What are Commodity Markets?
The answer is any place where all raw or primary products are exchanged is called commodity market. Commodity markets can include direct physical trading and derivatives trading in the form of spot prices, forwards, futures and options. Commodity Futures are contracts to buy/sell specific quantity of a particular commodity at a future date on an exchange platform. It is similar to the Index futures and Stock futures but the underlying happens to be commodities instead of Stocks and indices.
Why Commodity Trading?
Commodity trading can be done for various purposes out of which two are most important Against the exposure towards physical trades -for risk management (Hedging) Having no exposure in physical form - Investment & Speculation Hedging is the practice of offsetting the price risk inherent in any cash market position by taking an opposite position in the futures market. A long hedge involves buying futures contracts to protect against possible increasing prices of commodities. A short hedge involves selling futures contracts to protect against possible declining prices of commodities. Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a tradable good such as a financial instrument commodity.
How to trade commodities with Phase Markets ?
The basic information that should be with the client is as follows:- The process of the selection of the commodity depends on the knowledge and interest of the client regarding various commodities. Phase Markets brings you one of the best, understandable and to the point market research each and every day. You can easily choose which one is the opportunity. You can buy or sell a commodity so you can take a position in anyway. For example if you think that the oil price is too high and it will decrease in coming weeks -like in 2014-, you can sell oil and benefit the price roll-down. You can enjoy the low margin requirements in Phase Markets platforms. Try it!