Trading Commodities & Categories

What is a Commodity

A commodity is a raw material used to produce a final product. A commodity may be a metal, an agricultural commodity or an energy commodity. Commodities usually meet three important criteria:

1. Tradability

2. Deliverability

3. Liquidity 

3 Categories of Commodity Assets

All commodities are divided into 3 major categories: 

1. Precious, Rare and Industrial Metals

1.1 Precious Metals

Gold, Silver, Platinum, Palladium,

1.2 Industrial Metals

Copper, Steel, Aluminium, Cobalt, Nickel

1.3 Rare metals

Rhodium, Titanium, Indium, Germanium, Cadmium, Magnesium, Chromium, Beryllium, Niobium, Manganese, Silicon, Selenium, Lithium, Vanadium, Wolframite, Tantalum, Gallium, Tellurium.

2. Agricultural and LiveStock Commodities

2.1 Agricultural Commodities

Corn, Oats, Rice, Soybeans,  Soybean Oil, Wheat, Milk, Cocoa, Coffee, Cotton, Sugar, Orange Juice

2.2 Livestock Commodities

Lean Hogs, Frozen Pork, Live Cattle

3. Energy Commodities

Brent Crude Oil, WTI Crude Oil, Natural Gas, Heating Oil, Ethanol, Propane, Purified Terephthalic Acid

 

Major Commodity Exchanges

Commodities exchanges are financial markets offering financial products such as options and futures contracts and using as their underlying asset a commodity asset. Here are the world’s major commodities exchanges and links to their home page.

Commodity Exchange

Visit 

Physical

Location

Chicago Mercantile Exchange (CME)

Web-Site

Chicago, US

New York Mercantile Exchange (NYMEX)

Web-Site

New York City, US

London Metal Exchange (LME)

Web-Site

London, UK

Intercontinental Exchange (ICE)

Web-Site

Atlanta, US

Tokyo Commodity Exchange (TOCOM)

Web-Site

Tokyo, Japan

Multi Commodity Exchange (MCX)

Web-Site

Mumbai, India

Australian Securities Exchange (ASX)

Web-Site

Sydney, Australia

Commodities trading

Commodities can be traded using several different ways:

1. Spot trading

Spot transactions involve direct commodity delivery.

2. Forward Contracts

A forward contract is a predetermined agreement between two parties in order to exchange a given quantity of a commodity to a pre-fixed future date and for a price defined today.

3. Derivatives Contracts (Futures & Options)

Derivatives are financial products like futures, classic options and binary options that behave like the previous Forward Contracts. The difference is that a future or an option can be bought or sold at any time and you buy the right and not the obligation to deliver a commodity asset in the future. Futures and Options are highly used for hedging against market risk but also for market speculation.

 

More on Binary Value: » Forex Market | » Trading Stocks

Compare Brokers Trading Commodities: » Oil Traders |  » Gold Traders | » Trading Indices

 

• Trading Commodities

BinaryValue (2013)

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