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What you must know before you start trading:

You don’t think about where an ear of corn or a bag of wheat flour was farmed or milled when you buy them. As a result, they’re both regarded commodities.

They are interchangeable raw materials that can be bought and sold in large quantities. They are frequently used as components in the production of finished goods.

Commodities are divided into two categories by investors: hard and soft. Finding hard commodities necessitates mining or drilling. Soft commodities are cultivated or grazed. Agricultural products, livestock and meat, energy products, and metals are the four basic forms of commodities.

Commodity trading is essentially the purchasing and selling of these raw materials. It usually occurs through futures contracts, in which you commit to purchase or sell a commodity at a specific price and on a specific date.

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Discovering how to set up a stock screener for trading that aligns with your strategy is key to success. With TradingView you can learn all about that and many other topics like the US Dollar Index, or DXY, a key metric for forex traders. Learn what the dollar index is and its significance. You can also investigate why the economic calendar is an essential risk management tool for traders. Learn more on TradingView.

Something you should know when trading commodities:

  • You have inflation protection;
  • Investments can be diversified due to the number of commodities;
  • They are part of a transparent market;
  • Can be great for leveraging;
  • Can be hedged against geopolitical events;
  • Low minimal trading margin compared to stocks;
  • Their prices rise even when companies do not.

More things that you should know:

  • Leverage doesn’t always have to be good;
  • Highly volatile market;
  • Almost no connection to stock prices;
  • Loads of rules and regulations;
  • … but it can be easier with a specialist on your side.

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