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What are the risks and rewards inherent in commodities trading?

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What are the risks and rewards inherent in commodities trading?

Commodities trading is interesting in the sense that we're really not providing capital to a firm to do anything. So, we're buying stock -- we're actually giving capital to a company to go out and do something with that money. We're buying bond; we're lending money to a company to go do something. When we are trading in commodities, we're actually not using that money to create any capital. No one is actually physically taking this money and using it to do something else. In that sense of that commodities trading market, it's really pure speculation in what's going on with the market. So, what you're really doing is making a play on the speculation. Most commodities investment strategies or the diversified investment strategies using commodities are really kind of making a play on the volatility of the commodities market and that's where you're going to get gains or losses as an investment portfolio.

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Scott Leonard, CFP

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What are the risks and rewards inherent in commodities trading?

What are the risks and rewards inherent in commodities trading?

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What are the risks and rewards inherent in commodities trading?

What are the risks and rewards inherent in commodities trading?

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