What You Need To Know About Commodity Trading?
It is a universe that has long remained closed to the uninitiated. Commodity trading is a very old activity, which has recently developed.
Commodities are goods serving as a motor for trade, economic development and the taxation of the treasures of a kingdom or any other government.
Raw materials occupy an important place in our daily life. Anyone who drives a car can be hit hard by the impact of rising oil prices. The consequences of a drought on the wheat supply can influence the composition of your next meal.
Previously, the average investor usually did not allocate funds to basic commodities because the process required a lot of time, money and expertise.
Long reserved for professionals, the commodities market is now accessible to everyone via various tools ranging from futures and options to warrants and swaps, including Exchange Traded Commodities (ETC), listed funds specializing in commodities, all thanks to online commodity trading account India.
The evolution of the price of a full tank of gasoline, a kilo of sugar or its electricity bill: behind all this hides the work of traders in raw materials and energy. Who are they and how do they concretely impact the daily lives of citizens of the world?
Raw materials generally refer to physical and natural products that are consumed by people, for example coffee or orange juice, or deriving from sectors such as agriculture or mining, for example wheat or oil.
Some commodities have intrinsic value based on their scarcity and difficulty in extraction. Among these commodities, we find mainly gold, silver and platinum.
What commodities can I trade on?
Let’s start with perhaps the best known group among traders: metals.Metals are often referred to as “hard” commodities, as these are physical resources that are generally mined from the ground and include precious and semi-precious metals.
This sector also includes other non-precious metals which are mainly used by industry as a consumer or development commodity.
Energy markets are the second largest group of commodities and in this sector we find assets such as oil, natural gas and crude oil.
The energy markets enjoy high volumes of trade, as they have a great influence on the global economy. Just think of how many industries and companies rely on oil for the production cycle, from transport to the agricultural sector and again to industrial development.
Energy markets can be volatile, especially in times of political uncertainty, and are particularly sensitive to changes in supply and demand.
The last sector that completes the commodity markets is that of so-called “soft” commodities, also known as agricultural commodities, which contains several important elements in the sector.
These are mainly consumable physical goods, which have been grown or raised as commodities or raw materials that are consumed by people and animals or which are used as raw materials by businesses.
The agricultural commodity market is affected by global changes in supply and demand, as well as phenomena such as natural disasters (which can impact crops and livestock) and seasonal demand. To know about commodity trading in India for beginners, contact RKFS, the best financial advisory firm.