Commodities trading involves buying and selling raw materials like oil, gold, and agricultural products, providing opportunities for investors to profit from price fluctuations in these essential goods.
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You don’t think about where an ear of corn or a bag of wheat flour was farmed or milled when you buy them. As a result, they’re both regarded commodities.
They are interchangeable raw materials that can be bought and sold in large quantities. They are frequently used as components in the production of finished goods.
Commodities are divided into two categories by investors: hard and soft. Finding hard commodities necessitates mining or drilling. Soft commodities are cultivated or grazed. Agricultural products, livestock and meat, energy products, and metals are the four basic forms of commodities.
Commodity trading is essentially the purchasing and selling of these raw materials. It usually occurs through futures contracts, in which you commit to purchase or sell a commodity at a specific price and on a specific date.
