Commodity trading

Commodity trading and its principles

Commodity trading represents the wholesale market of goods, working on the principle of free competition.

 

Here you can purchase mass products of standard quality: energy and industrial raw materials, metals, textiles, grain and processed products, livestock products, food products. Such trading elements are universal and specialized, it works only with certain types of goods. 

Regulators that control the activity of commodity exchanges

There are three main regulators that operate and control order on the exchanges. These regulators are located in three economically developed countries.

 

СFTC USA – is valid for more than 30 years.

 

ESMA EU – European Parliament in 2012 resolution tightened control over the market for commodity assets and derivatives.

 

Central Bank of the Russian Federation is a single option for the country.

Earning on commodity assets

The commodity trading is operated by the means of bonds. It allows traders to make profit on price fluctuations, without having to store and deliver the product itself. A trader opens the deals for the future delivery of goods.

 

A trader pays a contract at a fixed price. If the price rises from the moment the contract is acquired and the contract gets expiry of a date, then trader will make a profit. If the price drops, the trader loses money. 

Places to trade in commodities

To get access to the any part of the exchange, you need a broker that guide you there. Broker gives you a path to any stock exchange.

 

The largest commodity market CME Group, that geographically consolidated in Chicago. There are a lot of goods and derivatives on them. Liquid assets are precious metals and grains. CME Group was “born” as a result of the merger of the commodity exchange with the Swot Chamber of Commerce from Chicago, New York NYMEX (the leader in trading volume of oil futures). CME attracts participants in the commodity market with a wide variety of futures contracts and options.

 

One of the largest commodity exchanges of the European Union is LIFFE. The most liquid assets are food products. There is also the LME Metal Exchange, a leading non-ferrous metals trading company.

 

The largest Asian platform is the Tokyo Commodity Exchange is TCE. The share of this commodity exchange accounts for up to 90% of the trading volume of commodity derivatives. Among the most liquid assets, it is worth highlighting oil and precious metals. ROinvesting provides entrance to such exchanges anytime you need and from any device you have. 

Keynote about commodity trading

When it comes to investment in raw materials, it should be marked that the supply of energy raw materials is mainly influenced by country’s policy (economic sanctions) and Middle East tensions, since Saudi Arabia has one fifth of the world’s proven oil reserves.

 

The supply of agricultural commodities is mainly influenced by weather conditions, such as heavy rain or drought. This is because most commodities, such as cocoa, coffee, and orange juice, are grown and harvested, so consistent weather cycles are important to trace.

Forms of transactions

The transactions on a commodity exchange are concluded for a period up to 6 months. Exchange deals are sales contracts concluded on the exchange.

 

The transactions are following types.

meet your every need

ROinvesting as a broker with high-tech platform is concerned about successful work of each trader that trusts it.

 

The broker gives a chance to trade on commodity part of the market for both beginner and master. It provides progressive instruments and platforms that meet your every need. You just need PC, mobile or any other device and internet to start your trader career and the broker helps you to realize the potential.

 

Commodity trading become more beneficial with ROinvesting.