Commodity futures

FOREX COMMODITY FUTURES TRADING

Commodity futures or commodities are one of the oldest assets in trading. For hundreds of years, people have traded wheat, corn, sugar, oil, etc. The main feature of such assets is their physical existence. That is, we do not buy paper, but invest in a specific, real-life product. On the one hand, this is an important advantage, but on the other hand, it imposes a number of specific features that must be taken into account.

The first feature is susceptibility to cycles. For example, the energy sector rises in price almost every year on the eve of the heating season. The reason is not that there is more or less energy, but that there is an increased demand for it, which also disappears with the end of the heating season.

The second feature is the simplicity of rate forecasting, especially for medium-term contracts. Since the work is carried out with physical objects, they are influenced by external factors.