What is futures trading and commodities?
Commodities are basic goods that are beneficial or valuable in some way. Futures contracts are standardized contracts that represent a given amount of a specific commodity. These contracts are traded on regulated exchanges around the world.CommoditiesA commodity is something of value that is harvested, mined or otherwise produced. Examples of commodities include wheat, corn, orange juice and gold.Commodity FuturesCommodity futures are contracts by which buyers and sellers agree to exchange a commodity for a set price at a future date. The futures contract specifies the quantity of the commodity to be traded as well as the date of exchange. The price is determined by buyers and sellers at the time the contract changes hands.Futures TradingFutures trading is the practice of buying and selling futures contracts over a futures exchange. The two kinds of market participants are speculators and hedgers.SpeculatorsSpeculators trade futures contracts in hopes of making a profit in the market.
Commodities actually offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity markets may find commodities an unfathomable market