Commodity trading is where various commodities and their derivatives products are bought and sold. A commodity is any raw material or primary agricultural product that can be bought or sold, whether wheat, gold, or crude oil, among many others.
When you engage in commodity trading, such commodities can diversify your asset portfolio. If you want to explore commodity trading, take the first step, and brush up on your basics. Get acquainted with the commodity market and how things work here.
Commodity returns have a low correlation to returns from other assets. As an individual asset class, commodities can partially diversify your investment portfolio.
Commodities are considered a good hedge against inflation as their prices tend to rise during periods of high inflation. This helps maintain the purchasing power parity.
Hedge against event risk
Supply disruptions during a natural disaster, an economic crisis, or war could push up the prices of commodities. However, the trading of commodities could help you guard against loss by leveraging strategically on price swings.
During a trade, the buyer and seller remain anonymous, thus enabling a transparent price discovery without any scope for manipulation.
Trading Forex CFDs, derivatives and other financial instruments involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in the financial markets including foreign exchange market trading, only genuine "risk" funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the financial markets including foreign exchange market.
Past performance is not indicative of future results.
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.
One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. Please check our full disclaimer.