Question

What is the consequences
of having limited information about a Commadity​

Answer 1

Answer:

Broadly speaking, commodity trading is an activity which involves investing/trading in commodities. It is similar to stock trading but instead of buying and selling shares of companies, a trader buys and sells commodities. Commodities traded are often goods of value, consistent in quality and produced in large volumes by different suppliers such as wheat, coffee and sugar. Trading is affected by supply and demand, thus, limited supply causes a price increase while excess supply causes a price decrease. Therefore, the process of commodity trading is directly or indirectly affected by the demand and supply in the market.

Commodity trading is an investing strategy wherein goods are traded instead of stocks. Commodities can be traded on a spot level or on the futures exchanges as futures contracts. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. A commodity future contract is a future contract which has a commodity as underlying asset.

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