Commodity trading is a great way to supplement your income

Commodity trading functions on similar principles as stocks and bonds. But futures-trading is all together a different ball game. Its future price movements are difficult to predict. As a trader it is your decision to determine the futures prices of these commodities by taking into consideration various parameters which might affect its demand. So how do you start trading in commodities? Well, you first need to have a commodities trading account. Online trading is the best way to execute your trades. You begin by finding the right futures brokerage entities. As a commodity investor you can utilize the services of a futures broker. 1. Online method - Online futures trading is a popular choice and least expensive. It has several advantages such as; the freedom to call your trades, bypassing a commodity agent etc. 2. Broker - A transaction in the commodity futures market is typically made on the trading floor of the exchange. This is typically done between two brokers of a recognized commodities exchange. As a commodities buyer or seller you can ask your respective broker to make a deal. They will then transact an order for a purchase or a sale. Commodity trader has several obligations to fulfill once the futures contracts are created. The buyer typically takes the delivery of the transacted commodity and pays the required amount to the seller. The seller on his part delivers the contracted goods and receives the money. Sometimes a buyer and seller eliminate their obligation by offsetting their trade before the end of the contract date. This is what most speculators do in the commodity markets. Investing in gold has several advantages. Below mentioned are some of them. 1. Traditionally, gold is considered as a wealth preserver. It builds a corpus which can be used against economic volatility or crisis. 2. It is a great option to hedge against the vagaries of increasing inflation, political crisis, currency fluctuations and falling stock markets. So how do you invest in gold? Mentioned below are the three popular ways. 1. Invest in gold through funds. 2. Exchange Traded Commodities (ETCs). 3. Bullion and coins. ETCs are popular because they provide a direct route. Bullion is a safe and reliable method. Investment in gold stocks or buying shares of mining companies is least preferred. Although copper prices have gained momentum in the recent times it has not been given its due respect. The other precious metals still rule the roost. This metal is one of the most sought after metals by industrial organizations. It is used in every manufacturing industry; automobile, telecommunications, heavy engineering, power, and other areas. ETF (Exchange Traded Fund) forms a popular choice for people who like to trade in this red/brown precious metal. If you are looking out for stable returns then investing in copper is a great idea. Copper ETFs have consistently outperformed many investment products. Although it does not give huge amounts of profits, it provides steady returns.