Commodity
A commodity is a basic good that is used in commerce and is interchangeable with other goods of the same kind.
Commodities are most commonly used as input to the production of other goods or services.
The quality of a particular commodity may vary slightly, but it is essentially one. When trading on an exchange, certain minimum standards, also called Basic Grade, must be met.
They tend to change quickly from year to year. The basic idea is that there is hardly any distinction between a basic product that comes from one manufacturer and the same raw material from another manufacturer.
A barrel of oil is basically the same product regardless of the manufacturer. In the case of electronic goods, on the other hand, the quality and properties of a particular product can be completely different depending on the manufacturer.
Some traditional examples of raw materials are the following:
- Grains
- Gold
- Beef
- Oil
- Natural Gas
The definition has recently been expanded to include financial products such as foreign currencies and indices.
Technological advances have also resulted in new types of goods being traded in the market, such as cell phone minutes and bandwidth.
The commodities market can be separated into four distinct categories: metal, energy, livestock and meat, and agricultural. Among the various types of commodities, crude oil and gold are the most popular assets to trade. Trading commodities is a great way to diversify your portfolio, as they’re typically reliable in a time of market volatility.
In ZFX you can trading gold, oil, and other commodities with CFDs allows you to leverage a sizeable return with a small sum.