futures commodity trading
Commodity exchange - centralized market of the goods. On a commodity exchange may be as spot transactions, and transactions on a delivery in a certain place by a certain date in the future (forward contracts), as well as futures contracts.
Commodity exchanges are the first kind of exchanges that have appeared in the world. They organized earlier, the stock exchange and foreign exchange. Starting from the 17th century in Western Europe there appeared the first commodity exchanges. Trading on commodity exchanges attractive for the investors and speculators, first of all, because of the high liquidity and the dynamic growth of prices for raw materials (such kinds of goods, such as oil, zinc, aluminum, copper, silver, gold etc.).
Commodity exchanges are divided into:
• for the purpose - the specialized and universal.
• the breadth of actions - at the national, regional, Republican, regional and oblast.
• accessibility - on opened and closed.
• on the nature of the operations on the stock exchange of the real goods and futures exchanges.
From the common market futures commodity trading is characterised by the (already pre-installed) the form of the organization of trade. In connection with the fact that one of the main functions of the commodity exchange was to ensure regular and effective communication between buyers and sellers, as the development of commodity exchanges began to develop certain standards on goods, the different trading practices, developed a model of exchange-traded contracts.
In our days on commodity exchanges are traded approximately 70 kinds of various goods, which include metals, rare, non-precious and precious), the so-called «soft commodities» (such as sugar, tea, coffee, cocoa), energy (oil, gas), as well as, seeds, grains, and even livestock.
Currently trades at the stock exchange have like a «virtual» in nature: the vast number of transactions (98-99%) do not end with the delivery of goods purchased, but only the payment of the difference in prices. Trading on commodity exchanges are primarily of a speculative nature. In connection with this, the transactions on the commodity exchanges are made on the basis of standard exchange contracts, which regulate the delivery date of the product and its quality. Himself a traded commodity on the stock exchange is not present and is not subject to presentation and preliminary examination. The buyer on a commodity exchange does not buy the goods, but only a document confirming the right of ownership to it - mostly in the form of options and futures contracts. Thanks to this kind of trade, the volume of trading on commodity exchanges increased by several hundreds of times since then, when on the stock exchanges still buy and sell real goods.
On commodity markets prices are very volatile. Fluctuations of quotations, caused mainly by speculative actions of participants of the commodity exchange is therefore commodity markets are very difficult to predict a normal trader. In connection with this, for a beginner trading on the stock exchange are not the best option for the beginning of its investment activities. However, it should be borne in mind the possibility of investments (increase) of Your capital in the future - when you get to a certain level of professionalism in the investment and speculative activities.
