Insights into Commodity Trading

Commodities are actual physical goods like gold, soybeans, corn and crude oil. These can be sold and bought physically in future market and are interchangeable with other goods. Commodities are traded in the same way as financial futures but the only difference is that they have physical settlement and asset quality is taken into consideration unlike financial futures. With respect to commodities, futures are contracts that are traded at a future exchange like MCX and NCDEX in India. There is a fixed delivery month for each contract and future exchange sets a standard size for each futures contract.

You can apply technical and fundamental analysis to particular commodity after understanding the basics of commodity. This will help you to find long term as well as short term trend. Fundamental analysis will help you to predict where the prices of commodities should be trading and what they will do in the future. Commodities trade in cycles and sometimes we will have too much of a commodity with fall in prices; other times, supplies will be tight with hike in prices.

The factors that can impact the supply of commodities are weather, production strikes, crop diseases, technology and amount of acres planted. Amount that is consumed at a given price level is termed as “Demand for Commodities”. So whenever the commodity price moves lower, the demand will increase and oppositely the demand will decrease as the price of a commodity increases. There is an offering of more level playing field for traders in commodity market as compared to stock market.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Jewellery manufacturing and Realty and Infrastructure. It is a comprehensive Financial Services and Solution Provider,which aims to provide an end-to-end financial solution to its clients.