1.Why Trade In Commodities?
One of the major advantages of future trading is that you can earn money without actually physically storing commodities. On the exchange, commodities are traded as future contracts. One of the major advantages of future trading is that you can earn money without actually physically storing (or buying and selling) commodities. Besides, the trading cost too is substantially low. Traders participate in commodities trading mainly because:
- They do not need to pay the entire transaction amount for trading; only the margin amount is required
- They can earn from short selling
- Some of the other benefits of trading in commodities are
- The commodities listed on this market mainly include metals, energy and agricultural products. This diversity provides opportunities for investors, hedgers, traders, manufacturers, arbitragers, importers and exporters to earn money.
- The prices of commodities changes purely on demand and supply. This makes it really easy to understand the movements and exploit opportunities.
- Commodities are traded all over the world. Putting your money in this kind of investment helps you diversify your portfolio
- Unlike the Indian stock market, the Indian commodity market is open for 14 hours a day, covering timings of major commodity exchanges around the globe and giving you ample time to trade.
- The fluctuation in the prices of commodities is caused by
- Demand and supply
- Currency movements
- Crop sowing aspects
- Economic forces
- Crop arrival factors