Commodity Trader


DEFINITION of 'Commodity Trader'

Unlike stock traders, who buy and sell equities, commodity traders focus on investing in commodities. These traders either takes positions based on forecasted economic trends or arbitrage opportunities in the commodity markets. Oil and gold are two of the most common traded commodities, but markets exist for cotton, wheat, sugar, cattle, pork bellies, lumber, silver and other precious metals.

BREAKING DOWN 'Commodity Trader'

Commodity traders usually do not have a need for the specific asset they are trading, but gain exposure through forward and future contracts. Contracts are usually hedged and actual delivery is a seldom occurrence.

  1. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  2. Forward Contract

    A customized contract between two parties to buy or sell an asset ...
  3. Dalian Commodities Exchange

    A commodities exchange located in Dalian, China. The Dalian Commodities ...
  4. Commodity Market

    A physical or virtual marketplace for buying, selling and trading ...
  5. Commodity-Backed Bond

    A commodity-backed bond is a type of debt security which is linked ...
  6. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
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