Binary Options School

What is Commodities?

The simplest definition of a commodity is the buying/selling of a raw material. Until recently the international markets were dominated by stock market trading rather than commodities trading. This has changed in the past few years, as the number of traders on the commodities market has increased dramatically.

Commodities trading has been going on for many years, having its roots back many centuries. It has evolved greatly to become popular among traders of all types. Commodities trading or commodities futures trading is a major international trading arena in which speculators, producers and merchants trade futures contracts to earn profits.

The commodities market differs from the forex and stock market, as commodities are based on an underlying instrument. A commodities value is calculated by numerous factors including demand, supply, harvests, etc. With many different factors that determine a commodities price, this makes it difficult to determine the actual price of a commodity.

The price and trading of commodities is based on fundamental analysis and technical analysis. Both are useful, but when it comes to commodities, technical analysis helps measure the value of commodities as a whole. This type of analysis is based on open interest, market price and volume.

There are several categories of commodities that include energy futures, financial futures, livestock, metals futures, grains and agricultural futures. Learning each of these categories will give you a great understanding of commodities trading.

The commodities market is one of the most dynamic markets in the world. Traders can now trade commodities with their preferred binary options broker.