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.

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RELATED FAQS
  1. Can commodities also be investments?

    Learn about the commodities trade and several different ways investors may participate. Find out about some of the advantages ... Read Answer >>
  2. Which of the following would be considered a short hedge ...

    The correct answer is a) Long the commodity and short the futures Read Answer >>
  3. How can I invest online in oil, gold and other commodities?

  4. What is the history of futures?

    Explore the history of futures trading and the origin of the major commodity futures trading exchanges in England and the ... Read Answer >>
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