Commodity trading guide india
Unlike brand name products, commodities are goods that have a universal price around the world. Gold, for example, has the same price per ounce in Brazil and Bombay, whereas the price of a toaster oven or even a T-shirt varies depending on the brand and the place in which it is sold. A commodity can be refined from a raw element, as oil is refined from petroleum. A commodity can also be mined directly from the Earth, such as a metal, or it can also be an agricultural product, like eggs.
In some cases, a commodity can be an abstract financial tool that is universal, such as the fluctuations in interest rates. Because commodities can take so many different physical forms, the financial market classifies them as a group based on their universal value and how they are traded. However, commodities trading is not limited to simple exchanges. Commodity trading is a broad category where the players range from individual ranchers hedging feed prices right on through to large multi-national trading houses: How big are the biggest trading houses?
Put it this way: That's equal to the combined oil exports of Saudi Arabia and Venezuela. Glencore in controlled 55 percent of the world's commodity trading guide india zinc market, and 36 percent of that for copper.
Additionally, the expansion of the category of commodities to include more abstract objects like interest rates is commodity trading guide india relatively recent addition. Historically, commodities were based on ordinary, tangible goods that could be commodity trading guide india visualized by the layperson. The expansion into this new territory reflects the growth and ambition of the increasingly globally integrated financial markets.
Why Invest in Commodities? Because they commodity trading guide india not based on the profits or business strategies of any one company or nation, commodities can make commodity trading guide india, steady investments. Gold, for example, is a commodity that will not disappear any time soon, whereas stock in a large car company may or may not exist in another hundred years.
Additionally, varied asset allocation allows an individual to spread out their financial portfolio. By differentiating the types of investments, an investor stands to greatly reduce his or her risk of suffering a major financial wipe-out, as every sector of the financial market would have to completely collapse to destroy their investment portfolio, a scenario that would undoubtedly be the end of society as it is currently known.
In the financial collapse, for example, several major institutions went bankrupt due to faulty business practices. Stockholders in these commodity trading guide india lost money. However, the commodities market is largely immune to collapses of this type. Commodities can therefore provide a reliable source of income for an investor who has spent time carefully considering what commodity he is buying, when he is buying it, and at what price he plans to sell it.
For those investors who are unfamiliar with commodities, or who are buying into the market in order to differentiate their portfolio, there are several different ways to invest in the commodities market. There are commodities indexes, commodities exchanges, and numerous types of contracts and buying options which allow a savvy financial investor to make considerable amounts of money based on the expected performance of a given commodity.
As with any financial venture, extensive research is a definite pre-requisite to investment. Despite their inherent durability, there are different risks involved with investing in commodities, especially when one considers the different aspects of the initial investment, the type of loan or margin at which the commodity is purchased, and in some cases, the nature of the commodity itself.
Although market forces do not impact commodities in the same way they impact stocks, they do play a role. However, this is not an automatic loss for the investor. Consider the following scenario.
Of course, this scenario requires unusual acuity and luck commodity trading guide india the part of the investor. Consider the reverse scenario, which is just as likely. This commodity trading guide india investor has invested commodity trading guide india high egg supply futures in Europe.
When the blight occurs, the supply drops astronomically. Should the investor have purchased futures, as opposed to options on this commodity, he will be required to sell his futures at a pre-appointed date for an agreed value. When he attempts to sell his high European egg supply futures in a climate of enormous demand, he will lose a tremendous amount of money because the market simply does not match the anticipated futures. In each case, there is really no way for the investor to know whether eggs will experience high supply or high demand in Europe when he buys the initial future or option contract.
In this way, commodities can be a risky investment, because they are prone to natural disasters and other events that no ordinary human can predict. However, there are always ways to mitigate risk. In each version of this scenario, the investor chose futures which required the market to behave in unusual ways.
It should be noted that investors can choose to invest in commodities with a high volatility ranking to increase their chance of windfalls, but that this strategy can also backfire and result in tremendous losses. Many commodities have low volatility rankings, and will therefore perform in a fairly predictable way. Additionally, there are so many ways to invest in commodities—including a yield curve approach, where an investor buys the same type of commodity with different future maturity dates—that an experienced investor will probably be able to balance any high volatility commodities with steadier performers.
Depending on what financial institution the future or option is purchased from, an investor may be subject to variable margin fees. While each of these topics will be explored in-depth in subsequent sections of this guide, an investor should know this: In other words, commodities can be a wonderful investment, commodity trading guide india a certain degree of risk is always part of every transaction. Nothing, unfortunately, is ever fully guaranteed. These cycles are brought about not only by the market forces of commodity trading guide india and demand, commodity trading guide india also certain policy decisions by major governments, especially when it comes commodity trading guide india tangible specie standards in relation to national currency fluctuations and valuations.
Because so many commodity trading guide india base the value of their currency against the value of the currency of other nations, as opposed to a tangible specie standard, both gold and silver do not play the same kind of pivotal role in international economics that they did forty years ago.
Despite this, the fluctuating value of some major commodities, like gold and silver, can influence how other investors perceive the overall commodities market. If gold has an exceptionally high price per ounce in a given year, the commodities market can be said to be flourishing, whereas if the price drops for several years in a row, financial analysts can sometimes use this to point to the emergence of a bear market. The difficulty with describing the performance of so many different commodities as experiencing an overall growth or retraction is that there are always exceptions to the rule.
The best predictor of a predominantly bull or bear commodity cycle tends to be the size of the population relative to the amount of production. This sudden interest in metals correspondingly drove up the demand for gold and silver, as investors interpreted the demand for zinc and copper as the beginning of a bull commodities market.
Additionally, as the manufacturing operations continued to expand, the increased economic prosperity brought about a new group of consumers, who began to buy other commodities like eggs in much greater numbers. The increased investment activity, combined with actual tangible demand by new populations, subsequently resulted in an actual bull commodities market.
Therefore, the quantity of certain commodities is frequently a predictor, or at least an indicator, of these bull and bear cycles. Oil, for example, can frequently swing the commodities market one way or the other based on how much commodity trading guide india it is produced, simply because so many other industries depend on the energy that oil inadvertently produces.
As an example, a steep drop in oil production which results in higher gasoline prices can affect the transportation of agricultural commodities. This produces artificial commodity trading guide india in supply and demand, and can impact the overall prices of other commodities. These secondary effects are therefore a somewhat predictable part of the overall market. However, it should be noted that since many commodities indexes make their money based on expectations of performance, an extreme shift in the production of the amount of oil or another high profile commodity can correspondingly cause the futures market to either perform up to or below expectations.
A completely unexpected rigorous drop in the production of oil may trigger a bullish market, whereas oversupply tends to saturate the marketplace, creating a bear market. However, although certain high profile commodities can influence these cycles, the commodity trading guide india market is varied enough so that only truly major global events can significantly impact demand.
Even in the case of a major global event, such as a tsunami, one sector of the commodities market may fall, while another may rise. Some economists have argued that the commodity trading guide india itself generates these cycles, based not only on major global events and supply and demand, but the very nature of investing itself.
Certain economic theories, such as the theory of Kondratieff cycles, have attempted to describe the complex nature of the global economy as experiencing longer-form cycles that can be interpreted as a series of booms and busts, triggered by certain behaviors.
Kondratieff Waves The Kondratieff Cycles are a 45 to 60 year economic wave encapsulating the tendency of a capitalist economy to experience stagnation, growth, overinvestment, boom commodity trading guide india finally bust.
Proposed by a Russian economist inthe cycles were linked primarily to the gold standard commodity trading guide india deflation. Because of this basis, the cycles do not have many supporters in the current economic age due to the prevalence of shorter business cycles commodity trading guide india the general global lack of a baseline currency standard.
The wave is supposedly easier to visualize internationally than in any one national economy, due to the globally integrated nature of trading and commodities. The cycle can be broken down into three major stages: The oversupply in the economy is usually infrastructural, such as railroads, or even real estate. After the market fails to grow, the lowering of interest rates fuels speculation in a new area or market, such as the stock market. After too many people have invested in this new potential region of commodity trading guide india, this market experiences a spectacular crash and subsequent financial crisis, commodity trading guide india to stagnation yet again.
According to this theory, the 20th century witnessed one complete Kondratieff wave from to The second Kondratieff wave would have therefore begun in the worldwide recession ofcommodity trading guide india peaking effects supposedly visible somewhere between and However, the global financial crisis of seems to go against this theory.
If the Kondratieff cycles are accurate predictors of boom and bust cycles, then a major flurry of speculative investment will occur within a few years of the crash.
As ofthe world is still largely experiencing stagnation, with some countries, including the U. Commodities are a vital part of the Kondratieff cycle in that they track global deflationary trends.
When significant commodities experience rapid deflation, this usually signals an imminent worldwide financial slow down. However, this theory is complicated by the rapid generative nature of technology and the simultaneous existence of so many high powered economies.
When Kondratieff initially crafted the theory, Asia was not nearly as economically significant commodity trading guide india the commodity trading guide india economy as it is now. Additionally, technology has dramatically increased the speed at which it completes a cycle. Commodity trading guide india technology in the 20th century took longer to reach a saturation point, technology in the 21st century can reach saturation points far more rapidly, but then generate a second wave of commodity trading guide india which quickly supplants the first.
This rapid generative ability results in a de facto sector of innovation that so far shows little sign of slowing down. These complicating factors do not necessarily negate the existence of Kondratiev cycles, but may call for a slight modification to reflect different realities of an age in which advances in technology occur commodity trading guide india a far more rapid rate. Regardless of whether the Kondratiev cycle should be shortened or lengthened to reflect new technological trends, the cycle can be useful in helping economists and government leaders take charge in situations where all evidence points to potential deflation and subsequent collapse.
While some variance is necessary in any economy, extremes can be avoided with intervention and occasionally the deployment of some strategic investments. Paired with the general outline of stagnation, investment and the financial commodity trading guide india of the Kondratiev cycle, the study of commodity values in particular can help economists get a clearer view of what is going on in the global economy.
There are several different platforms which offer different levels of support, depending on the experience commodity trading guide india the individual user. Each platform allows users to trade in options and futures. Every software platform reviewed here allows traders the option of practice runs with actual market input to get a better feel for this process. IB Direct Razor Trader Futures is an excellent site for those investors who do not have a substantial amount of experience with commodities trading.
In addition to offering a free trading demo, the site also allows members to chat with an online rep, and has an archived learning center which can quickly bring novices up to speed.
The online software also provides instant quotes and market research, and allows users to trade futures and options. This platform is best for beginners primarily because it is so heavily focused on educating the user.
Once you select the Trader you wish to add to your portfolio, you will have to set up your commodity trading guide india for each added Trader as to the number of positions you wish the particular Trader to open in your account and the amount traded per position. You can of course change these settings anytime from your account.
Please also make sure that the specified amount is offered by your Broker for all supported Binary Options Types. Example: Lets assume you have selected two Traders in your portfolio, Trader X and Trader Z.
If Amount is set to 100 for Trader X and 200 for Trader Z, this means that you the amount invested for each position Trader X will open in commodity trading guide india account (irrespective of the amount the Trader risks in his own commodity trading guide india is 100 while the amount invested for each position Trader Z opens will be 200, again, irrespective of the amount traded by the Trader himself.
This is a very broad area but we will try to explain this on an example, while other examples can be found in parts of this article discussing bonuses, withdrawal processing problem, etc. Recently a customer sent us an e-mail about not being able to withdraw profits from CTOption. This rule is not mentioned under section on withdrawals. We see this as vey unethical and we have asked the responsible person about this, but never got an answer.
You will be able to read more about this on our blacklist soon.