Commodities is a marketable items or raw materials that meet the needs or demands of people, which can be exchanged for other goods of the same type. Oil, coffee, sugar and gold are examples of various goods.
Although the quality of different batches of tradable goods may differ slightly depending on the manufacturer, the product will be essentially the same. The reason for this is that products must comply with predefined standards that are known as the basic quality. This means that all oil, regardless of where and by whom it was produced, will be approximately the same. This oil is different from, for example, electronic devices such as televisions or MP3-players, which will be different depending on the manufacturer.
One of the product characteristics is that its price is determined depending on the market as a whole. You have several types of goods, such as so-called “soft commodities”, which are products that are grown (eg, soybeans and tea), while the “hard commodities”- are goods of production of
the extractive industries, such as coal. Electricity or gas are defined as the Energy products, or energy. Such products are consumed immediately, as their storage is impractical.
You will notice that the fall in exchange rates and stock prices of commodity prices often rise. The merchandise trade imbalance situation is uncommon, as the raw materials and goods are needed by all. For this reason, to diversify their assets in commodities trading is always a good idea: it allows you to increase the profitability of the trade.