How does commodity trading take place?
1 answersQuestion asked ( August 15, 2009 , Shopping / Finance )
Can somebody explain me clearly that how does commodity trading take place in a financial instrument trading market? How does it operates?
Answers to : How does commodity trading take place...
Answer
The commodity trading takes place in a market (physical markets) where the traders buy and sell the actual commodity. The traders enter into a deal in cash, either spot or forwards contract which is why the commodity market is also called the cash market. The trading takes place by telephone and sometimes in the sales room and also by open outcry system. Each deal in the commodity market is individually negotiated for a particular commodity between the non-standardized traders. The hard commodities and agricultural commodities futures contract are exchanged in paper markets.
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