What are the good side and bad sides of Commodity trading?

[skrimon]

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Good Side:

Unlike the price of a share of stock in a single company, the price of a commodity will never go to zero because of constant demand.

One can obtain physical delivery from the market and store it in a warehouse if the price of a commodity one bought in futures prices drops down.

Trade commodities in accordance with their seasonality can result in significant profits.

Primary physical surveys, as opposed to data gathered by a firm, can accurately predict where a commodity's price is headed.


Bad Side:

The market is quite volatile because of the low volume.

As a result of a dearth of substantial competitors, the market has become over-operated and manipulated.

Since the operator is familiar with the locations of most Stoplosses, he or she will knowingly trigger it first. Therefore, it is necessary to keep larger Stop losses in place or to keep the stoplosses in mind frequently.

If you have any questions, write below. I shall try to answer your question.

 

[wicky1986]

Good Side:

1. Commodity prices cant become zero as there is a demand of a commodity everytime unlike a share of particular company.
2. In case, prices of commodity one bought in futures goes against, he/she can take physical delivery from exchange and kept in a warehouse.
3. One can make handsome returns if trade commodities according to seasonality of the commodity.
4. Primary physical surveys can give actual price direction of the commodity unlike a company which can manipulate its data according to their needs.

Bad Side:

1. Due to lower volumes, there is a heavy fluctuation in the market.
2. Excess operating and margin requirements