Commodities are real world goods that hold an historic and economic importance. This category of assets include gold, silver, oil, corn and coffee etc.The prices of commodities will fluctuate on a daily basis depending on economic , political and climatic factors.
Commodity trading was meant for highly professional traders and futures markets.Recently, the introduction of binary options trading has opened doors for investors with smaller budgets. You can easily invest in commodities with a very small amount and unlike Forex trading you do not have to buy a whole contract to earn a profit.
With binary options trading, if you feel that the price of a particular commodity like Gold will go up, you place the Call position and earn a profit if your prediction is right. But if you feel that the price of the same commodity will go down then you place a Put position. With binary options, commodities can also be traded with when the market is highly volatile because you are just going to predict the direction of the price.
Commodity types and classes
The commodity market is divided into 4 sub asset classes which are as follows:-
- Metal Commodities: iron, copper, steel, aluminium, palladium.
- Precious Metals: Gold, Silver, platinum
- Agricultural Commodities: Soybeans, corn, coffee, wheat, sugar
- Energy Products: Oil, gas, coal
The most frequently traded commodities are energy commodities such as oil and precious metals such as gold and silver. Energy products such as crude oil, natural gas etc are affected due to war conditions and natural calamities. Precious metals such as Gold and Silver are a good option when conditions are economically stable.Basically, when stock markets become bearish (volatile); commodities become a safe option to invest your money on.