Live Commodity Tips: Commodity Trading refers to the buying and selling of commodities like metals, spices, food grains, livestock etc. This trade takes place on a exchange such as the Multi Commodity Exchange or MCX. The functioning of the MCX market is similar to the functioning of a stock exchange or any other market place.
However, prices of commodities fluctuate more easily and quickly with changes to demand and supply as compared to any other trade forms. This high volatility influences the nature of trading on a commodity market to a great extent.
On one hand, high volatility results in quick movements of prices and higher risk on investment. On the other hand, the same high volatility of prices allows traders to make quick decisions to move in or out of the market that can result in quick gains albeit at a higher risk.
Therefore, it is very important for traders to gain basic knowledge of commodity trading before trying their hand in the market.