Commodities trading: is it for me?
Commodities trading is a term that refers to the stock market. This branch of the market is a fairly stable side, since there will always be the need for these commodities. This makes it ideal for investors that are just starting out. There’s four types of commodities: energy, metals, livestock and meat, and agricultural. If you think about it, commodities trading is essentially how stock markets came to be; it’s a very old tradition. We used to walk up to a farmer, ask to trade their rice with our meat and come to a good deal. These days, the internet has made commodities trading way easier! Are you still confused as to what this type of trading is? Don’t worry, we’ll explain more in this article.
Taking a risk with commodities trading
With any kind of trading on the stock market, there will be risks. When we’re talking about commodities trading, some are riskier than others. Take precious metals, for example. Gold has proven to be a good commodity to invest in, time and time again. However, some other commodities are a lot riskier than others. Commodities trading means you don’t have control over the weather, natural disasters, epidemics and man-made disasters. You can trade in a commodity like grains (very profitable over the summer!), but if the weather is particularly bad that year, you will lose a lot of money. A good rule of thumb is to never have more than 10 percent of a stock portfolio be commodities.