Before talking about trading in commodities, it would pay to know what a commodity is. To simply put, a commodity refers to a product that has a demand in the market and can be made, mined, or manufactured by just about anyone. Usually, commodities include more raw materials, which could range from corn and rubies to gold and aluminium, all of which have a somewhat universal price.
Commodity Trading
When a certain value is given to a commodity across all markets, which shows little difference in quality, it can be taken as a specific category of investment vehicle. As the price of a commodity is determined by the world's supply and demand factors, investors can use ‘Futures Contracts' to purchase and sell commodities in their effort to get a profit. New York and Chicago are the locations where the central commodities markets are based, and commodities broker houses too are usually headquartered here.
Trading in Futures
Let's take an example to discuss how to trade in Futures. Suppose you want to purchase gold because you think that the price of this commodity will rise. You could then purchase gold ingots, store them, and wait for the prices to rise, and when they do, you can sell them at a profit. However, you need to ensure that the gold purchased by you is pure, and find a secure place to store it until you are ready to sell it. So, apart from ensuring the purity of the gold purchased, you also have to arrange for security to keep it safe, and get it transported to and from the vault safely, in addition to handling other such hassles. So, if you want to steer clear of such hassles and would like to invest in gold in a better way, you can buy gold futures from the commodities exchange. If you have an online trading account, you can easily trade in commodities online. If you are already adept in equity research and share trading, commodity trading won't be hard to understand and embark upon.
Why opt for investing in commodities
Investing in commodities is considered to be low on risk due to the establishment of the ‘Futures Contracts'. Again, as products must be considered to be "standard" to make the trade, you need not worry about their purity or quality. What's more, if you are looking for a route to beat stock market losses, commodities would be your ideal choice as their prices don't always follow the stock market's ups and downsc.
If you are into trading mutual funds via your online trading account, you can buy commodities as part of your mutual funds, where you money would be invested in the stocks of commodity-related companies.
So, if you have been thinking about trading in commodities for quite some time now, take the plunge today.
Commodity Trading
When a certain value is given to a commodity across all markets, which shows little difference in quality, it can be taken as a specific category of investment vehicle. As the price of a commodity is determined by the world's supply and demand factors, investors can use ‘Futures Contracts' to purchase and sell commodities in their effort to get a profit. New York and Chicago are the locations where the central commodities markets are based, and commodities broker houses too are usually headquartered here.
Trading in Futures
Let's take an example to discuss how to trade in Futures. Suppose you want to purchase gold because you think that the price of this commodity will rise. You could then purchase gold ingots, store them, and wait for the prices to rise, and when they do, you can sell them at a profit. However, you need to ensure that the gold purchased by you is pure, and find a secure place to store it until you are ready to sell it. So, apart from ensuring the purity of the gold purchased, you also have to arrange for security to keep it safe, and get it transported to and from the vault safely, in addition to handling other such hassles. So, if you want to steer clear of such hassles and would like to invest in gold in a better way, you can buy gold futures from the commodities exchange. If you have an online trading account, you can easily trade in commodities online. If you are already adept in equity research and share trading, commodity trading won't be hard to understand and embark upon.
Why opt for investing in commodities
Investing in commodities is considered to be low on risk due to the establishment of the ‘Futures Contracts'. Again, as products must be considered to be "standard" to make the trade, you need not worry about their purity or quality. What's more, if you are looking for a route to beat stock market losses, commodities would be your ideal choice as their prices don't always follow the stock market's ups and downsc.
If you are into trading mutual funds via your online trading account, you can buy commodities as part of your mutual funds, where you money would be invested in the stocks of commodity-related companies.
So, if you have been thinking about trading in commodities for quite some time now, take the plunge today.
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