Overview of Commodities Market
In layman’s terms, a commodity is an economic good that holds complete or significant fungibility, meaning it can be bought, sold, and traded. These are physically or virtually bought, sold, or traded where these are known as commodities marketplaces. The price-regulating mechanism in commodities markets is managed by supply/demand, thus making the commodities susceptible to unpredictability and instability due to economic growth factors.
The commodities in the marketplace are divided into mainly two categories known as hard and soft commodities. The hard commodities category includes natural resources, like metals, oil reserves, and many more. Whereas the soft commodities category includes products such as agricultural futures. Commodities are traded on exchanges that can be specified in a single group of commodities or carry a few diverse commodities.
Further, the retail traders can also trade contracts for difference (CFDs) on commodities. CFDs follow the price change of the underlying instruments in the market, and the trader makes a profit if the commodity price rises or a loss if the price falls.
Hard vs. Soft Commodities
- The Hard commodities comprise natural resources, such as metals like gold, oil, and many others.
- They form the foundation of the economic growth of a country.
- The worldwide demand for hard resources can be scrutinized to determine the future stability of an economy of a country.
- They are more profitable.
- The supply/demand for the products is largely foreseeable.
- Soft commodities comprise products that must be cultivated and treasured for, like agricultural futures and related primary products.
- The production of goods depends on environmental conditions.
- They are more volatile.
- The price-setting mechanism on these products relies on multiple external factors.
- The economies suffer more due to events like climate change, which is one of its major disadvantages.
Banxso’s Commodities Trading Option
Considering the space and the potential of commodities trading and the fact that commodities can be a clear path to diversify an investor’s portfolio beyond conservative securities or investment options, the Banxso platform provides commodity trading options. It has added specific tools, trading systems, educational materials, and resources to ensure the utmost convenience for the traders while trading commodities.
Types of Commodities that are Tradable on Banxso
There are usually many types of commodities prevailing in the market. However, here on the Banxso platform, the tradable commodities option is categorized in three broad categories for its user, traders, or investors, and they are as follows:
- Energy Commodities: Energy commodities on this platform encompass gasoline, electricity, crude oil, natural gas, and wind power. Again, these commodities are sub-divided into two categories, i.e., one is non-renewable, or fossil fuels commodities such as oil, gas, and coal, and the other is renewables commodities such as wind power, biomass, and geothermal power, and solar power.
- Soft Commodities: Soft commodities on this platform encompasses agricultural goods such as wheat, rice, cocoa, soybeans, sugar, corn, coffee, cotton, and many others.
- Precious Metal Commodities: Precious metal commodities on this platform encompass, as the name suggests, precious alloys such as gold, silver, platinum, as well as copper that are growing in value and are reliable assets as compared to others.