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What is Backwardation?
Today, in this short [What is Backwardation?] video , we're diving into the world of commodities and talking about a term that you may have heard before - Backwardation. In this short [What is Backwardation?] video , we'll explain what it means and how it affects the market.
If you look at the graph on your screen, you'll see the price of a commodity over time. When the price decreases gradually, it's called 'contango'. But when the price drops rapidly, it's called 'backwardation'. This is represented by a flat or inverted line.
Now, why does this happen? Basically, it's a result of high demand and low supply for a particular commodity. And it often occurs when the market predicts limited supply in the future.
For traders, backwardation can be seen as an opportunity to make a profit by buying the commodity at a lower price and selling it for a higher price later on. This makes backwardation an important concept to understand for those involved in the world of trading and investing.
So, to sum it up - backwardation means the price of a commodity is expected to increase in the future. We hope you found this short [What is Backwardation?] video informative and gained a better understanding of this term.
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TRADING TOOLS
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️ Webull – Get FREE stocks with Webull https://bit.ly/3jKfvw5
️ E*TRADE – Use our link and we both get rewarded! https://bit.ly/3zP6rvB
️ FinViz https://bit.ly/3h7r8M3
️ ChartMill https://bit.ly/3By9g4X
️ TD Ameritrade thinkorswim® [TOS] https://www.tdameritrade.com/tools-and-platforms/thinkorswim/desktop.html
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TRADING PLATFORMS
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✅ Webull – Get FREE stocks with Webull https://bit.ly/3jKfvw5
✅ E*TRADE – Use our link and we both get rewarded! https://bit.ly/3zP6rvB
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#Backwardation #Contango #commoditiestrading
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