I bet many of you still don’t know what Commodity Futures Trading is! Am I right?
For those who don’t know anything about Commodity Futures Trading, a popular way to trade in commodities is Commodity Futures Trading where people invest in commodities via a futures contract. A futures contract is an agreement to buy or sell, in the future, a specific quantity of a commodity at a specific price. You are merely speculating on the future direction of the price of the commodity you are trading be it hard commodities such as crude oil and gold or soft commodities such even agricultural products such as cotton or wheat. If you believe that the price of the commodity you are trading will go up in the future you buy a futures contract and if you believe it will go down you sell a futures contract. The primary economic purpose of these contracts is to hedge the risk from fluctuating prices and get a stable return. And since most people are risk averse, Commodity Futures Trading seems like a sensible choice to make.
In Pakistan, Commodity Futures Trading is comparatively new. So while some local investors have been trading since the 1990s in international commodities, the country’s first technology driven, web-based, demutualized commodity exchange, Pakistan Mercantile Exchange (PMEX) started its operations in May 2007, which is only about 10 years ago.
Even though all of this is great progress for our country, there are still various factors that act as a hindrance to Commodity Futures Trading.
First and foremost, because of the country’s education crisis, Pakistan’s producers and farmers are not educated enough to understand the concept of Commodity Futures Trading and the process behind the trading in commodities. Further, they lack the resources and the technology required to get connected with the commodity exchange. Since, producers and farmers are one of the key players in commodity trading, the above factors are an obstacle in the development of the futures market.
Secondly, the lack of interest of the middleman and the intermediaries in commodity trading is another obstacle in the growth of the futures market. They are simply not interested in a regulated web-based marketplace as in addition to weakening their influence on producers and farmers, it will make them unable to exploit the producers and farmers or manipulate the market to their advantage.
Commodity Futures Trading’s status of being a highly risky endeavor is another major obstacle in its progress. As with any other business, investment or trade, you win some you lose some when it comes to Commodity Futures Trading. People who can’t control themselves are usually the ones who suffer great losses. A simple way to reduce your risk is to diversify your money. You can further reduce risk by carrying out the necessary due diligence before handing your money to a firm or you can take advantage of ACMGold (Pvt.) Ltd’s team of highly qualified specialists for advice, guidance and assistance. When it comes to Commodity Futures Trading, don’t look at small losses as failures. Treat them as lessons learnt for future trade. Look at the overall picture!
Even though there are hindrances and obstacles, Commodity Trading is picking up. With the multi-functional MetaTrader 5 trading platform, Commodity Trading has been revolutionized for the modern trader and once traders and investors realise its true benefits, the obstacles can be surmounted and its progress can be immense! As I said before,
IT’S STILL NEW!
To experience Commodity Trading, create a safe and secure trading account with ACM Gold