Commodities

Written by Trader Maker

Commodities are things that are grown naturally or found in the ground. These range from coffee, orange juice, sugar and pork bellies, to oil, gas and GOLD.

There can be no one out there who has not heard that gold is at its record levels. This is probably outside of oil the most talked about commodity. As companies hold their reserves in gold and it is seen as a 'safe haven' in uncertain economic times gold is the commodity of choice to currently trade.

 

Commodities in the main are traded by industry and large institutions. For instance if British Airways wants to secure the price they will pay for fuel this year they can go into the market and buy oil and fix it in at the current market rate, this is call 'hedging'.

All this means to you, the trader, is that because large players are in the market if you have a trend, follow it, and if you are on the correct side of a trade it will move harder and faster as there is more momentum behind it. This makes commodities a very interesting market to trade.


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