What Is Commodity Trading?
Where stocks represent a publicly traded entity, commodities are the raw, unprocessed materials of the global economy. All commodities fall under four category headings: Energy (crude oil, heating oil, natural gas, coal, gasoline), Metals (gold, platinum, palladium, silver, copper, nickel), Livestock and Meat (lean hogs, pork bellies, live cattle and feeder cattle), and Agriculture (corn, soybeans, wheat, milk, rice, cocoa, coffee, cotton, sugar, frozen concentrated orange juice).
Trading in commodities is very different from trading on the stock market. With stocks, investors buy in the present at a set price. When you trade commodities, you speculate on what the asset will be worth at a specific time in the future. This is also why trading commodities is referred to as futures trading.
Commodities can be traded in futures exchanges all around the world. The two main futures exchanges in the United States are the Chicago Board of Trade (CBOT) and the Commodities Exchange Center in New York.
Commodity trading speculators take a long futures position when they think the price of the commodity will rise. Commodity speculators take a short position when they believe it will fall.
The price of a commodity will rise and fall for a wide variety of reasons. In addition to supply and demand, commodity prices can fluctuate based on weather patterns, economic data, or geopolitical tensions.
When trading a commodity, the investor secures a selling or buying price, quantity, quality, and date of delivery. Once the details are agreed upon, you are locked in, regardless of whether the price of the commodity goes up or down.
If you are long on the underlying commodity and it soars throughout the life of the contract, you can either sell the contract or wait until the expiration date. If you sell the contract before the settlement date, you simply realize the profit. Or, you can wait until the settlement date, collect the commodity, and resell it.
Benefits of Taking Commodity Trading Courses?
Many investors avoid commodity trading because of the uncertainty and speculative nature. But by taking commodity trading courses from Learn-To-Trade.com, we can show you how these same factors can help generate serious profits with commodity trading.
Our commodity trading courses at Learn-To-Trade.com will also reveal all of the benefits of commodity trading. For example, commodity futures are highly leveraged; to take a position, you might only need to put up 10% of the value of the contract—meaning you can take a larger position than if you purchased the commodity outright.
Taking our commodity trading courses at Learn-To-Trade.com will teach you how to leverage your contract. In fact, attending our commodity trading courses at Learn-To-Trade.com in Toronto will help you:
- Understand commodity trading terminology
- Learn about different commodity trading perspectives and strategies
- Appreciate short-term trades to longer buy-and-hold strategies
- Identify a “W” top and bottom, Fibonacci retracements, and channel breakouts
- Develop realistic exit strategies
- Set valid stop losses
- Calculate profit or loss and risk-to-reward
Finishing our commodity trading course at Learn-To-Trade.com is not the completion of your education; it’s just the starting point. At Learn-To-Trade.com, our Lifetime Membership means you can re-attend this or any part of our program as often as you like at no additional cost.
For more information on our Learn-To-Trade.com course and Lifetime Membership, e-mail us at email@example.com, or call us at 416-510-5560.