Commodities can be interpreted as something of a physical substance. Commodities divided in two, the first is a common commodity that is the result of mining such as gold, silver, oil and other commodities. This commodity is a natural resource which is limited and requires a high cost to obtain it. Second, is a commodity that is produced from agricultural production such as sugar, rice, cocoa, coffee and others.
Commodities easier to understand because a lot depends on the conditions of supply and demand fundamentals. Volatility of commodity prices is smaller than stocks and bonds, thus providing an efficient portfolio diversification choice for market participants. What makes commodities more attractive and more risky than stocks in the transaction is the amount of leverage or leverage. In fact, the risk of trading in commodity markets will not be more than the risk that you set yourself.
The velocity of money in commodity markets is quite high because of commodity transactions is one of the most popular instruments in the eyes of most global investment manager.
Commodity futures contract that is the subject of the trade, is a commodity agriculture, forestry, mining, upstream industry, financial products and services.
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