What is commodity/currency trading?
Commodities’ trading involves trading in every kind of movable property other than actionable claims, money and securities. These include gold, silver and other metals and select agricultural commodities. Currency trading refers to the exchange of currencies, where the difference in the currency value is used to make profits. It is a huge market, with traded value being higher than equities.
Benefits of Commodities/Currency Trading:
Diversification of portfolio
It offers a means for diversification of portfolio for the investors, by offering exposure to an asset class different from stock markets instruments such as equities, mutual funds and bonds.
Liquidity
Trading in commodities futures/ currencies futures involves use of leverage through margin which is maintained with the broker. Hence, large transactions can be executed with lesser amount of cash in hand.
Liquidity
Futures contracts in commonly traded commodities such as gold, silver, crude oil and grains offer a high level of liquidity in the market. Similarly, the currency markets offer high levels of liquidity as a large amount of trades are conducted per day.