How Can You Start Commodity Trading?

By Author: jessica smith
Total Articles: 18
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What is commodity trading?

Commodities are part of day-to-day life and play a vital role whether they are related to food, metals or energy. We have been following the method of exchange of one commodity for a similar type since ages. However, commodity trading as an investment tool is entirely a new concept.

Commodity trading is a type of trading which focuses on buying and selling commodities such as silver, gold and oil in the financial marketplace. Here traders use the fluctuation market prices to harvest potential profit. Similar to the share market, commodities are traded on exchanges.

What is the commodity market?

The commodity market is similar to any other financial marketplace It is either a virtual space or a physical space where interested market participants can either sell or buy commodities (primary or raw products) at future or present date. The price depends on the two primary market forces demand and supply. These commodities are included in both the international and national marketplace. ...
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Types of commodities

Now you may be wondering about the options you have in the commodity market. Commodities today are primarily divided into four main sectors. Understanding each sector, types of commodities available and enhancing knowledge of the market allows the trader to make wise investment decisions.

1) Agriculture: Pulses, spices, grains, oilseeds and oil
2) Energy: Natural gas, thermal coal and crude oil
3) Metal: Silver, gold and platinum
4) Livestock and meat: pork, cattle, eggs and feeder

Investing in commodities

There are sundry ways through which you can start commodity trading. It entirely depends on you, which is suitable for you. Commodities are physical goods; considering this, there are four major methods for investing. There are as follows:

1) Commodity ETFs: Purchasing share of ETFs or exchange-traded funds
2) Futures contracts: Using commodity futures agreement to spend in the commodity
3) Direct investment: Directly investing in the commodity
4) Commodity shares: Purchasing share or stock in organisation or companies which produce commodities

The most famous and widely used way to invest in commodities is by using a futures contract. It is an agreement signed between two parties to sell or purchase a specific quantity or amount of commodity at predefined time and date in the future for a predetermined price.

How to start commodity trading?

Have you understood what commodity trading refers to? Now we will move forward with another main question on how to start commodity trading? For trading in the commodity market, you will require an online trading account. To open an online trading account with the broker, follow the steps provided below:

1) Visit the website of the broker you wish to trade with and click on the sign-in tab.
2) Get yourself registered by providing details such as name, surname, profession, email id, phone number for verification.
3) Enter the one-time password provided on your email id or phone number.
4) Upload the required documents, which include:
Identity proof: It includes a passport or national id card in case your passport expired and financial and bank statements not older than six months.
Address proof: Upload the documents which contain the permanent address and your recent photograph. You can upload the electricity bill for this.
5) Select the market and asset you wish to trade
6) Deposit the fee for that specific trade
7) Start trading

You can opt for TradeATF, an authentic financial service provider regulated by the Cyprus Securities and Exchange Commission. It offers to trade on a wide variety of tradable asset classes which include: commodities, currency pairs, cryptocurrencies, indices and stocks. The minimum deposit to open trade with the broker is $250 without any commission fee.

The Bottom Line

Commodity trading has become a luring option of investment for traders because it enables them to expand and maintain a well-balanced trading portfolio. Moreover, it also helps traders to generate short-term profits. Depending on the level of experience, you can choose different ways to invest in the commodity. The most popular among them are futures contracts.

Like any other market, the commodity market also needs the knowledge to harvest profit. Remember your investment decisions decide the size of your profit. To grab a considerable amount of profit, try researching more and more and focus on the factors and trends which influence the price of commodities. For this, you can opt for educational courses provided by TradeATF which includes articles, tutorials, videos on demand and courses.