1.5 Commodities

In this video, we are going to talk about Commodities Market.

What is it?

We are going to understand that a commodity is a basic good that is interchangeable with other commodities. The basic good can be, for example: Gold, Silver and Coffee. As you can see Gold can be exchanged for other Gold products of the same type. For example, if you go to a Jewellery shop you can either put the Gold and take out another Gold or you can take out money. That's what we mean over here.

Market size and Liquidity.

    1. Chicago Mercantile Exchange (CME) - Largest Commodity Exchange, which has got a monthly turnover 268 million dollars.

    2. Gold - Most liquid precious metal.

    3. Oil - Most liquidly traded Commodity

Price Increments

The smallest price increment that can happen in any Market is a penny. Just like in the UK, it is 0.01. As mentioned before, if you buy any product, in the normal economic transaction world, the smallest price increment that you can move by is 0.01. In the UK it is known as a penny and the other market it can be a cent.

In the Commodity Market, the smallest price increment is 2 decimal points, which is 0.01. In the terminology here, we call it as a Tick.

In this module of Commodities Market, we looked at what it is, the market size and liquidity, and the price increments.

Let us move on to the next Market.

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