Commodities trading is the buying and selling of these raw materials. Sometimes it involves the physical trading of goods. But more often it happens through futures contracts, where you agree to buy or sell a commodity for a certain price at a specified date.
Done right, commodity trading can generate strong returns and add diversification to your portfolio. But investing in commodities requires more specialized knowledge and may carry more risk than more well-known investments.
Trading commodities is one of the oldest forms of investment types, dating back hundreds of years. Even today they continue to offer a high-profit potential because of steady global demand. While commodities are not entirely immune to market fluctuations, they can still be a great opportunity for those looking to diversify.
Have you ever invested in a commodity type? Share your experience in the comments below.
