COMMODITY TRADING

1. What is Commodities?

A commodity is goods used in business or on a market. 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 sugar, corn, wheat, coffee 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 Gold, other precious metals, diamonds and oil, along with other energy products.

2. What is Commodity Trading?

Commodity trading is an exciting and sophisticated type of investment.

While this type of trading has many similarities to stock trading, the biggest difference is the asset that is traded. Commodity trading focuses on purchasing and trading commodities like gold rather than company shares as in stock trading.

Like stocks, commodities are traded on exchanges where investors work as a team to purchase or trade products in an attempt to generate profit from the fluctuation of market prices or because they need that particular product.

What affects the prices of commodities

Supply & Demand

If supply and demand balance out, prices should stay the same. However, anytime the market thinks the supply will be lower due to weather or production cuts, prices tend to go higher, and vice versa; higher supplies tend to lead to lower prices.

Stock and Inventories

Production of these commodity prices can be affected by the following; weather, crop diseases, production issues with staff, political and economic environments which form additional charges such as taxes, trade laws, subsides from governments etc.

Currency Strength

Connections between some of the worlds most traded commodities and forex are common. For example, the Canadian dollar (CAD) is connected to oil prices since Canada is a large exporter of oil. If you are aware of these common connections, then monitoring them and trading at the right time are important to making the right decisions in successful trading. It should be noted that most commodities are priced in US dollars.

Inflation

When there is change in inflation, the price of a commodity usually changes accordingly.

IS THERE A SMART WAY TO TRADE SHARES

Educate Yourself

Pay attention to News

Keep an eye on data releases

Economic Calander

How do I start trading?

That’s where we come in.
Ready to make informed investment decisions?
We look forward working with you.