How to Buy Wheat ETFs

Buy Strength and Sell Weakness

Buying a wheat exchange traded fund is similar to buying any other stock. What is different is that rather than owning pro-rated shares of a earnings vehicle you own a prorated claim on a commodity product that is held by ETF management. Buying a wheat ETF is no different than buying any other stock.

Instructions

1. Consider wheat exchange traded funds (etfs) managed by a sponsor that stores and owns wheat, both physically and notationally using the futures market. The object of the fund is to allow investors to own commodities without trading in the futures market, with the ability to own the physical product, and to manage the process for a small fee. Wheat futures trade on national exchanges and have good institutional sponsorship.

2. Use wheat exchange traded funds as a trading vehicle. A wheat ETF can be used to gain from the price of wheat, as a hedge against the dollar and the rate of inflation. Begin by using Resources (below) to locate the available wheat exchange funds. Understand that many commodity funds exist where wheat is only a component of the fund. It is also possible to short wheat by shorting the ETF or buying the wheat inverse fund which tracks wheat opposite to how the physical product performs.

3. Open a brokerage account, either through a standard broker or employ the cheaper on-line broker. Fund the account and wait for the registration forms to be approved by compliance and the funds clear the bank. Write the order on paper including the amount, symbol and protective stop (the absolute price that a stock may drop to before it is automatically sold). Once the trade is entered, wait for the confirmation to ascertain that you traded exactly what it is you intended to trade.

4. Owning a commodity fund or ETF such as wheat provides important diversification to a portfolio of stocks and bonds. Consider using a combination of farm commodities to further diversify your holdings. Fees for a wheat exchange traded fund should not exceed .075 percent.

5. Trade wheat commodities using either technical trading or fundamental analysis. Fundamental analysis requires the study of broad trends in supply and demand and the factors affecting them. This may include analysis of weather, relative price, cost of production, and aggregate demand. Technical analysis employs the mathematical manipulation of price and volume. Follow your signals carefully. Know your buy and sell points before you enter into a trade.

Tips & Warnings

• Strongly consider a farm commodity fund. Farm commodity funds include wheat, soybean, rice, and other grains. Together, it provides a diversified package of products.

• Always use protective stops when trading to prevent small losses from becoming big losses.

References

• ETF Calendar
• Short Wheat ETF

Resources

• List of Major ETF's with Wheat Ownership