To better understand trading commodities you first have to know what commodities are. Commodity is something that is in need but has no differentition on the market, best example can be corn. If you look at the corn and taste it, you will never know who produced it, that is why there is universal price for commodities and some other examples of them are: rice, coffee, wheat, tea and oil is aswell a commodity and we must not forget on gold and silver. The last three ones are the ones that are offered by majority brokers because they are traded the most.
What you will learn here:
- What is commodity
- Types of commodities
- What effects the commodities
- Info on most traded ones
WHAT EFFECTS THE COMMODITIES
What do you think determines the price in this case? If you said supply and demand you are defineatly right because thats exactly what it is all about. all business around the world evolves around this statement of supply and demand. As you may see the prices of oil are constantly going up and that is simply because there is a big demand for this commodity and there is never such thing as enough of oil.That is because we all have cars and in order to go around with them we need to put gas in them. There also comes times when demand is lower or buyers are not interested in paying such high price, then there is no other option as that the price of oil goes down.
I would also have in mind, not just in mind, put this on a paper or somewhere you will keep an eye on because that is how important it is. For example, United States Department of Energy releases every Wednesday their inventory. Similiar reports comes of course for other commodities aswell. Based on these reports, the prices also regulate, so find out where and when they are published because it will help you be a better trader.
TYPES OF COMMODITIES
METALS:
- GOLD. This is defineatly one of the most traded metals because it is viewed as safe investment in bad times.
- SILVER. Mostly it is driven by jewelery industry but is know as volatile market.
- COPPER. This metal is used in almost any industry especially in construction because of the durability.
ENERGIES:
- OIL. This commodity is as we said always in demand and is the most traded energy commodity.
- NATURAL GAS. Since it not enough known about this energy, supply is very uncertain therefore it can be very volatile
AGRICULTURE:
- CORN. Prices are still affected by natural disasters and also rise of human population.
- SOYBEAN. There is a wide range of where you can use soybean, from food to cleaning products.
INFO ON MOST TRADED COMMODITIES
OIL
Available for trading: 5 days a wekk. Check with your broker if it is anything different.
Which broker offers oil: Almost every broker has this in their asset list
TIP: You have to check news if there are wars going on or there are any oil spills or sea platforms in danger. This makes prices go up becase its much harder to get oil.
GOLD
Available for trading: 5 days a wekk. Check with your broker if it is anything different.
Which broker offers gold: Almost every broker has this in their asset list
TIP: Gold was always know as a good reserve of money when the times are not right but its more of a long-term buy. As always have in mind trend.
KEEP IN MIND….
That there comes times when commodities especially gold, sivler and oil have stronger moves then currency pair or other assets on the list so you need to be carefull and trade smart. So be sure to follow news regarding commodities.