What is commodity trading?
On the stock exchange, you can trade with very different goods, virtual currencies, products and currencies. This includes the trade in raw materials. This is a so-called futures trading. This means that today you buy a fixed quantity of goods at a fixed price, but the delivery and payment is made on a different, already fixed date. This type of trade is different from previous trade in raw materials. Here, both parties always negotiate a single transaction with an individual quantity and individual price. This is no longer the case; instead, trading is highly structured and standardized.
There are various exchanges that specialize in trading commodities. The largest of these is the Chicago Stock Exchange, which plays an important role for both commodity traders and sellers.
Trade in raw materials also possible for laymen
Foods traded include sugar, cocoa, coffee, wheat and soybeans. The bandwidth is actually much larger than you could list here. For this reason, the different commodity exchanges specialise in different products. Depending on which products you want to bet on, you should look at the range of goods on the New Yorker, the Chicago or even the London Stock Exchange, where metals are traded.
For a layman, as in the foreign exchange market, it is very easy to enter the trading of commodities. You need little prior knowledge and can rely very well on your gut feeling.
Basics on trade in raw materials
Those who want to trade in raw materials rely on rising or falling prices for the respective raw materials on the stock exchange. In any case, it is advisable for laymen to bet on rising commodity prices. When prices fall, they rely on the insurance of those who have bet on rising prices. However, this is much more complex and, above all, not so easy for laymen to understand.
If you bet on rising commodity prices, you must consider factors like food shortages and the like. To achieve better success, you can find out about the current state of the food trade online on the day of trading and then better decide what you want to focus on.
It is also important not to lose sight of the long-term objectives when trading raw materials. Online sites help you simplify speculation. Nevertheless, you should expect to make losses from time to time.