What does commodity trading mean?

Commodity trading refers to the trading of gold, silver, copper, oil, soybeans and other basic agricultural products, rare metals, energy and other commodities on exchanges or commodity markets. This kind of transaction is usually carried out by professional investors and companies, who trade through commodity futures contracts to avoid the risks brought by physical delivery. Winning or losing a transaction depends on the value of a specific asset, not the stock of a specific company.

Commodity trading in the world began with the London Metal Exchange in the19th century, and then with the emergence of the new exchange in the early 20th century, this market has been rapidly expanded. Commodity trading is dangerous, and investors may still suffer losses due to market instability and price fluctuations. Therefore, market research and risk management are extremely important in this market.

The trade of commodities is driven by supply and demand. When the supply is insufficient, the price usually rises, and when the demand falls, the price usually falls. Due to globalization and technological progress, commodity trading has become one of the major commercial transactions in the world. It is very important to the global economy and commodity trading, providing investors with an opportunity to make more reasonable and wise investment decisions, and also promoting the smooth operation of the global market.