Commodity Trader

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Forward Contract

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

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

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

    A commodity-backed bond is a type of debt security which is linked ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Delta Hedging

    An options strategy that aims to reduce (hedge) the risk associated ...
Related Articles
  1. Losing To Win
    Options & Futures

    Losing To Win

  2. A Silver Primer
    Fundamental Analysis

    A Silver Primer

  3. Using Double Tops And Double Bottoms ...
    Forex Education

    Using Double Tops And Double Bottoms ...

  4. Introduction to Types of Trading: Fundamental ...
    Trading Strategies

    Introduction to Types of Trading: Fundamental ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center