COMMODITIES

Commodities trading is very popular, offering a world of choices and the opportunity to invest in a diverse range of products. A physical or virtual marketplace for buying, selling and trading raw or primary products. For investors’ purposes, there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities.

Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.)

There are numerous ways to invest in commodities. An investor can purchase stock in corporations whose business relies on commodities prices or purchase mutual funds, index funds, or exchange-traded funds (ETFs) that have a focus on commodities-related companies. The most direct way of investing in commodities is by buying into a futures contract.

A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future for a certain price. They are normally traded on the exchange. The exchange specifies certain standardized features of the contract.