So you want to be an investor and doing research on commodity investing for beginners. Oh! Yes! You are at the right place. In this article, we are going to give you a list of the best commodities to trade for beginners and see a quick walkthrough about commodity trading for beginners.
So if you are here, learn to trade on gold, oil, silver, copper, greens whichever commodity that you want to invest in, we are here to help you.
As a new investor, chances are you started with stocks. A lot of people do right?
But many people lose their beginning because of the lack of financial education. They don’t teach themselves
- How to invest?
- What is the trading market all about?
- What is the risk that you should consider before you buy commodities or stocks?
- And more importantly, whether I’m interested or not?
So before you get into the commodity market for beginners ask these questions and if you get the answers then you are good to go, if not you better learn these things before you get into trading, because I don’t want you to lose your money just like the other traders.
Now, with a little bit more experienced, you might want to start branching out your investment portfolio. It has long been proven that a diverse portfolio is the best way to minimize risk and maximize profits as an investor.
After all, spreading out your assets offers protection against market changes, something that is becoming increasingly important in today’s generation.
So investing in commodities can be an important way to diversify your investments beyond traditional Securities.
But as a new investor, Let’s first be clear on exactly,
What commodities are?
Commodities refer to any uniform resources that are considered to be basic goods, from the Greens(which make up your breakfast) cereal to the silver and copper, the crude oil that is refined into the Petroleum you use to drive your vehicle.
Commodities are many things, but what they all have in common is they are physical in nature and traded on the world markets. Commodity prices often fluctuate wildly because of changes in their supply and demand.
For Example,
Commodities that are traded are typically sorted into four broad categories, which are:
- metal
- energy
- livestock
- meet
Each category has its own ups and downs and they have its own range of risk levels, so your choice for which to invest basically depends on your ultimate goals.
Commodities can be a risky game if you don’t know what you’re doing, and it’ll be much more profitable long term to get a crisp on the basics first than to proceed later.
There are several ways to invest in commodities, each with unique benefits and risks to consider. let’s dive a little bit more into the commodity market.
For now, let’s see how you can invest in the commodity market. So we have collected the six ways you can get into commodity trading and the best commodities to trade for beginners.
let’s check out one by one what is all about and what is the thing that you should consider before you get into investing in commodity as beginners.
Best commodity investing for beginners
Invest directly in the Commodity
Invest in Commodity ETFs
Invest in Future Contracts
Invest in Commodity Stocks
Invest in Mutual and Index Funds
Use Commodity Pools
Alright, guys, these are the six ways you can invest in various commodities.
While commodities are known to be a risky investment because they could be affected by uncertainties that are difficult, if not possible.
To predict, such as unusual weather patterns, epidemics, and disasters, both natural and manmade on the whole commodities are best suited to investors with a large chunk of capital to spare and at least some experience.
It is best to manage risk by making commodities a part of a balanced portfolio rather than “putting all your eggs in one basket.”
If you’re looking to invest in a commodity for the long term commodity stocks, mutual funds and ETFs are a better option for most of beginners individuals.
- COMMODITIES FOR DUMMIES – This top commodities book is a good Introductory work on trading and investing in commodities which helps appreciate the kind of risks involved in the commodities market and how to deal with them efficiently.
- A TRADER’S FIRST BOOK ON COMMODITIES – Excellent first book on commodities, futures, and options if you know nothing about them.
- HIGHER PROBABILITY COMMODITY TRADING – It is a beginner’s guide and has lots of general information on the various types of commodity trading and strategies including trend following, counter-trend, fundamentals, etc.
- THE LITTLE BOOK OF COMMODITY INVESTING – Short and snappy guide to investing and commodity trading as a viable alternative to preferred choices of stocks, bonds, and real estate as one of the fastest-growing markets.
- DIARY OF A PROFESSIONAL COMMODITY TRADER – Peter writes in an informal style and hasn’t hidden anything in this book. If you are contemplating trading, it is worth a read as it gives a trade-by-trade account of an experienced and profitable trader.
- TRADING COMMODITY OPTIONS…WITH CREATIVITY – This book has a simple language, lots of real examples and, most important and unique on this book, FAILED examples.
- HOT COMMODITIES – The author(Jim Rogers), an expert on commodities himself and having successfully managed nothing less than his own commodities index fund, offers practical advice to investors.
It may be difficult.
If you’re not buying in Huge quantities, you may have little or no advantage.
If you are just buying a small quantity, the second option for investing in Commodities is to invest in commodity companies.
You can deal in oil, gas, silver, green, by simply buying shares in companies such as Exxon Mobil, BP, or Royal Dutch Shell.
The same applies to other Commodities.
Although your options might not be as wide and your country. Your investments will also be subject to the movement of the stock market and changes in the prices of the Commodities.
An investment fund is the most convenient way to access the Aditi Market. These funds also allow you a degree of diversity because they are invested in a variety of Commodities.
Other funds are invested in commodity-producing companies passive funds, have gained popularity, recently eat EPS or exchange-traded.
There are also commodity exchange-traded funds, ETFs that are equity-based, and exchange-traded Commodities, ETC’s.
ETFs invest in shares of The companies while ETCs give investors exposure to Commodities, in the form of shares, ETC track, the price movement of an individual commodity and or commodity basket, they can either be physically backed by the Holdings of the commodity or they can use swaps with other financial institutions.
However, ETFs only moderate particular indexes such as oil. Futures with this there’s little room to move ETC’s allow investors to short or leverage their investments before, also need more space to maneuver.
They can take bets on the prices either rising or falling. Being careful is key because although there could be potential gains, there could also be possible losses. so be aware of those thing before you get into.
