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Title: Commodities Trading 101 - Do You Know The Basics Of Commodities
Trading?
Author: Mike Singh
Article:
In this article we will look at some generalities concerning
commodities. This introduction will include information on the
different types and on different ways they are traded on the
market. So let's take a closer look first at the different types
of commodities there are out there.
First before looking at the different kinds, you should
understand that there are many different factors that can affect
the prices of commodities. These things include taxes, inflation
and money supply. Politics, weather, transportation and its
costs and technology and its changes can have an effect as well.
Other than this the different kinds of commodities affect it as
well.
There are two kinds of commodities we will discuss in this
introduction:
1) Soft commodities: The first kind is considered . These are
the best kinds of commodities to get your hands on if you can.
This is because these include agricultural products, such as
sugar, cocoa, coffee, that are in demand all over the globe.
These types of commodities are primarily affected by price with
a little effect from cultural factors as well. The supply for
these types of commodities can be most affected by weather,
soil, transportation and even insects.
2) Energies: The next kind of commodity is generally energies,
such as crude oil or natural gas. Technological and political
things affect the supply of these two. On the other end of this
type of commodity, demand keeps rising and has been for a long
time. This is because a lot of energy is needed for everything
to building to heating and powering homes that are already
built.
Besides these basics we will look at two different markets they
are exchanged in. These include the spot markets, which is more
immediate trading for cash or something else of value. Usually
this is confined to personal purchases, for example paying for
jewelry with cash, that is what is called a spot trade when it
comes to commodities. Although a spot trade can happen on a much
larger scale, for example with oil or several million ounces of
gold.
The other option is a future trade or option. The commodity
itself is not traded, but a promise in the form of a contract
is. This states what is to be sold and for how much and by what
date. Though this type can be more of a risk, it is done more
commonly when it comes to market trading of commodities. The
risk comes from predicting most of the variables in the trade
and how they will behave.
Hopefully this brief introduction to commodities has given you
some basic information. Not only what they are, but also how
they can be traded. With this knowledge handy, you are one step
further along the line of understanding commodities and trading
them.
About the author:
Check out <a
href="http://www.commodities-trading.org/">http://www.commodities
-trading.org</a> for more articles on <a
href="http://www.commodities-trading.org/commodity_trading.html">
comodities trading</a> and <a
href="http://www.commodities-trading.org/commodities-technical-an
alysis.html">commodity signals</a>.
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