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
US currency one hundred dollar bill with yellow corn.
Analyzing the 5 Most Liquid Commodity Futures
Bird's eye view of London financial district at night
Association of Futures Brokers and Dealers (AFBD)
What Is the Last Trading Day?
Signing Contract
Spot Delivery Month Definition
Spot Commodity Definition
Businessman Touching Futures Data With Pen
Delivery Option
Lock Limit Definition and Example
Skyscrapers in the financial district of London
Commercial Hedger Definition
Delivery Notice Definition
What Is an Against Actual Transaction?
Delivery Point Definition
Futures Spread
Why do companies enter into futures contracts?
Forward Spread Definition
Futures chart
Futures Exchange Definition
Hero Image
The Benefits of Short Selling Futures vs. Stocks
What Is Forward Delivery?
a screen showing bar graphs and line graphs
What Are Back Months in the Commodity Futures Market?
What Is an Outright Futures Position?
What Is a Commercial Trader?
Non-Commercial Trader Definition
What Is Full Carry in the Futures Market?
Commodity Pool
Futures Strip Definition
Visible Supply Definition
two workers looking at clipboards with a loaded truck behind them
Inland Bill of Lading
Warehouse Receipt
Domestic Box Office Receipt (DBOR) Futures Contracts Definition
Basis Grade
Close-up of computer screen with stock prices
What Is Futures Equivalent?
Carrying Charge Market Definition
Grading Certificate Definition
Booking the Basis Definition and Example
Invisible Supply
Minimum Price Contract
International Commodities Clearing House (ICCH)
Delivery Driver in the Warehouse
Cash Contract Definition
stock market on tablet
Delivery Price
Bunch of Australian Hundred Dollar Bills
Australian Future Fund
overlay of stock numbers, financial graphs and charts
Contract Unit
grain elevator in the countryside
Terminal Elevator
Delivery Instrument Definition
Current Delivery Definition
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?
Digital Composite Image Of Businessman Touching Data With Pen
What's the Difference Between Contango and Normal Backwardation?
Buying On Margin Definition
Solar powered home
What Is a Renewable Resource?
Federal Reserve Building in Washington DC
What Is Initial Margin?
Hedging vs. Speculation: What's the Difference?
Omnibus Account Definition
What Is a Cash Settlement?
How Do Futures Contracts Work?
Commodities Trading: An Overview
How the Futures Market Works