Commodity trading is actually a stirring and matured type of investment. Specifically, it is an activity that involves investing or trading in commodities. Akin to stock trading where a trader buys and sells companies shares, commodities trading involves the buying and selling of commodities. Commodities that are traded are goods of value which are consistent in quality and produced in large volumes by assorted suppliers like sugar, wheat, coffee, corn, oats etc. Trading is always involved with supply and demand, thus limited supply causes a price increase while extra supply causes a price drop off. Hence, either directly or indirectly but the entire process of commodity trading is affected by the demand and supply in the market. Commodity trading is all about purchasing and trading commodities while in stock trading trader focuses on company shares. Similar to stocks, commodities are also traded on exchanges where investors purchase or trade products so as to make profit from the instability of market prices.
Over the last few years, online commodity trading has gained immense popularity as the platform offers a trouble-free and handy trading experience to investors. Trading commodities online is also emerging as a well-accepted and popular mode of business because it allows instant trading and frees a trader to get in contact with a live broker for placing orders. One can trade almost everything through an online commodity trading account including commodity news, commodity trading charts, and technical analysis programs. Traders also get a sense of independency with online commodities trading as it allows them to make end trading decisions by themselves. The execution of online trading is also much swifter unlike a few years ago when traders had to call the broker and provide then instructions about the trade. Online commodity trading comes with scores of advantages such as convenient trading, lower commissions, liquidity etc. Trading commodities online also allows traders to place different types of orders, namely limit order, market order, day order and stop loss order.
Derivative trading is emerged as a newer concept that introduced in the market recently. Basically a derivative is a security that derives value from an underlying asset which could be an equity share, debt instrument, a currency or a commodity. Derivatives deal with an agreement to trade at a future date or at a certain price. In practical sense, derivatives are financial contracts which derive or get their value from spot price, which is termed as underlying. For instance, a rice farmer can also enter into a contract to sell his/her harvest at a impending date so as to reduce the risk of a variation in prices by that date. Such a transaction would take place by means of futures market and this market is derivates market. The prices of the derivates market would be driven by the spot market price of rice which is underlying.