{"id":4098,"date":"2018-03-22T11:36:19","date_gmt":"2018-03-22T11:36:19","guid":{"rendered":"https:\/\/www.openbusinesscouncil.org\/?p=4098"},"modified":"2020-02-27T09:35:52","modified_gmt":"2020-02-27T09:35:52","slug":"overview-commodities-trading","status":"publish","type":"post","link":"https:\/\/www.footballthink.com\/overview-commodities-trading\/","title":{"rendered":"An Overview of Commodities Trading"},"content":{"rendered":"
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An Overview of Commodities Trading<\/figcaption><\/figure>\n

Commodities, whether they relate to metals, energy or food, play an important role in everyday life.\u00a0 Anyone who is a car owner can see a major difference in the amount they pay for petrol by rising crude oil prices.\u00a0 Plus, the impact of a drought on certain food items may influence what you can eat for your next meal.\u00a0 Similarly, commodities trading can be a great way to diversify your investment portfolio beyond traditional securities.\u00a0 You could opt to use commodities trading to park some cash in highly volatile stock markets, as commodities will typically move in opposition to stocks.<\/p>\n

In the past, the average investor did not even consider looking into commodities trading because of the significant amount of time, expertise and money it required.\u00a0 That is no longer the case today.\u00a0 There are now several routes when it comes to trading in commodities.<\/p>\n

What is Commodities Trading?<\/h2>\n

If you choose to trade on commodities, this is a way to speculate on the future price of a particular good like oil, gold or even cotton.\u00a0 Unlike Forex trading, commodity trading takes place on structured exchanges.\u00a0 Regardless of whether you opt to trade on commodity CFD\u2019s or spread betting, you will be trading on the underlying cost of that good.<\/p>\n

Typical Investment Characteristics of Commodities<\/p>\n

With the commodities markets, basic economic principles will drive these markets.\u00a0 Generally, this means that a lower supply will more than likely drive up demand, which equals higher prices.\u00a0 Also, major disruptions to a supply chain, such as a widespread health scare amongst livestock could lead to a spike in the overall stability of that market.<\/p>\n

Types of Commodities<\/h2>\n

Nowadays, tradable commodities fall into four main categories.\u00a0 These include:<\/p>\n