What are the different types of commodities?

Investment in commodities includes the purchase of investments that relate to food, energy or metals. Like shares trading, investing in commodities will usually require the use of a strategy or other plan for the purchase and sale of these investments. Popular plans for investing in commodities include the use of futures contracts, securing, speculation about future price movements and possibilities that are a derivative of real futures contracts. Investments in commodities can be more risky than investing in stocks, as there may be large fluctuations in the commodity market that investors can not predict. Individuals or businesses buy contracts for future commodity delivery such as oranges, coffee beans, gold, currency or other items. This contract provides specific information about the commodity. The Buyer and the Seller shall enter an agreement with the mentioned payment price for the commodity, the amount of good purchased, delivery date and other factors that may affect the agreement. The basic part of the commodities is the future datedelivery. Investors buy a contract for a specific price and hope that the price of commodities will increase or decrease sharply, making the contract more valuable.

Hedging is a process where the investor buys compensatory contracts to ensure that they compensate for any losses from their investment. For example, if an investor buys a contract for the purchase of 12 soybean pounds for $ 100 for a bush, he can buy an investment in related security such as coffee beans. If the soybean agreement turns out to be unprofitable, coffee beans can lead to profit as a result of market changes, allowing to work in favor of the investor.

speculators are a group of investors who never expect to take over the goods specified in the contract. In the commodities Market, speculators buy contracts that usually have a higher probability of future price changes, such as oil. These contracts are valuable because companies that wishTake oil supply and specify in gasoline or other oil products, looking for contracts at the lowest price. This falls within the theory "Buy low, sale high".

In investment in commodities, they represent the right to purchase a contract. Investors can assign rights to other investors or companies who want to buy a commodity. Although possibilities may not result in significantly high profits, they may have more mobility on the commodity market. Options usually must be sold before the expiration date of the contract, or the possibility is worthless. Options can be for the purchase of futures contract and immensely reflect movements included in the futures contract.