"Commodities are not only essential to life, but they are absolutely necessary for quality of life“ is what we can talk about commodity trading. For its importance, today we will have a small talk about Commodities Basics. So, What are Commodities?

1. Commodities Basics "Commodities are not only essential to life, but they are absolutely necessary for quality of life“ is what we can talk about commodity trading. For its importance, today we will have a small talk about Commodities Basics. So, What are Commodities ?

2. Commodities and futures trading evolved over many years, borne out of the necessity to standardize forward contracts on goods and to possibly manage price risk which is associated with trading or producing those goods. You know, the word commodity comes from the French; it was spelled “commodite’” which means to profit or benefit.

3. The grains transport center which was Chicago on the Great Lakes in the breadbasket of the Midwest, gave birth to the modern futures markets in many ways. For around a century, The Chicago Board of Trade ( CBOT ) has been known as an important center for futures prices and grain futures.

4. To compare with futures trading and commodity exchanges, commodity future trading with options is a little younger. Options were at first considered with caution as they were derivatives of actual futures contracts. Options trading are now a popular trading vehicle for speculators and hedgers alike in modern times.

5. About the whole commodities future trading, it is now popular all across the globe. Electronics are used in commodity trading. This make it more convenient when commodity prices are now available online, and electronic trading has replaced much of the original floor trading which existed on exchanges.

6. Where commodity broker used to take place on the floor of a commodity futures trading market with traders using hand signals and gestures while ticker tape ran you now might see commodity futures online trading.

7. Things have been changed. Much of the trading is done solely on an electronic market without any open outcry trading. Cocoa futures, sugar futures, and coffee futures are some of the markets that no longer have an open outcry session.

8. What commodities are traded today? Each futures market is made for a commodity which demonstrates the need for a market for fair price discovery. The particular importance for futures markets has changed over time.

9. This is proved that there are a number of commodity futures trading contracts which were once considered a necessity and are now obsolete including butter and potatoes. While some of others was banned from trading for price fixing on products such as onion futures.

10. The rest of futures markets once considered different have now become news headline makers such as natural gas or ethanol. “ Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.”