Investment In Commodities Market
Most of the people invest in stocks, bonds and gold in the course of their everyday lives. However, an excellent option is to invest in commodities like metals, food or energy as even these can give great returns. Commodities market is the best way to diversify your portfolio and make it recession proof.
Till a few years ago, a majority of people did not want to invest in commodities as the process was long and required a lot of time, money and effort. However, things have changed drastically over the last few years and now days it is fairly easy to invest as much money as you like in the commodities market.
Commodities Futures Market
All you need to do is to decide a date in the future and get into an agreement to either buy or sell a specific quantity of commodities at that particular date. The most common future commodities trading options are available for natural gas, gold and crude oil. The investor needs to open a brokerage account and sign a form that states that he or she is aware of the risks involved. Each and every commodity requires a particular deposit that needs to be made to the broker.
Pros of Commodities Market
• Commodities trading is pure play
• You can leverage your account and hence make huge profits if you trade correctly and smartly.
• You can get into full size contracts even with simple minimum deposit accounts
• You have the option to go long or short as per your requirement without any trouble
Cons of Commodities Market
• Direct investment can be extremely risky at times as the markets are volatile and inexperienced investors may end up losing a lot of money
• Though leverage allow you to make a lot of money if you trade correctly, it also makes you lose a lot of money if you are on the incorrect side
• There have been instances when the market has moved very quickly and people have lost a lot of money