Common Terminology in Futures and Commodity Trading

Commodity Markets

A commodity market is a market where generic movable products are bought and sold with contracts. Examples of commodities are: corn, wheat, coffee, pork bellies, cocoa, soya beans, oats, live cattle, crude oil, natural gas, gold, silver and so on.

Contract

Buying and selling of commodities is done with contracts. These contracts state exact rules, including descriptions, quantities, unit price, and delivery times.

Trading

Trading means buying and selling contracts.

Futures trading vs Commodity trading

Commodity trading and futures trading is the same thing. When you are trading in commodities you are trading in futures.

The Commodity Exchange

Commodity exchange is a central place where the buying and selling commodities take place. The biggest commodity exchange in the world is he Chicago Board of Trade (CBOT). There are also quite few around the world.

Mini-Contracts

Trading mini-contracts is an alternative to trading standard contracts and is smaller in quantity, ranging between one-fifth and one-half the quantity of a standard contract. Mini-contracts are traded in Chicago on the MidAmerican Commodity Exchange (MidAm).

Standard Contracts

Standard sizes of futures contracts are most of them related to the specific product. Example:

– a contract of corn has 5,000 bushels

– a contract of gold has 1,000 ounces

– a contract of lumber has 160,000 board feet

Contango

Contango describe the carrying costs inherent in different price months for the same commodity. For example a commodity to be delivered in eight months has more overhead costs (due to storage price) compared with a commodity be delivered in two months.

Trading Months

Every commodity has specific trading months and is not all the same. For example: Crude oil has trading every calendar month. Soya beans have in January and every second month.

Spot Market

It is also known as the cash market in futures which means delivered and paid for “on the spot” or immediately.

The spot month is the present month.

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Stock Market Trading

Stock Market Trading: On A Share

The cult of share traders is bringing a stock renaissance. Traditionally, it was known to be the rich man’s land but with the changing times and unearthed circumstances, it soon tuned into a field for common man and small investors. Heartiest wishes to the stock market that it revolutionized so quickly with the supporting sticks of technologies including online investments and channels like CNN.

The incidence of stock market trading is showing a risen trend all over the world. Underlying increasing knowledge coupled with a shifting trend of investment from savings are some of the main reasons for this melody. But, you do not hear about these traders making more and more money in the stock market. Few of them actually know the reason and have the skill to make profits in stock trading.

Investing hard-earned money takes a lot of courage and when it comes to generate more out of the invested one, it gets to the tough tunnel. A tunnel that is darkened with the risks and frauds, however, it can be rescued only with due care, knowledge and alertness.

Stock market trading basically begins with basic understanding of stocks. Literally, stocks are the shares of the companies that provide partial ownership to the buyer of a particular stock. It acts as a devise for the investor to earn money in form of dividends and a tool for raising capital on behalf of the company. Stock is traded on stock exchange that is a forum where all the companies are listed that may deal in stocks.

Undoubtedly, like any other markets there are many catalysts that provide services for easy trading of stocks. For stock market trading, they are the brokers that act as mediocre between stock exchange and traders. Not only, they are the service providers but also provide their expertise and tips to trade in stocks However, today there are many companies that are catering as stock broker firms and facilitating stock market trading through discount brokerages.

Also, their quick and reliable services tend the trader to self-trade in stocks. Stock brokerages has transformed to online stock broking that helps the trader to posses user-friendly and hustle- free services that allows a person to trade from a place of his choice.

Trading in stocks is not an easy job, but with the help of few tricks and tips one can be more assure of his positive returns. Here are some tips you should look out for to trade in stocks:

  • Hedging: it is considered to be one of the safest techniques for investing in stocks. In case you wish to protect your position and reduce the risk, holding a stock for longer duration is recommended. It reduces the risks of immediate swings of the market and provides you with option of increasing price of stock.
  • Dow average: this is another option that may be followed by any stock investor. Buying the best value stocks after measuring it on Dow industrial average turns out to be safe. It is said that the lowest 10 on the Dow posses the most potential for growth in the future market.
  • Dollar cost and value averaging: investing a fixed amount of dollar on a regular basis is known as dollar cost averaging. It reduces the risks and may let you purchase more number of shares when prices are low and vice versa. It not only fixes the amount of risks but also provide a consistency to the trader’s portfolio.

Commodity Trading Tips, Golden Trading Tips and Guidelines of Do’s and Don’ts in Commodity Markets

Historically, commodity trading has delivered the biggest fortunes worldwide. It originated centuries ago, even before the stock markets came into existence, albeit traded then in a different manner, than as seen today on electronic exchanges. I have often quoted that ” If trading in the speculative markets, then Stocks & Equities is for boys but Commodities & Forex is for men” (No gender bias intended). Wealth creation is not a matter of chance. It is a process that needs sharp analysis & a lot of work time. Plan your play and then play your plan. Happy investing!

The similarity in Stocks & Commodities begins & ends at the point that they are both speculative trade markets, but there are a lot many differences in both these markets. Unlike the stock markets where even a highly valued stock could eventually see all it’s commercial-value being eroded due to several reasons, the values of commodities may see corrections on a large supply but eventually will only increase again with time, as the inherent imbalance in the demand and supply ratio would always favor demand more than supply due to many influencing factors like growing populations, rising economies and better lifestyles to name a few. All adverse scenarios like geo-political tensions, wars, climatic imbalances, catastrophes and other man-made disasters, etc. which pull the stock markets down generally push the commodities up (especially Agro-Commodities & safe haven instruments like Gold), basically due to the differentiating factor that these commodities generally are also regular necessities to normal life and not simply investment instruments. Most Commodities are traded globally & the price rigging in these is next to impossible unlike, as seen in a lot of equity instruments where manipulation is a lot easier & occurrences of traders getting duped are rampant.

Massive wealth creation is possible through Commodity Trading & Investments if done the right way & with a lot of strict discipline. But if done the wrong way, which is generally the most followed path, there will be enormous losses also. You can start off equity trading or investment with smaller sums of money, but would require deeper pockets to be able to do some modest trading in the Commodity Exchanges & also to sustain the “Mark to Market” volatility in the Commodity Markets. The gains & losses in both also become proportionately big or small eventually. I would now like to highlight some basic Do’s & Don’ts for the most frequently seen habits & maybe unknowingly committed mistakes, which I have noticed in most traders & had to address to a number of times as a Market Analyst & a Commodity Market Trade Advisor.

1] Do not trade with hesitance, half heartedly or in over confidence. You may incur small but repeated losses if you are scared of the markets or heavier ones if you are overtly brave and foolhardy.

2] Be patient when your trade positions are moving in the right expected direction to extract maximum gains and ensure the gains by improvising the stop-loss level, time and again. Do not be pessimistic here or else you may book gains pre-maturely & may later repent on exiting early. This may lead to keeping on re-entering the same trade at further levels & repeatedly exit at small reversals in panic, which in turn would erode earlier small gains & also build losses. It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong & that makes all the difference between Winners & Losers.

3] Do not be over optimistic when trades have hit the suggested stop-loss levels and make sure you exit there. You may miss better and multiple opportunities on being stuck in deals gone wrong leading to higher and higher losses each day.

4] Do not discuss your open positions with one and all. This will lead you nowhere and confuse you more, as all would air their own views on the same (whether knowledgeable or not) and many a times, would make your trade decisions seem as foolishly and hastily taken. If only you would have consulted them earlier…

5] Do not develop a tendency of being a Bull or a Bear in these markets. There is only one side to the markets and that is neither the Bull side nor the Bear side – But ONLY the Right Side at the Right Time. Trend is King, so follow it at all times.

6] Realize that you are in a bad situation and exit fast when you need to pray for relief at each rise or fall in a trade which is leading you further in a deep pit towards heavier losses.

7] Follow ONLY one Analyst’s or Technical Advisor’s guideline at a time, as more guidelines will again create a lot of confusion. You can opt for or look out for an alternate guidance when the earlier guideline proves to be less productive or loss making, but not simultaneously.

8] Be honest to yourself as hoping or praying for something different, than the actual reality or situation is nothing less than fooling your own self.

9] There is NOTHING such as HUGE, mind-blowing and sky-high profit makings overnight, as assured by many to win a prospective client. YES, there are sizeable gains and high returns for a disciplined trader and may return exactly the opposite, if not worse, for the non-disciplined. Do not enter this trade market under any illusions of getting to be a Billionaire overnight. It will never happen. In fact all that you now possess may also be lost.

10] DO NOT BORROW or trade with funds that are not yours or pump in more funds by borrowing to hold on to loss making trades. Trade only with own funds that are spare-able and be prepared mentally in losing even that in totality, in the worst case.

11] Never trade or enter / exit positions in panic. Volatility is a non-separable component of this trade market and will be present most of the times.

12] Do not be a party to rumors or be guided or misled by these. Verify & double-check on the source for genuineness.

13] Stay away from the people who have a habit of saying “I had told you – See now?”. These are the very same people who would never put anything on paper or ever trade on their own views- with their own funds, as in reality they do not have any concrete views or knowledge. They are mere sponges on an ego trip, who keep soaking or gathering tidbits of information from anywhere available irrespective of their reliability, put all together and spread the newly formed news. If what they say goes wrong, they would disappear and would be seen nowhere or if found, might now have some stronger views and reasons for why the wrong happened as generally these kind of people are very good convincers & are blessed with the gift of gab. Listening to these characters and their views is very dangerous. As the wise always said: – “Half knowledge is always the most dangerous”, “Ignorance is Bliss” and “Blessed are the fully knowledgeable”.

14] DO NOT TRY to be the TREND SETTER or the first one to know where a particular trade will turn from. No one can possibly be, except by a sheer matter of chance, the best seller or the best buyer – so why try it? You might end up losing a lot of money and also becoming the laughing-stock for all. Follow the trend and make respectable gains, “Quietly”.

15] Do not enter the Commodity Markets with Stock Market trading ideas. Though both are speculative trade markets, there is a substantial difference in both and generally have opposite trading patterns and thumb rules, as elaborated earlier.

16] Providing past performance records is not a mandatory rule for Analysts or Advisors, and the same info (wherever posted) can be misleading, as the same can be manufactured by the end of day to dupe prospective clients. Do not try to look for something that can misguide you & lead you on the wrong path, ending up in losses – money-wise & also confidence-wise. Upon subscription by the trader, the same people showing fantastic results on their websites, but performing poorly in real-time, may later not be available even for a discussion or may later say that “Past performances are not an assurance of any future success”. So take a Trial for a fortnight or a month (not for a day or two), do some live paper trading & only trust the live performances. Judge the genuineness of the research quality and real-time trading support only on the basis of live experience and not by past performance records. Most of these records could be fakes. Better to pay for the Trial & come to the right conclusion, rather than loose a lot of capital by trading on faith generated by looking at & getting impressed by the past performances.

17] “Trading without a Stop-Loss & yet making gains is sheer Talent – Not trying such stunts is Intelligence”. The stop-loss practice is for your own benefit as this provision has utmost importance and is not provided on each trading ticket by the exchanges, just for the heck of it. If the trades turn & move in the opposite directions beyond entry levels, they might further move very fast in a volatile manner & the losses accrued, in the absence of a stop-loss, can be un-imaginable. There are several things happening across the globe constantly, which affect the price movement, direction & volumes in commodity trading, as basically they move in accordance with demand and supply situations & are also greatly affected by the Geo-political scenarios all over. It is not humanly possible to track each & every occurrence, watch out for economic data’s released all around the globe and understand the level of their impacts on the trade movement & direction of all commodities, though you may be constantly updated on most of the developments, most of the time. Many times the reaction or the impact of these developments is so quick & enormous, that large & rapid movements in rates are instantly triggered with high volatility, even before the news on these developments reach all over the world. In such a scenario, you may never know as to what level these trades could go to & the losses (though sustainable by a few) may be very large. These losses are not the only losses that you incur if caught in such a situation – you also miss out on the opportunity, the same commodity is offering, in the opposite direction and also by other trades as most of your attention and funds will now be concentrated and caught up on this particular trade gone wrong. Remember – Growing wealth is important, but safe guarding seed capital is even more important. It’s easier to resist & also absorb losses at the beginning than later.

18] Averaging in loss making positions is a practice which is most commonly seen & generally leads to more dangerous losses. This is also recommended by a number of advisors, but I certainly do not recommend it. In fact I strongly oppose it. Remember – YOU are incurring the loss & not your advisor.

19] Putting all your eggs in one or a couple of baskets could prove to be more dangerous for the day trader. Having a wider investment or a trading spectrum would be more effective. All entered trades may never go wrong simultaneously but a stray one or two could and what, if you have traded in only those? It may also happen that the 1 or 2 trades that you have entered into, have moved in the right direction, but have not achieved the expected high results or gains in comparison to the ones you have left out. So it is only advised and not stressed upon – that the trader should take positions in a wider range of trading / investment opportunities to achieve better results.

20] Do not be biased to a particular commodity. Look at all commodities (having healthy trading volumes) only as profit generating opportunities & not at the English name or Social status of the commodity.

21] Always remember -“You cannot use yesterday’s ideas for today’s business and expect to be in business tomorrow”. Be ready to accept and implement change immediately and constantly as “Change” is the only factor that’s constant in the world – everything else keeps changing and its meaning is all the more true in these highly volatile and ever-changing market scenarios.

Adherence to the above is sincerely recommended to trade and achieve gains in these ever volatile Speculative Trade Markets.

What is a TMS? (Transportation Management System)

Transportation Management System (TMS) – What is it?

A Transportation Management System is software that helps businesses manage the execution of its logistics supply chain, in particular coordinating and optimizing the movement of products and materials.

The general functions and benefits of a TMS include the following:

Shipment Load Planning and Shipment Routing Optimization – This functionality helps in areas such as determining the most cost effective mode to ship an order (truckload, ltl, air freight, intermodal, etc.), or the optimal way to combine multiple orders together into larger shipments. Carrier rate agreements and contracts are often housed within this area as well.

Routing Guide – Helping to ensuring vendor compliance to inbound routing guides is crucial to cost management. Centralizing the routing instructions for a company with multiple shipping locations can improve compliance.

Execution Management and Carrier Communication – This includes tools for assisting with carrier selection, calculating shipments costs (including line-haul, fuel surcharges, and accessorial charges), tendering loads and facilitating carrier communication (bills of lading and proof of delivery).

Visibility/ Shipment Tracking – Providing delivery status updates and alerts, this tool allows proactive program management and notice of potential delivery problems in advance.

Freight Bill Audit & Payment – Automating the freight audit and payment process, saving time and improving accuracy, or ending reliance on an outside third party. It is estimated that performing regular freight invoice audits can save 4-5% in transportation costs per year.

Other functions:

Business Intelligence/ Reporting

Claims Management

Returns Management

Appointment Scheduling

TMS systems are can be deployed on client’s systems or on-demand SaaS (Software as a Service).

Organizational Investment Management

What are managed?

Essentially, Investment organization refers to the activities carried out by organizations to meet various asset goals. It also involves the supervision and operations related to the assets and securities of the organization. For instance, real estate is one of the valuable capital assets of any organization. Securities involve the negotiable instruments or fungible commodities that represent certain financial value. Also, common stocks are equity security, while debentures and bonds are all debt securities.

Why investment management?

By carrying out efficient asset management and meeting the various investment goals, the organization meets the expectations of the investors. These investors could be private stakeholders who are involved through mutual funds or other collective schemes for asset. The investors could also consist of other stakeholder organizations like various corporations and insurance companies.

What is the investment administration process?

The Investment management process fundamentally consists of deciding how and where to invest the funds. It also comprises of either or both fund organization and collective investment management. There are hundreds of ‘investment advisors’ today, both individual fund managers as well as dedicated firms offering their services in this segment. But there are many rich private investors who hire special teams for the sake of discretionary and advisory investment management and these teams or firms refer to the process as portfolio organization or wealth organization.

The asset organization ‘industry’ is responsible for the movement of billions and trillions of various currencies and various tasks are adopted in such a procedure. Firstly, this work requires a lot of analysis and financial research. Asset selection and asset allocation is dealt by the decision makers or advisory board. Bespoke funds are the strongly managed funds that satisfy particular investor requirements, and Chip funds are ‘reliable returns on asset’ funds. Asset portfolio construction is another important task. This represents the various kinds of assets made by specific investors. Weighting of asset classes (stocks, shares, bonds) is done carefully, considering the relative financial bias.

All organization plans must be executed within a time frame, for maximum returns. A solid plan implementation move is undertaken by the asset organization firms and individuals. Past, present and future asset plans must be analyzed.

Career in investment management

The asset organization industry offers a lot of scope for career. There are fund managers who direct the investment, marketers who bring in funds, internal auditors who examine systems, compliance staff professionals who ensure that activities conform to regulations, financial controllers who account for the money owned and spent, back office workers who monitor and report transactions, computer operators and experts among other investment managing professionals. Independent firms involved in asset organization are known to produce best results.

Possible business problems

Firms who work on investment organization face problems of staffing, because the professionals who generate above-average results often leave the firm in order to manage personal portfolios. Also, the skilled professionals are expensive to hire. Good performance is not sustainable forever, and investors might not tolerate the tough times.

Yet, today the investment organization industry is vast and well spread out, with many countries showing immense potential.

Common Terminology in Futures and Commodities Trading

While at a coffee shop with friends, one turns to you and says, “I just went LONG in Lean Hogs off a confirmed swing bottom.” What did he say? He went “LONG” in a hog off a swing in the bottom?”

For those of us who trade, we instantly know what was just said. By going “LONG”, this person BOUGHT (or is a BUYER) in the Lean Hogs futures market. His decision to do so was based on his determining that Lean Hogs had made a bottom and was now moving higher, thus ‘confirming’ the bottom.

The term LONG is very common in trading circles. It simply means that you took the BUY SIDE of the trade (every trade has two sides, the one who SELLS and the one who BUYS). You believe the market is going to go UP, so you decide to BUY, thus going LONG.

The term SHORT is the opposite of LONG. When you go SHORT, you are a SELLER in the market. In trading Futures and Commodities, you can just as easily SELL first to open the position SHORT, in hopes the market is going to go down. Later, you can then close your position with a BUY.

When you BUY to enter a position, you are LONG. But when you BUY to exit a position, because you SOLD first (went SHORT), you are simply out of your position.

When you SELL to enter a position, you are SHORT. But when you SELL to exit a position, because you BOUGHT first (went LONG), you are simply out of your position.

When you are out of all your positions, you are considered FLAT.

MARGIN is a term used in reference to the amount of money you have available in your trading account that can be used for trading. Brokers require that you have a certain amount of capital available for each contract you trade, in the event that the trade does not go in your favor. A MAINTENANCE MARGIN is the minimum margin you must have in your account for each futures contract you enter into.

BULL MARKET refers to a period when prices are rising. A BEAR MARKET refers to a period when prices are declining.

COMMISSIONS are the fees you pay to the broker for executing your trades.

HEDGING is the practice of offsetting your risk in the actual commodity by taking an equal but opposite position in the futures market. For example, a Farmer who grows Wheat has inherent risks to his crop. By the time he goes to market, prices could have dropped. To protect himself, he can take a SHORT position in the Wheat futures. If the price of Wheat drops by the time he goes to sell his crop, he losses in the actual crop, but he gains in the SHORT futures position, thus offsetting his losses. If the price of Wheat instead moves higher, he gains in the higher prices he is able to sell his Wheat for, but losses in his SHORT futures, again offsetting each other.

DELIVERY refers to the transfer of the actual commodity from the seller of a futures contract to the buyer of the futures contract. Most traders do not take delivery, but will close out their position by FIRST NOTICE DAY.

FIRST NOTICE DAY refers to the first day that a notice of intent to deliver a commodity can be made by a clearinghouse to a buyer of a futures contract.

These are some of the terms you can expect to hear among traders of Futures. There are a few others, less used. And if you trade Options on Futures, you have a whole set of terms such as PUT, CALL, In-the-Money, Out-of-the-Money, etc.

Before engaging in futures trading, take the time to learn the language. This way, there will be no mistakes in communication between you and your broker, and it helps when sitting around with traders at the coffee shop.

What Strategic Land Investors Need to Know About Water and House Building in the UK

Downpour is just the same old thing new to England. In any case, the rate at which it falls might be. Why? Environmental change may well be a variable in the surges that immersed parts of the UK in the winter of 2013-2014. A study out of Oxford University reported in The Guardian (April 2014) shows that “significantly more incessant serious surges for occupants of the swarmed locale, with what were once amazingly uncommon occasions [are] now happening a great deal more regularly than the base of the area is prepared for.”

This comes during an era when constructing new homes is basic to the nation. More homes mean more streets, all the more parking garages and more rooftops, elements that avoid normal retention of water. In any case, urban organizers, scene planners, regions and developers are reacting fittingly. They are exhibiting that groups and homes can be intended to alleviate stormwater and the harm it can bring about.

For instance, on both a for each home and more extensive group premise, methods to channel stormwater toward normal penetration of water to the aquifer incorporate downpour gardens and bioswales. The UK building firm HR Wallingford, a natural hydrodynamics association, has done broad work with soakaways, trenches and bowls that involve penetration outline. The firm likewise performs spillover and stormwater stockpiling examinations and constructs water collecting frameworks that customers can use to spare water for arranging and other non-consumable utilizations in drier eras.

These sorts of devices break the twentieth century advancement worldview that most normally directed tempest water through dark framework, concrete and metal pipes that introduced far from homes and organizations to regular streams and waterways or to city treatment offices. Experience demonstrates those frameworks are deficient in substantial precipitation and with developing populaces.

For the improvement financial specialist, for example, those working through genuine resource reserve administrators, this can at times decipher into higher advancement costs. What’s more, at times not – each site is one of a kind and once in a while a maintainable water-administration framework can be less expensive than “dim base” that depends on conventional channels. In any case, notwithstanding when the expenses are more noteworthy, it can interpret into more significant property and lower property protection costs over the more extended term. Calls to the National Flood Forum (NFF) philanthropy tripled by mid 2014, a consequence of the flooding occasions of the former winter. It was not uncommon for a property holder to see a multiplying of his or her premiums (e.g., to £2,000/year) while one little business proprietor reported a yearly premium ascent from £4,000 to £25,000. A more brilliant configuration for new-form groups could maintain a strategic distance from that.

Using Commodity Hedging Strategies to Manage Price Risk

Item dealers make benefits basically through two distinctive ways; hypothesis and supporting. The last is a danger administration methodology used to ensure a speculation against misfortunes and protecting its benefits. Therefore, the previous is a more forceful system, simply determined by benefit. Despite the fact that the two techniques can be utilized in the meantime, it is basic for brokers to see how supporting functions and why it is essential. In a perfect world, product supporting procedures are one of the fundamental tips to benefit offering wares. Here is a brisk diagram on the best way to utilize this straightforward technique to boost your benefits exponentially.

What is a flexible investments dealer?

A fence stock investments dealer is an individual or organization that includes in a business identified with a particular ware. Ideally, a fence stock investments broker could be a maker of the ware or rather an organization intrigued by obtaining a product in future. Supporting permits every gathering to restrain their dangers in the ware markets.

Why do dealers fence?

It is impractical to foresee the heading item costs are bringing with 100% precision. Aside from the heading of costs, brokers additionally need to know the particular time allotment for such changes. Rather than worrying to get these two components right, dealers can select to make more benefits by utilizing the supporting system.

How does supporting work?

Physical items are purchased or sold by merchants in a money market. In the interim, contracts including the conveyance of these products at a future date are profited inside the prospects market. Despite the fact that the money market and the fates cost are firmly related, they don’t move in a comparable way. This is the motivation behind why the expression “Premise” is utilized amid exchanges. In a perfect world, (Basis = Cash Price – Futures Price).

Go short or long?

Financial specialists and brokers have two decisions to make; go short or long. Going short includes obtaining the agreement from a specialist and offering it away before purchasing it back at a lower cost. Then again, going long includes purchasing an item today with the desire that the offering cost will make a benefit at a later stage.

Choosing to run long with your supporting systems debilitates the Basis. This is occasioned by the way that the trade value diminishes out a comparative way to the prospects contract. Therefore, shorting can be helpful at whatever point the Basis increments. The expanding money cost is constantly with respect to the prospects contract. Keep in mind that the premise can move the other way to the value levels. However, what makes a difference is the total contrast between the two.

Potential supporting dangers

As makers support against physical products, it is considered not dangerous depends on a short – term period. Be that as it may, the fence broker could miss out on all their potential investment funds if the wrong value developments are figure.

Should you add supporting to your exchanging arrangement?

Supporting is one of the best devices to oversee dangers required in ware prospects exchanging. In the event that conceivable, the objective of supporting ought to be accumulated at exchanging value hazard and setting the costs one will pay or get inside a definite reach. Diminishing introduction to shocks permits dealers to certainly arrange their operations.