges use sophisticated risk management and financial surveillance techniques to protect Exchange members and customers from default on futures and options contracts. The Exchange Clearing House guarantees contract performance. The Clearing House is made up of more than 100 large, nationally known, financially sound brokerage firms. All floor traders must be affiliated with one of these firms and all trades sent to the floor must arrive at the desk of one of these same firms. After each trade is verified, the Clearing House acts as the third party to every trade, (the seller to every buyer and the buyer to every seller) thus ensuring the integrity of all trades. Exchanges like the CME are financially backed by its clearing members as well as a special Trust Fund. This combination provides unparalleled safeguards for the protection and benefit of all market users.