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Speculating on the prices of commodities that are used in our daily life is known as commodity trading.
Traders tend to make profits from the ups and downs of the prices of various commodities.
Several methods are used for investing in commodities.Working of Commodity TradingThe Commodity Exchange market is an over-the-counter market that manages all the operations electronically.
For example, in the USA it is the New York Mercantile Exchange (NYMEX), in India it is the Multi Commodity Exchange (MCX), in Europe it is the London Metal Exchange (LME), and many more.These exchanges work in determining the trading prices of commodities based on various factors.
Some of the factors are demand & supply, productions, economic growth, and many more.Types of CommoditiesThe major classification of commodities has been done into four categories that are discussed below.
The categories are:AgriculturalThe primary category of commodity trading is agricultural produce.