Trading with Commodities Compared to Forex Currency Trading
There is a whole range of different commodities that can be traded in the financial world. Most of the private investors and retail traders tend to stick to only one or two markets when it comes to commodities. Prices of commodities going up or down affects our day-to-day activities. To put things in perspective, Anyone who drives a car would be impacted by rising crude oil price or a weather prediction of under average rainfall affects the crop production and in turn, the price of our next meal. A commodity market facilitates trading in various such commodities.
Commodities in the market are largely divided into three groups. Metals, Agricultural produce, and Energy. The metal is further classified into non-precious metals, like, iron, steel, aluminum, copper, and Precious metals such as Gold, Silver, Platinum, and Palladium. Agricultural produce is called Soft Commodities As the name suggests, it includes coffee, cocoa, wheat, corn, and so on.
The futures market is the most direct and popular way to participate in commodity trading. On the other hand, you may participate in commodity trading indirectly by buying or selling equities that are tied to commodities in some manner. In this article, we will further analyze what commodities are, how they are traded, and what is the major difference between Commodities VS Forex market.