What are commodity stocks?
Commodity shares are investments in commodities - obscured materials such as grain, gold and silver or orange juice. In order to be available to investors as commodity shares, the products must be purchased and sold in a raw standard form. This means that the product cannot be distinguished from one manufacturer to another. If the investor buys commodity supplies for orange juice, the product is purely orange juice, not a branded orange juice or orange juice with added vitamins. They can be food products such as wheat, pork belly and tea. Other agricultural products include commodity supplies such as tobacco, cotton and rubber. All these commodities have a lifetime. This means that the investor can buy a commodity opportunity in the future to trade in the product and the possibility of commodities has a predictable value after a predictable amount of time.
Other types of production investors available on the commodity stock exchange include metals and energy products. Metal examples include steel, aluminum, silver and gold. Examples of energy include oil, natural gas and propane.
Not every individual commodity type is available for investors as commodity trade. In general, the commodity must have a significant volume of purchasing and sales of activities to be included in commodities markets. In addition, there must usually be sufficient fluctuations in the product in the product to justify its integration on the market.
commodities are usually traded in two main ways: as an immediate sale or purchase on the "point market" or as commodity futures. When the investor buys the future of commodities, he effectively buys the right - and the obligation - to buy the amount of commodity on a certain date in the future. Most investors who trade with Commodity do this using the commodity futures method.
One of the key facts you will learn about commodity supplies is that the price of these shares is determined mainly by supply and demand. This is, unlike shares of the company traded, where the stock price is determined by the market.
worldwide there are a large number of exchanges that provide commodity supplies for trading. These exchanges can provide a trade with many different commodities such as New York Trade Exchange. Other commodities exchange focuses on specific types of commodity supplies, such as the London Metal Stock Exchange.