Commodities

 

Commodities trading can also be referred to as “Commodities and Futures,” which is generic to describe the classic trading markets. The term is used in the same way Stocks and Equities are used to describe the Stock Exchange market.

In specifics, commodities are defined to be physical assets such as Crude Oil, Gold, Diamonds, Corn, Beans, etc. it is regarded as a contract of goods been traded at a futures exchange. Here, there is a standard contract that has to be adhered to amongst the buyer and the seller of the commodities that specify the details of the contract. In commodities trading, there are several different participants.

Speculators: here consist of potential investors who combine resources to mitigate against risk and increase profit. Like mutual funds, the role of large speculators is to make investment decisions through their money market managers.

The Commercial Entities: these are mostly manufacturing establishments that are involved in the manufacturing and production, processing and selling of a commodity. They account for most of the trading done in the commodity markets.

Small Speculators: these are commodity traders who, through their accounts, help to trade through a commodity broker. They are generally able to shake up the prices in the commodity markets.

Before proceeding to trade commodities, you should be appropriately informed about the complexities of the futures contract and learn about the strategies that will help for successful trading.