What Are Commodity Futures?
What is a Commodity.
A commodity is a collection of property or items which are essential in regular life, including food, energy, or metals. A commodity is alternate and exchangeable through nature. It may be categorized as each sort of movable good that may be bought and sold, besides for actionable claims and money.
In general, commodities are labelled into 4 types:
1. Metals – Silver, Gold, Platinum, and Copper
2. Energy – Crude oil, Natural gas, Gasoline, and Heating oil
3. Agriculture – Corn, Beans, Rice, Wheat, etc.
4. Livestock and Meat – Eggs, Pork, Cattle, etc.
How to invest in commodities.
The great way to capitalized into commodities is thru a futures contract. It is an settlement to buy or sell a particular quantity of a commodity at a fixed rate at a later time. Futures are available in each commodity category. Traders use those contracts as prevention towards the risks related to the rate swing of a futures’ indirect exchange of products or raw material. Trading in commodities includes an excessive amount of risk for amateur investors.
What are the benefits of futures.
Advantages of futures:
· Futures are leveraged investments
· Future markets are very liquid
· Futures deliver big earnings if traded carefully
· Affordable minimum-deposit accounts and managed substantial contracts
· Long or short futures may be set as target easily
More than a hundred commodities are traded withinside the commodity futures market. Out of those, 50+ commodities are actively traded. These consist of energy products, metals, agricultural commodities, etc.