Commodities trade for beginner
The commodities trade is less understood when compare to stock market that are well known at least in part by most laymen. To start conducting commodities trade especially for the beginner, it is essential to learn the basic aspects of commodities and the commodity market itself.
Commodities trade is basic traded goods with a number of properties. Commodities have been traditionally primary goods or the goods that have not been processed such as cooper, wheat and rubber.
Goods in commodities trade has to have internationally agreed quality standards. This goods quality standard is very important because commodities traders might sell and buy without seeing the goods or having the chance to test them.
The commodities can be sold and transferred quickly and efficiently, since they standards have been agreed to be verified by officials in the particular commodity exchanges. Further commodities are always traded in certain standard volumes or weights, such as tons and troy ounces.
The aim of the standardization, so that there is no haggling over either quantity or quality and traders can base their decisions on market conditions and other external factors affecting price during commodities trade.
The commodities can be split into groups. Agricultural commodities encompass grains, pulses, soybeans, cotton, wheat and sugar. Agricultural commodities trade is traded in pounds, tons or bushels.
The other farmed goods that are traded into a different class, they are meat and livestock commodities. They are traded in pounds and this group class includes live cattle and frozen pork bellies.
Energy commodities involve different versions of gas and oil and are traded on the international commodity exchanges. They are sold in barrels and gallons. There are also group of metals, they are precious metals and industrial metals.
The precious metals group includes gold and silver. This kind of metals group is traded in troy ounces. The industrial metals group includes zinc, copper and tin. They are traded in metric tons. In commodities trade, there are also a number of commodities that do not fall into any particular group, such as palm oil and polypropylene.
It is not enough to know what the commodities are, when we are trading commodities. A high knowledge of the commodities being sold and bought is very important thing.
Supply and demand, weather conditions, natural disasters, government policy, advancements in technology and much more are some factors can affect the price of each individual commodity during commodities trade. So it highly advised that anyone wish to come into commodities trade, researches thoroughly first should be done. At last be happy trading.