commodity trading

commodity trading
A commodity market is a market that trades in primary economic sector rather than manufactured products.

Soft commodities are agricultural products such as wheat, coffee, cocoa and sugar. Hard commodities are mined, such as gold and oil. Investors access about 50 major commodity markets worldwide with purely financial transactions increasingly outnumbering physical trades in which goods are delivered.

Futures contracts are the oldest way of investing in commodities. Futures are secured by physical assets. Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures.
Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management.

Exchange-traded funds (ETFs) began to feature commodities in 2003.
Gold ETFs are based on “electronic gold” that does not entail the ownership of physical bullion, with its added costs of insurance and storage in repositories such as the London bullion market.
According to the World Gold Council, ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity.

In India, the National Commodity and Derivative Exchange, the Multi Commodity Exchange of India Ltd and the National Multi Commodity Exchange of India Ltd are major commodity exchanges. All three have electronic trading and settlement systems and a national presence.

The commodities market will have three broad categories of market participants apart from brokers and the exchange administration – hedgers, speculators and arbitrageurs. Brokers will intermediate, facilitating hedgers and speculators.

The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
COPYRIGHT © 2009-2018. Pramod Baviskar. Dalal street winners advisory and coaching services. FAQ | Disclaimer | Privacy Policy

This website is best viewed using Microsoft Internet Explorer 9 or higher, and/or latest version of Google Chrome and Mozila Firefox browsers.