Commodity Trading

Commodities are tangible assets that are relatively homogenous in nature. This attribute allows these assets to be standardized as contracts for purchase and sale in futures markets.

Increasingly in recent years, many investors have become involved in the ownership of or participation in commodities and natural resources. Commodities can be bought and sold easily in large quantities and held by investors directly in the form of physical assets or indirectly through the functioning of the futures markets.

There are two ways that an investor can access the markets: directly and indirectly. Investors can gain direct exposure to commodities by purchasing them in cash markets (eg, buying gold coins) or in the futures markets where the delivery of the asset is deferred.