The term Commodities in the online markets refers to various natural raw materials used to produce finished goods, usually agricultural products, but can be extended to include precious metals, fossil fuels, or livestock as well.
This article focuses on Agricultural products, such as Corn, Wheat, Soybean, Cocoa, Cotton, Coffee, and Sugar.
In many ways, trading commodities is one of the most ancient forms of trading, as these goods were exchanged between them long before the invention of currencies. Many consider commodities trading to be the birth of modern investing.
For example, the New York Stock exchange was originally founded by trading tobacco, which is why it has golden tobacco leaves decorating its ceiling.
As with most tradable assets, commodities are susceptible to supply and demand trends but are also affected by unpredictable situations such as unusual weather patterns, epidemics, and disasters both natural and human-made.
Trading commodities is best suited for traders who:
Prefer opening short-term positions.
Want to hedge their portfolio.
Can tolerate short-term loss for long-term gains.