Commodities are basic items of consumption of the worldwide economy. Do you have an opinion on the price movements of Gold, Silver or Coffee? Act on it! Commodities are traded around the world on different exchanges and are usually traded as future contracts.
On our platforms, we provide , which are contracts, based on the price of an underlying asset, that don’t grant ownership of the physical goods. This means that you don’t have to actually own the asset, yet you can trade it whenever you want. Quite convenient that you won’t have to have 100 barrels of Oil delivered to your front room! And probably not very secure having bars of Gold stored at your home! Instead, you will speculate on whether you think the price of the asset will move up or down.
What are Commodities
A commodity is a raw good used in business. Each commodity, when traded on an exchange, must meet standards and grades. They may each be slightly different, however, ultimately are the same amongst all producers. There are two different kinds of commodities, soft and hard:
Soft commodities – This refers to items that are grown as opposed to mined. For example,
agricultural products such as , , , and more. Produced by farmers, these instruments are highly sensitive to climate and weather changes, and have cyclical price patterns dictated by seasons.
Hard commodities – This refers to items that are mined, such as , other , diamonds and oil, along with other .
Why Trade Commodities
Having a variety of commodities in your trading portfolio can be a great addition as it brings diversity. Commodities do not pay dividends, at the same time they do not go bankrupt.