What Are the Commodities?
The commodities are the many types of goods or raw materials that can be used to generate a livable world. To sustain themselves as humans can use energy, metals can be used to build tools, apparatus and weapons and to feed themselves by Agri products. These are three most important types of commodities like energy, agricultural products and metals. This is the main pillars of global financial system building block of every country.
Commodities usually meet the following criteria:
Trad Ability: The commodity products have to be trad-able; meaning their requirements to be a feasible investment vehicle to assist you deals it. For example, a commodity is involved if it has a commodity futures contract signed for it on most of the major commodity exchanges, or if a corporation processes it.
Uranium is the important metal of energy commodity, isn’t considered by a commodity futures contract, but many companies specialize in processing & mining this mineral. By investing in these corporations, you get risk to get uranium.
Deliver Ability: Every commodity has to be physically (really) deliverable. The crude oil is also involved because it can be received in barrels, and the wheat is involved because it can be received by the bushel.
Liquidity: Each and every commodity in this studying center has a lively market with traders constantly transacting with one to another. Liquidity is more critical because it provides you the option for choosing in & out of an investment with no having to visage the difficulty of trying to search a trader for your securities.
Opening an Account with a Commodity Broker:
If you want to start the commodity products trading under the commodity exchange, you have to need a new commodity trading account with a broker, who’s licensed in trading business on behalf of customers at the commodity exchange and give us good Commodity trading tips, MCX tips and NCDEX Tips.
The technical meaning for a commodity market broker is a futures commission merchant (FCM). The FCM is executing the all commodity orders and allow payments for this valuable service.
If you want to choose a commodity broker who will manage and control your account to perform via good technical, global and fundamental analysis of its commodity trading platform. You have to get much more information and report about his firm and its trading activities. Little things you must consider are broker firm history, firm customer, licensing data & information, commodity trading platform and employee information.
After you choose a commodity trading brokerage firm you are comfortable with us, this is more crucial time to open an account for start commodity products trading! You can select from lots of different brokerage accounts. Most of the firms will suggest you minimum two types of trading accounts, depending on the maintain level,
Self-directed accounts: If you have confident about your commodity market trading abilities, have a better understanding of commodity market fundamentals & technical, and want to acquire direct access to commodity market exchange goods or products, then a self directed or managed account is it for you. In this kind of account, also identified as a non-discretionary personage account, you call the targets and make every commodity trading decisions.
Previous to you open a self directed or managed account, talk to some commodity brokers, because each and every firm offers different types of account features. Specifically, minimum money requirements, the broker firm has (some commodity market brokers require, that you spend a minimum amount of Rs. 10,000/- or more than), account maintenance charges, and the commission fees the broker firm uses.
Managed accounts: In a well managed account, you are effectively transferring all the responsibility of making all trading decisions over to well trained experts. This is the ideal account, if you don’t adhere the markets on daily basis, are uncertain about which commodity market trading strategy will increase your profits, or basically don’t have the time to handle an individual account.
First select your investment goals, risk tolerance, time horizon, before you open a well managed account and find a commodity trading advisor or broker (CTA) who will maintain your trading account based on your individual risk profile and provide live Commodity Tips for better profit. Previous to contracting with anybody, however, find out regarding any minimum money requirements, commission fees you may face.
Some important question before Investing in Any Commodity:
- Whether you make the decision to invest through commodity futures contracts, commodity companies or managed funds you need to obtain as much more information, commodity tips as possible previous to you start commodity market trading.
- The market performance of any investment, you can select on that commodity’s fundamental supply & demand story.
Here are some important questions you must ask yourself previous you start investing in the commodity market:
- Which countries hold the biggest reserves of the commodity goods?
- Is that country good politically stable or is it susceptible to turmoil?
- How many of the products are actually produced on a daily basis? (Ideally, you wish to get information and data for daily basis, monthly basis, quarterly basis, and annual basis.)
- Which countries are the biggest consumers of the commodity goods and products?
- What are the most important uses of the commodity products?
- Are there any substitutes in the commodity? If so, what are they and do they pose a major risk to the manufacture value of the end mark commodity?
- Are there any recurrent factors that change the commodity?
- What is the connection between the commodity & similar commodities in the similar category?
- What are the past company production & market consumption rotation for the commodity?
Selecting a Commodity Trading Adviser
If you are buying & selling commodities through a well managed account, you want to choose a commodity trading advisor (CTA) from any advisory firm such as TRIFID RESEARCH. Act as a security expert who is licensed by the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA) to offer advice and commodity tips, MCX Tips, NCDEX tips on commodities and to believe compensation for commodity market investment and the management services.
Here are some important points to ask the qualified CTA advisers
- How many years of commodity market experience and updates does he have?
- What is his long and short term performance record base?
- What is his commodity trading strategy and plan and does it rectangle with your investment aims?
- Does he have any grievance filed against him?
- How many trading accounts is he at present managing? If the number of accounts seems high, your account could not be a lofty priority for him.
- Does he have an illegal record? If so, find out the information of any arrests. This information is also obtainable through the NFA.
Before you choose a CTA, perform an exact background check. A CTA is must required to register with the NFA to transact with the clients. You can find out many CTA by searching and visiting the NFA Web site.
The major benefit of the well managed trading account is that you take a trained professional and expert managing your commodity market investments. The main drawback is you cannot blame anybody but own self, if you can bear any losses.
Similar Commodities with Commodity Exchanges
In the 20th century saw an expansion of commodity exchanges the entire world, with based on a lot of money centers of Chicago and New York. In the 1st decade of the 21st century, the business industry experienced a major collimation period — partially driven by an E-based commodity trading platforms — that significantly reduced the lots of players in the commodity market space and increased the goods or product offerings of the remaining market exchanges. Here are a few of the important commodity market exchanges in today’s new environment.
Chicago Mercantile Exchange (CME): Crude oil, ethanol, natural gas; gold, copper, silver, platinum, palladium; soybeans, corn, wheat, lean hogs, live cattle.
Intercontinental Exchange (ICE): Gas oil, crude oil, natural gas; sugar, cocoa, cotton, coffee.
Shanghai Futures Exchange (SHFE): Fuel oil; gold, aluminum, copper, zinc; rubber.