Speculators

As a speculator in commodity contracts, the person taking the opposite side of your trade on any given occasion could be a hedger or it might well be another speculator, an individual or institution whose opinion differs about the probable direction of prices.

Speculation in commodities offers opportunities and the risks. Speculators are individuals and institutions that seek to profit from anticipated increases or decreases in a particular commodities price. By doing so, they provide the capital needed to facilitate hedging

A trader who expects a commodities price to increase would buy contracts favorable for this anticipated move in the hope of later being able to sell them at a higher price. This is known as "going long." Conversely, someone who expects a futures price to decline would sell futures contracts in the hope of buying it back, or offsetting at a lower price. The practice of selling futures contracts in anticipation of lower prices is known as "going short." One of the attractive features of futures trading is that it is equally easy to profit from declining prices, by selling, as it is to profit from rising prices, by buying.

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