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Various ways of trading in Commodity market by equicom services
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Various ways of trading in Commodity market |
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Finance & Investment,Business News,Business
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Trading in commodity market is done in two either ways one directly that is in physical market or through contracts that is trading in future market. The remarkable increase in the volume of trading in commodity market has been recording since the beginning of the decades. The trading in commodities takes place through the following modes Spot trading This is a type of trading where the delivery of the product takes place immediately if there is a delay in delivery of the product that would be due to some technical constrains. The delivery of the product takes place after visual inspection like for example wholesale market. Future Contracts When two parties decide over the trade of a particular commodity on the basis of some future price according to decided standards is known as future contract. Future contract is a standardized forward contract where the price of the product can be negotiable. Forward Contract It is similar to future contract but mostly these contracts were used for trading in commodities related to agricultural food and products. Delivery and condition The delivery of the product, day, time and mode everything is pre-decided and that also within two or three days of the trading done. Benefits of trading in Commodities Futures: A Producer: One who produces a commodity can sell the future of the commodity, and ensures that the particular quantity of the product can be sold at a particular date, as a result drawing the benefits from the production. Investors: An investor can invest into the commodities either in spot market or in future market at a particular future or spot price. The buying and selling options can be chosen by the investor for drawing profit from the market. But the investors stay away from taking deliveries from the market. Traders: Commodity traders are the major part of the market that make up the trading phenomena alive and increase the volume of trading in the market. The traders either play in the sell side of the or in the buy side or enjoy the benefits. Traders always play an arbitrage in commodities, whenever they encounter upward movement in gold they tend to short silver. Similarly if silver is in uptrend then they go selling of gold. In this way they hedge up their trade. As the scenario seems to be little risky looking towards the recession, price rise, natural calamity and various other factors stock market is becoming a very volatile place for the execution of trade. People are turning towards commodity market as per the trends. Commodity market as traded future seems to be a beneficial place for traders and investors. But taking the profit and loss in to the account one should play safe and always follow the stop loss strictly. Commodity tips given by the experts should be well evaluated looking at the market trends and then should be traded upon. Trader should search for the best broking firm which offer them less brokerage and max returns, never run behind the cheap and free tips as they are not going to benefit in anyway. So analyze the tips before you invest in the market.
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