Futures and Commodities Trading

Futures and commodities can be very complex and volatile asset classes that differ significantly from investing in stocks and bonds. This means that investors need to do significantly more research before wading into these types of investments.

Frequently Asked Questions
  • Is commodity trading the same as futures trading?

    No, though they are related. Futures are a type of financial derivative in which you agree to buy or sell a certain asset at a certain price at a particular time in the future. Commodities are a type of asset representing fungible goods, such as oil, iron ore, or wheat. Commodities are usually traded using futures.

  • Which commodity is the best to trade?

    There is no best commodity to trade in the same way there is no best stock to trade. The commodities market is volatile and significantly affected by economic cycles. This means that no one commodity will be the easiest to trade or the most profitable.

  • What is futures trading?

    Futures trading is the buying and selling of a particular type of derivatives contract. These contracts entitle one you to buy or sell a particular asset, such as a stock or commodity, at a particular price at a certain date in the future.

  • What is commodities trading?

    Commodities trading is the trading of fungible goods in financial markets. This means that any one commodity good is the same as any other one of the same type. For example, any one ounce of gold is the same as another or any barrel of a particular kind of crude oil is the same as another. Commodities are usually traded using futures contracts which allow you to purchase a set amount at a particular price sometime in the future.

Key Terms
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Analyzing the 5 Most Liquid Commodity Futures
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Association of Futures Brokers and Dealers (AFBD)
Last Trading Day
Signing Contract
Spot Delivery Month
Spot Commodity
Businessman Touching Futures Data With Pen
Delivery Option
Lock Limit Definition
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Commercial Hedger
Delivery Notice
Against Actual
Delivery Point
Futures Spread
Why do companies enter into futures contracts?
Forward Spread
Futures chart
Guide to Futures Exchanges
Forward Delivery
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Back Months
Outright Futures Position
Commercial Trader
Non-Commercial Trader
Full Carry
Commodity Pool
Futures Strip
Visible Supply
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Inland Bill of Lading
Warehouse Receipt
Domestic Box Office Receipt (DBOR) Futures Contracts
Basis Grade
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Futures Equivalent
Carrying Charge Market
Grading Certificate
Booking the Basis
Invisible Supply
Minimum Price Contract
International Commodities Clearing House (ICCH)
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Cash Contract
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Delivery Price
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Australian Future Fund
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Contract Unit
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Terminal Elevator
Delivery Instrument
Current Delivery
How The Price Of Stock Futures Is Calculated
What Derivatives are Types of Forward Commitments?
What Is the History of Futures?
Forward Rate vs. Spot Rate: What's the Difference?
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Contango vs. Normal Backwardation: What's the Difference?
Buying on Margin: How It's Done, Risks & Rewards
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Renewable Resource: Definition, Considerations, and Types
Federal Reserve Building in Washington DC
Initial Margin: Definition, Minimum Requirements, Example
Hedging vs. Speculation: What's the Difference?
What Is an Omnibus Account? How It's Managed
Cash Settlement
Futures Contract Definition: Types, Mechanics, and Uses in Trading
Commodities Trading: An Overview
Futures Market
Zero-Sum Game
Zero-Sum Game Definition in Finance, With Example