Money Today speaks to market players to clear the misconceptions around Commodity Trading.

1. 9 Common Myths Of Commodity Trading
Money Today speaks to market players to clear the misconceptions around
Commodity Trading.

2. 1. COMMODITY TRADING IS FOR
SPECULATORS
For years, commodity trading has been a part and parcel of the
economy. Market participants, particularly hedgers, arbitrageurs and
speculators, help in efficient price discovery and price-risk management.

3. 2. UNDERSTANDING THE MARKET IS TOO
DIFFICULT
All commodities are globally traded and the global-demand supply
situation is widely known and available to anyone who reaches out for
it.

4. 3. THERE IS NO ASSURANCE ON QUALITY OF
COMMODITIES DELIVERED
Most exchanges put quality control measures in place to ensure that
commodities delivered to their warehouses meet high quality standards

5. 4. COMMODITY MARKETS ARE TOO VOLATILE
Many investors see volatility as a big problem. They have to invest 4-10 per cent value
of the commodity, far less than in stock futures.

6. 5. COMMODITY EXCHANGES FUEL INFLATION
Commodity exchanges promote price transparency. Today, a copper wire
manufacturer in Punjab can see the live international price of copper in
London on his trading terminal.

7. 6. DIFFICULT TO MAKE MONEY IN
COMMODITY TRADING
It is generally believed that most investors lose money in commodities futures. "This
happens only when market participants do not trade with discipline and fall victimto
greed and fear," says Mathur of Angel Broking.

8. 7. COMMODITY TRADING IN ONLY FOR LARGE
TRADERS AND HIGH NET WORTH INVESTORS
For instance, the exchanges first launched gold contracts on 1 kg bars.
Later, they introduced 100 gram, 8 gram and 1 gram contracts to attract
small investors.

9. 8. DELIVERY OF COMMODITIES IS
COMPULSORY
There is a common belief that anyone who buys commodity derivatives
has to take delivery as well.

10. 9. PRICES ARE EASY TO MANIPULATE
Most commodities that are traded are produced and consumed across the globe. As
such, any person or a group of persons cannot easily manipulate prices.

11. Commodity Trading
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