How Can I Trade In Commodities?

Investors can trade in commodities through offline as well as online channels. Read on to learn more about them.

Once you understand what the commodity market is and how it works, the next logical step is to learn the process of commodity trading. Commodities can be bought and sold through online as well as offline channels. Let us understand the meaning, advantages and shortcomings of the two channels.

If you have an online commodities trading account, you can carry out all the transactions yourself. Offline trading is also an option.

Offline channel

One of the most common ways to buy/sell commodities is to hire a broker. Brokerage houses or brokers are institutions or individuals licensed to buy/sell commodities on behalf of others. Once you have given the responsibility of trading commodities to your broker, you can easily manage your portfolio without actually spending time on it. Since these brokers are experts in commodity trading, they offer professional advice and personal services to clients.

However, brokers usually charge an annual fee and brokerage commission that is much higher than the fee charged by online accounts. Besides, it usually takes more time to execute an offline transaction, which at times may result in losses.

Online channel

If you have an online commodities trading account, you can carry out all the transactions yourself. Since this mode of trading requires no professional service and personal time of brokers, it is usually cheaper than offline channels. Most companies charge a one-time membership fee, after which you are not required to pay any maintenance charges. The brokerage fee per transaction is quite low too. This mode is one of the quickest methods of trading, as it allows you to conduct real-time transactions.


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