What is Commodity Market
Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.
Making Money in Commodity:
It is not easy to make money in commodity as we think. The main reason behind this, there is no right time of when to enter or exit market. There are many ways to invest in commodities, including the futures market, buying the actual commodities (gold and silver are examples of easy-to-store commodities), Commodity ETFs (exchange traded funds), and stocks whose business model involve commodities.
How to Invest in Commodities
As new in commodity market everyone wants to know that how they will invest in commodity market. Here we will show you how to invest in commodity market. You can trade easily in commodity market by following these simple steps:-
Talk to your Commodity Broker:-
- You will need to communicate that your net worth meets a certain threshold.
- You must also have a high patience for risk.
Decide Area to invest in commodities futures or options
- A futures contract is an agreement to buy a commodity at a set price and at a set date. Most investors close out their position before the buy date rather than take the commodity.
- Options allow you to buy and sell the commodity itself. Unlike futures, you are not locked into buying or selling by a specific date.
Buy commodities futures
- Place the minimum required deposit with your broker. In most cases, a relatively small amount of money can control a large quantity of commodities.
- If the value of your futures contract decreases, you will be required to place more money in your account to cover the loss or else lose your position. This is known as a margin call.
- Commodities can increase or decrease in value on a dime. Margin calls are not uncommon.
Purchase commodities options
- You can buy “mini” option contracts that are a fraction of the full contracts bought and sold by institutional investors.
- Options spreads allow you to offset the cost of your investment by selling options to other investors while you purchase options for a later date.
According to me this is best to hire an advisory firm for this. But before hiring an advisory firm you must sure that you have hire a right firm who will provide you accurate Commodity Tips. Any advisory firm makes lots of research in providing Commodity Tips to you. Once you hire an advisory firm it will be there responsibilities to make money by your investment.