The commodity is a physical as well as a vertical marketplace where buying and selling of physical or raw products are done. There are basically two types of commodities, Hard and Soft. The natural resources denote the hard commodities such mined products like Gold, Silver etc. while the soft commodities are agricultural products like wheat, corn etc. There are several ways to invest in the commodity market. An investor can purchase the stocks from a company which is based on the commodity products. The other way an investor can invest their money by purchasing mutual funds that are related to a commodity market.
There is one more type falls below Commodity market which is Commodity Intraday trading and involves the selling of commodities within the same day. Intraday commodity trading is considered to be safer among the investors as compared to the equity market as they can enter the market with the lowest margin of the contract.
Commodity market remains open till late evening that gives enough time to the investors for trading. Commodity market facilitates trading in different commodity sectors. Further, there are two types of markets, one is spot market and other is a derivative market. Spot market involves immediate delivery of buying or selling the commodities whereas in the derivatives market, various instruments based on the commodities are traded. Commodity Market is generally volatile because of the factors such as any major international events or news, Weather conditions local and global, Environment etc.
The market where homogeneous goods in bulk are bought and sold is known as a Commodity market. Commodities market generally includes trading of Grains, pulses, Oil, natural gas etc. Commodities market also involves trading of foreign currencies, certain financial instruments.
The active buyers and sellers can actually make the market flourish for almost any commodity market, says New York Mercantile Exchange. No one can actually tell about the drawing factors of commerce sector and that is what makes it volatile and interesting.
There are conditions that need to be satisfied for an item to get categorized into the Commodity market. The conditions include the standardness, the raw nature of the item if it is from agricultural and industrial commodities, it must have a shelf life that means usable and the price must vary so as to create a market for that item.
Investors can trade in the commodity market in two different ways; One way is to trade in the spot market or cash market where the transactions are get done immediately by the buyer and seller and the other way of investing is in the futures market.
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