Copper, one of the oldest and easily mined commodities, is the world’s third most widely used metal after iron and aluminum. Five thousand years ago, people learned to alloy copper with tin, producing bronze and giving rise to a new age.
Copper is one of the most widely used industrial metals because it is an excellent conductor of electricity, has strong corrosion-resistance properties, and is very ductile. It is also used to produce the alloys of brass (a copper-zinc alloy) and bronze (a copper-tin alloy), both of which are far harder and stronger than pure copper. Electrical uses of copper account for about 75% of total copper usage, and building construction is the single largest market (the average U.S. home contains 400 pounds of copper). Copper is biostatic, meaning that bacteria will not grow on its surface, and it is therefore used in air-conditioning systems, food processing surfaces, and doorknobs to prevent the spread of disease.
Copper is unique among other metals because it can establish the state of economic growth in a given country. For example, if the demand for copper is increasing, then the economy is expanding. In fact, the World Bureau of Metal Statistics has cited an 8% increase in copper consumption during 2010 alone—most notably in Asia—and since then, the demand has continued to climb. Because copper is so vital for construction and electric wiring, it is no wonder this precious metal maintains its significance alongside silver and gold in futures investing.
The futures contract trades on Globex, the CME Group’s electronic exchange. The market opens at 5:00 PM CT and closes the following day at 4:00 PM CT, Sunday through Friday. The market closes Friday afternoon and re-opens Sunday evening.
One Copper futures contract, sometimes referred to as High Grade Copper, is 25,000 pounds. The most common contract symbol is HG.
The price quote is in U.S. cents per pound. One price increment or “tick” is $.0005. A one “tick” move is $12.50. Therefore, a price move from 3.3125 to 3.3130 is $12.50.
The performance bond or initial margin requirement to initiate one futures contract position is $3,410 (as of November 11, 2015). To control that futures position going forward the maintenance margin becomes $3,100 (as of November 11, 2015).
Trading is conducted for delivery during the current calendar month, the next 23 calendar months, and any March (H), May (K), July (N), September (U), and December (Z) falling within a 60-month period beginning with the current month.
The Copper futures contract’s Last Trading Day (LTD) is the third to last business day of the delivery month. For example, the December 2013 Copper contract the LTD is November 25, 2013.
This particular market has the potential for volatility large trading ranges due to fundamental factors.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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