Commodity Trading: An Overview

Commodity Trading: An Overview

Everything in the world revolves around money and Trading is a great platform for overall economic growth, new innovation, and development of mankind. Commodity trading is one of the aspects of trading which is prevailing since ages. Commodity trading is the same as that of equity trading, which involves buying and selling of commodities. Commodities are the basic raw materials or fundamental units that contribute to a healthier and wealthier lifestyle.

Types of commodities:

Commodities are categorized into the following groups

  • Agriculture
  • Energy
  • Livestock
  • Metals

The commodities are highly volatile and hence it is necessary to educate oneself before dabbling into the market. And also regular monitoring is required as commodity trading is a day to day affair and the changes in their value are more apparent. The commodity trading is carried out in two precise states: 1) Over the counter (OTC) and 2,) Exchange based.

OTC trading is straightforward and carried out in a single day. For instance, the trader purchases gold for a price of $1000 per ounce and sell the same to other customers with some profit. The same way we buy jewels in the jewelry shop.

The Exchange-based or future trade involves buying contracts. It means they have an expiry period for the contract and within that speculated time period physical delivery of the underlying commodity takes place. The value per unit fluctuates according to the market status and this the product acquisition takes place accordingly.

The commodity market is open 24×7. It offers high flexibility and we should be aware of its attribute of higher leverage.

Is Cryptocurrency, a commodity?

This is a critical question. Every trader is aware that the cryptocurrencies are assets and they do not possess intrinsic value. The Federal judge in the US gave a historic judgment citing Bitcoin as a commodity recently. This raises an important question. Will the cryptocurrencies are taxed, the same way as that of other commodities? The answer to this is still not clear! That is why the Governments of different countries are trying to devise principles and policies to regulate cryptocurrency trading. On the other hand, due to the massive support from the people, the trade experts and analysts have developed various easy to use trading bots like Bitcoin Trader to encourage crypto investments. Whatever, the Bitcoins and other digital currencies are becoming undeniable commodities in the WorldTrade platform.




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