Online Forex Trading

Learning Commodity Trading – A Beginner’s Guide

A Brief History of Commodity Trading

Buying and selling of commodities in a marketplace is the simplest definition of Commodity trading. History of commodity trading is pretty old dating back to early 19th Century when Midwest farmers came to Chicago to sell their wheat produce. Farmers who were often exploited by local dealers visited Chicago to sell their produce from where it was shipped all over the country. Later on Chicago transformed into a giant commercial center for farmers and till today Chicago rules the agricultural commodities trading markets.

Learning Commodity Trading

A Brief Perspective on Futures Contract

Over a period of time, farmer’s transactions evolved into a futures contract as is known today to the commodity traders. Farmers (buyers) started committing their produce (commodity) to the dealers (sellers) at a fixed price for delivery at a fixed date in future. So, a futures contract is nothing but a commitment (contract) to buy or sell a commodity at a fixed price at a fixed time in future. It is suggested that learning commodity trading should start with a deep insight into futures contracts.

Market Factors – What moves a commodity Price?

Most fundamental factor influencing the price movement in any commodity is the demand supply economics. However, market momentum plays a vital role. Learning commodity trading is all about the market forces, technical factors and trading strategies.

Market Participants

Hedgers, Arbitrageurs and Speculators are the core participants of Commodity trading. Know more details about the market movers by learning commodity trading.

Conclusion

Commodity trading is a vast subject that requires an in-depth knowledge of futures contract, futures exchanges, clearing houses, trading positions, taking delivery, and risk management. It makes sense in learning commodity trading so as to make it a profitable venture.