Commodity exchange market is the
market in real sense. From the beginning of social relation among the human in
history this type of trading started between the two types of persons one is
called buyers and other is called sellers. In this market people trade in
commodities and no concept of currency
prevails. One person provides his commodity to the second person and in
exchange first person receives another commodity from second person. This trade
is done on some standers. This basic concept of commodity trading market of
ancient times is still prevailing in the modern commodities trading markets.
The people have to trade their commodities with the others commodities without
the intervention of money.
To understand the basic forces
which lead the commodity market following division is made in the form of
problems and benefits of commodity market. This division of favorable and
against factors is given in the following paragraphs to understand the
commodity market easily.
Problems faced by traders in commodities market
• Cost
of carry
• Cost
of insurance
• Cost
of storage
• Perish-ability
of goods
When a trader went to trade his
goods in commodity market he has to face some problems during the process of
trading in commodity market. Few are discussed here. First of all he has to
face the cost of carrying his commodity to the market. If you have to trade
with money this type of cost does
not occur and traders don’t have to think about this problem. Moreover during
transportation there can be any kind of damage occur. To avoid suck risk trader
have to insure his commodity with some good insurance company.
In addition to that cost of
storage is inevitable in trading under the system of commodity market. The
reason is that there can be time between arrival of commodity to the market and
the departure of traded products to the buyer. Therefore during that time
commodities must be stored on safe and suitable place. This thing also
generates an expense called cost of storage. Perish-ability of goods also create
some problem especially when there prevails some idle time between the arrival
of goods to the market and departure of goods to the buyer. Sometime goods are
more perishable while others are less perishable however the risk of getting
the commodity spoil exists.
Benefits of commodity market
As mention in the introductory
paragraph commodity market is the oldest way of trading in human history. There
are number of benefits in trading the commodities rather than sale purchase
through money. In the following
paragraphs few benefits are given:
• Low
effect of economic rescission's
• Availability
of commodity on the spot
• Low
risk of loss
• Natural
way of trade
Commodity market bears some
advantages over other type of trading. In commodity market economic rescission's
can shed low effects. Reason is that the price of commodities does not
fluctuate as frequent as the prices of currency
fluctuate during economic crises. Moreover currency
rates vary with every minute event in economic field. While the effects of
these events reaches to commodity market after a certain period. This factor
makes money market little safe and
less fluctuating market. However the net effect of economic changes reaches the
commodity market and shows its effects on trade in commodity market.
Another benefit of commodity
market is that in most of the cases commodity remain available in the market
for trade. This thing not only attracts the customers but also make him
satisfied with the physical view of commodity. Customer can check the quality
and quantity of Commodity at the spot and also can assess the value of the
commodity at first hand. This thing reduces the risk of loss for both the
seller and the buyer. Hence the trader feels more comfortable while trading in
commodity market rather than the other mode of trade. These factors make the
commodity market more successful than the other types of trade markets.
Above said are the basic concepts
which lead the commodity market and cause the rise and fall of market in its
operations. Anyone who is interested in commodity market for trade must
understand these factors and forces and must keep in mind while trading in this
market. These factors can make him successful and also can case the loss in
trade for him. You can Trade with [b binary]
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