PostHeaderIcon Introduction to the Commodity Market

Trading involves many aspects. Trading in the commodity market is just one of the many other markets out there where traders actively try to practice their wares. The commodity market is basically a market where raw and primary products are being traded and exchanged.

The commodity market is said to be one of the few areas of investment where traders with limited capital may have the opportunity to gain incredible profits in a relatively short period of time. Many people have become rich trading in commodity markets. But it may also be a case of easier said than done.

History of commodity trading

The roots of modern commodity markets today can be traced back to the trading of agricultural products in the past. Farm produce such as wheat, corn, and cattle were already considered as standard trading commodities in 19th Century United States.

But the history of commodity trading can be traced way earlier during the time when cattle and other farm produce were being used as commodity money. Early Sumerians were using sheep and goats to trade for other goods while other cultures began using shell money. As this progressed, people sought a way to standardize this practice and trading commodities smoother and more predictable.

The earliest evidence of standardizing the commodity trading practice can be found in ancient Sumer where small baked clay tokens in the form of sheep and goats were discovered. This has been considered as a crude form of using commodity money in trading.

These tokens were found inside clay vessels with a number written on the outside. This was believed to be a form of commodity money which carries with it a promise of delivering a certain product or goods at a certain time and date. This early practice seem to be similar to the use of today’s futures contract.

Advantages of trading in the commodity market

Trading in the commodity markets may have its own inherent advantages when compared to the other types of investment options. Trading in the commodity market, for one, may be the option for investors with limited capital. It takes quite less investing in the commodity futures than for one to start off trading in stocks.

Another advantage of trading in the commodity market is that there are relatively lower commissions that investors have to pay. When compared to commissions on stock investing, the ones that investors pay for futures trading deal profit are way lower. What’s more, commodity trading may be relatively easier and simpler to evaluate than stock trading since there are only about forty futures markets to trade in as compared to thousands to choose from in stocks ad mutual funds.


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