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. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  6. Arbitrage Trading Program - ATP

    A computer program used to place simultaneous orders for stock ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Options & Futures

    Losing To Win

    Adopting realistic expectations is essential to staying in the trading game.
  2. Fundamental Analysis

    A Silver Primer

    Find out what affects the price of silver, the types of investments that can be made and the methods in which it is traded.
  3. Forex Education

    Using Double Tops And Double Bottoms In Currency Trading

    Find out how to apply the two most common price reversal patterns to your trading.
  4. Trading Strategies

    Introduction to Types of Trading: Fundamental Traders

    Learn about the different traders and explore in detail the broader approach that focuses on company-specific events.
  5. Options & Futures

    Trading The QQQQ With In-The-Money Put Spreads

    Even beginners may use this strategy to trade a bullish outlook.
  6. Forex Education

    Introduction to Types of Trading: Technical Traders

    Learn about the different traders and explore in detail the broader approach that looks to the past to predict the future.
  7. Options & Futures

    Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.
  8. Chart Advisor

    Commodity Traders Are Using Momentum To Profit From These Stocks

    Active traders are drawn to momentum strategies. These momentum winners of 2015 are worth a trader's second look.
  9. Economics

    This Is A Small Country With Huge Potential to Grow

    Trinidad and Tobago's increased revenue and economic success have been primarily generated by its energy sector, but it still might be best to diversify.
  10. Economics

    Canadian Dollar Continues To Drop, But Why?

    The Canadian dollar-US dollar exchange rate is positively related to oil prices partly due to crude oil's big share of Canada's total FX currency earnings.

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center