What does the commodity invest?

Investment in commodities is the process of concluding an agreement on the purchase or sale of physical commodities, financial instruments and currencies. The contract can be to purchase futures contract or opportunities for futures. Both are standardized and legally binding contracts that require the delivery of the commodity to the specified date, price and time.

Commodity futures are traded on the floor of commodity exchanges mostly in the United States, London and Japan. All Futures exchanges have households that guarantee that all stores are completed according to market rules and regulations. When a shop is a shop, the clearing task is to enter and function as a buyer or seller on both sides of the trade. Commodity exchanges are regulated by the government. In the United States, it is a regulatory body of the Commission of Commodity Futures.

Commodity markets were originally determined as a commodity manufacturer system such as agriculture and livestock Farmers to perform a certain level of control over voices in their respectivethe businesses. Commodity markets allow manufacturers to provide a price for their product when commodities are placed on the market. This helps to reduce their risk if prices undergo an unpredictable decline.

Business are carried out using electronic trading platforms and open shouts. Only brokers and companies that are members of Exchange are allowed to trade on the stock market. Exchange members are usually licensed brokers who are paid fees and commissions to trade on behalf of clients. Exchange members can also trade for their personal accounts.

Unlike shares trading, investors are encouraged to trade in the long side and the short side of the commodities in commodity investment. Some traders use a strategy called "spread" that requires both. By purchasing one Conntract and sell a client, these investors hope to benefit from the prizea different difference.

The buyer who lasts long expects to rise prices. If the prices increase, the investor will make profits, but if the prices fall, the buyer will suffer from a loss. On the other hand, buyers who buy short expect prices to drop. If they are right, they earn money. If prices increase instead, the buyer will lose the investment.

In principle, there are two types of buyers in commodity investments: Hedgers and speculators. Hedgers are individuals or businesses that buy futures contracts to insure them against the unpredictability of market prices. Large operational operations and airlines are usually on the oil futures market. These traders are not profit oriented; Their primary is to neutralize their risk.

Hedgers then usually go to cash or place to buy the same number of contracts, but attract Naospart. Spot Market is where to sell for cash and must be delivered immediately. This strategy, which is very common, reduces the effect of anybalanced price movement. Hedger, who lasts long in futures, will briefly secure on the cash market. If it registers a short on the futures market, it will go on the spot market for a long time.

speculators who are involved in investment in commodities are buying futures strictly to make a profit. Whether prices are rising or falling is very important to them. Their focus is on the successful prediction of the direction of movement of prices. If they are right, they are often in a short period of time to gain considerable profit. Speculators whose market analysis is incorrect can lose a large amount of money just as fast.