Commodities are raw materials that are extracted from the earth, such as oil, coffee and wheat. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts, where investors tend to buy and sell based on speculation. Commodities markets have had tremendous impacts on both nations and people historically. Ancient civilizations traded a wide array of commodities, including livestock, seashells and spices, although the quality of the product, date of delivery and transportation methods were often unreliable.
How do you trade Commodities?
Commodities are traded in Lots where each minimum price fluctuation is measured in Ticks. Commodities are traded in the Futures market. The only commodity traded at Windsor Brokers Ltd. is Coffee whereby each standardized lot is equal to 37,500 Pounds with the minimum price fluctuation equating to 0.05 Ticks.
Trading Commodities in the Futures market
The Futures market is a worldwide market for all types of commodities including manufactured goods, agricultural products and financial instruments. The primary function of the futures markets is to provide a liquid centralized market to set prices. A futures contract is a contract to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.