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The commodity exchange trades in the economic sector. The two types of commodities are soft commodities and hard commodities. The soft commodities are agricultural products like sugar Patriots Jordan Richards Jersey , cocoa, fruits and more. The hard commodities are products that can be mined like gold, precious metal Patriots Malcom Brown Jersey , oil and more. At the exchange you can trade in bullion, energy, metal and agricultural products.

The exchange aims to provide an effective and competitive marketplace for trading in commodities. The commodities traded at the exchange have to meet a minimum quality standard. There is no difference in commodity coming from one producer than the other. The commodity is the same regardless of the producer. The contracts traded at the exchange are standardized. The exchange helps to settle the futures contract Patriots Joe Thuney Jersey , offers settlement guarantee fund and follows risk management practices. It also offers online trading. These are the benefits of commodity exchange.


Commodities exchanges


The national commodity exchanges in India are as follows:


Multi commodity exchange (MCX)
Indian commodity exchange limited (ICEX)
National commodity and derivatives exchange limited (NCDEX)
National Multi-commodity exchange of India (NMCE)
Ace derivatives and commodity exchange (ACE)
Universal commodity exchange (UCX)


Investing in commodities


Commodities are a major diversification too. You can diversify your portfolio by investing in it. To invest in commodities you can invest in stocks of companies whose business depends on commodities prices. You can invest in mutual funds, index funds and exchange traded-funds of companies which focus on commodities. You should invest a small percentage in the commodities as the commodities are affected by weather pattern, epidemics and disasters.


You can trade in the commodities by buying the physical commodity and hoping for the price to go up to sell. For example gold.


Benefits of investing in commodities are that the margins are low and you can make highly leveraged returns Patriots Deatrich Wise Jr. Jersey , it is hedge against inflation and it is linked with international market scenario.


The most traded commodity at the exchange is gold as it has a reliable and conveyable value. Another common traded commodity is crude oil.


Trading at the exchange


The exchange trades in commodities and commodity derivatives. A derivative is a contract between the parties whose values is based on underlying asset, index or securities. The common commodity derivatives are forwards contract, futures contract Patriots Antonio Garcia Jersey , options, swaps and warrants.


The most common derivative used to trade is the futures contract. Farmers use this way to trade.


Shaeen Patel works at a firm that offers online trading in commodities. Her firm is a member of the MCX and the NCDEX exchanges. She knows the importance and the benefits of commodity exchange. She likes guiding the customers in online trading.

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