Commodity Trading, more in detail
Heart of any commodity exchange is the exchange hall. It is in the floor there is a negotiation between sellers and buyers. Bargaining is based on the principle of double auction, the prices of the buyers are rising, and the sellers are reduced. Commodity Trading is a great number of auctions, which are held in the same place and almost at the same time.
Absolutely every transaction, which is performed on the stock exchanges, should be carried out using one of the standard contracts. These contracts otherwise are called futures contracts/futures. This type of contracts is uniform and standardized in accordance with the rules of stock exchanges, as well as it provides specific requirements regarding the quality of the goods, their quantity, date and place of delivery of Commodity Trading, and the like. In the contract there is only a single variable value is the price. It is defined in the moment of conclusion of the transaction. Committing to a purchase-sale transaction takes place without the inspection of goods for a certain number of futures. There is a very important difference of futures contracts on delivery of the actual commodity. So there are two ways of execution of futures. In the first case is the opposite deal for the same quantity of goods in any one day according to the conditions of delivery. In the second case the futures execution comes caused by the goods.
In spite of the fact that in the stock exchange turnover of the transaction, which shall be completed delivery of the goods, for a small part of, the existence of a possibility to deliver the goods at the exchange warehouse or receive the goods from stock exchange's warehouse is the most important function is the Association futures market with the market of the real goods.
Therefore, a commodity exchange always gives the opportunity to Commodity Trading, despite the fact that in our time of exchange in most of the cases presented markets futures and options.
In a mandatory manner each futures contract is registered with the clearing house of the exchange. Registration of a futures contract provides for the settlement chamber of concluding the contract of the guarantee Deposit in the form of a Deposit or margin. Usually a Deposit, or in other words the initial down payment is 10-15 per cent of the contract value. Margin - this is an additional Deposit, which is to be paid in case of change of the price for the goods. After the contract has been registered with the clearing house of the exchange, the opportunity to eliminate it. Liquidation may be carried out unilaterally by any of the parties and going on through the conclusion of the offset of the transaction. The party, which decided to liquidate the contract, can win and get in the clearing house of the amount of the winning, or may lose, and to pay to the clearing house the amount of loss.
