|
|
Advice - Commodities
|
What are Commodities?
Commodities are bulk goods such as grains, metals, livestock,
oil, cotton, coffee, sugar and cocoa. They can be sold either on
the spot market for immediate delivery or on the commodities exchanges
for later delivery. Trade on the exchanges is in the form of futures
contracts. Commodities are often viewed as a hedge against inflation
because their price rises with the consumer price index.
|
|
Commodities are just as
simple to buy as stocks and shares
|
How can Commodities form a part of an investment
strategy?
Commodities can be bought and sold, just like property, bonds or
stocks and shares. Commodities are not the first thing that many
people would think of when aiming to increase their returns but
their unusual nature actually makes them extremely profitable. Commodities
are almost as simple to buy and sell as shares, once you know what
to do. Their outlook can be discussed on the Bulletin
Boards.
|
|
Which Commodities are most popular?
As ever, the commodities you choose to trade in will depend
on how you buy them and your personal investment style.
What makes Commodities worth considering?
Commodities are finite in number. Supply is fixed, which means
that when demand goes up so does the price that people are willing
to pay. Commodities are tangible and demand is ever-present. People
will always need to eat and house themselves, and commodities are
required to build goods and vehicles. Commodities are traditionally
a great hedge against inflation. Because they are always required
the price of the commodity rises swiftly when inflation rises. That
means that when the economy does well commodities can soar. When
the economy falters the tangible nature of commodities means their
prices remain stable.
|
|
|
Commodities are a great
hedge against inflation.
|
How can I trade in Commodities?
There are many ways to buy or sell commodities, with the most popular
being futures contracts, CFDs or
Spread Betting. Of these spread betting is the easiest for someone
who is new to trading. There are a number of spread betting companies
that let you buy or sell commodities and precious metals like gold
and sliver. TradIndex
has no commission and that lets you try "virtual" trading
before you risk any money.
|
|
Where can I find out more?
To find out more the best way is to open a SpreadBet account
and start trading with virtual money until you are confident you
can make good money.
There are excellent books on trading commodities and special metals,
like An
Introduction to the Commodities, Energy and Transport Markets
published by Reuters, or Profitable
Candlestick Trading by Wiley Press.
The best books on commodities can be found by asking in any of
the big high street bookshops like Waterstones and BlackWells. The
cheapest way to buy books on commodities is usually the online bookshops
like Amazon.co.uk.
|
|
|
