Commodity trading involves the buying and selling of raw materials and primary products, including precious metals like gold and silver, and oil. Commodities can be classified as either hard or soft. Hard commodities are natural resources that are mined or extracted from the ground, such as oil, gold, copper, and rubber. Soft commodities, on the other hand, are agricultural products like wheat, corn, and soybeans.
Commodity trading is often used as a way for investors to diversify their portfolio and hedge against inflation. It can also be used for speculation on the future price movements of these materials. Traders can buy and sell futures contracts, which are agreements to buy or sell the underlying commodity at a future date at a predetermined price.
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