Why Trade Commodities
Rare and difficult to acquire, gold has always been treasured and sought after by all cultures. The Latin name for Gold is AURUM, which means morning blush or glowing dawn. It is from this word “aurum” the chemical symbol AU was derived. Gold possesses a number of desirable physical characteristics that have all contributed to making it one of the most valuable commodities in the world.
There are many benefits and advantages to trading Commodities. Here are just a few reasons why so many people are choosing this market as a profitable business opportunity:
Liquidity
The Commodities Market is extremely liquid. This means that with a click of a mouse you can instantaneously buy and sell. Whether it's morning or evening, somewhere in the world there are always buyers and sellers actively trading. You are never 'stuck' in a trade. You can even set the online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop order).
Leverage
Many traders see the low margin requirements and tremendous leverage afforded by futures to be a major advantage. Consider this illustration: The purchase of just a single CBOT gold futures contract presently covers roughly $60,000 worth of gold but requires an exchange minimum initial margin deposit of just over $2,700 (based on recent market prices). Equivalent minimum margin (50% Reg T) for the ETF position would require a deposit of approximately $30,000.
Opportunities in both rising and falling markets
If you think the price of a commodity market is about to move higher, you can buy ("go long") a futures contract. However, if you believe a commodity price is going to decline, you can sell ("go short") a futures contract just as easily! In other words, you can sell without actually owning the commodity. There are no special uptick or short-sale rules. It's just as easy to go short as it is to go long!
Low transaction cost
There is very less brokerage commission fees for each transaction. For all the major currency pairs, the spread could be 4-5 pips or varies depending on the buyers and sellers demand. Capital Forex is a Licensed Broker from Government of Dubai and regulated by Emirates Securities and Commodities Authority.
Uncorrelated to the stock market
A trader in the Commodities market is involved in selling or buying a commodity. Thus, there is no correlation between the commodities market and the stock market. A bull market or a bear market for a commodity is defined in terms of the outlook for its relative value against US Dollar. If the outlook is positive, we have a bull market in which a trader profits by buying. Conversely, if the outlook is pessimistic, we have a bear market and traders take profits by selling. In either case, there is always a good market trading opportunity for a trader.