What does Commodities exchange mean?
An exchange where commodities like Gold, Silver, Crude Oil, Natural Gas and agricultural commodities such as Wheat, Sugar, Cotton are traded. They are traded as contracts with spot and futures.
Futures Knowledge Explains Commodities exchange
Commodities exchange is an organized market where buying and selling or commodities takes place. A commodity exchange provides the rules, procedures, and physical for commodity trading, oversees trading practices, and gathers and circulates marketplace information. The contracts entered into with commodities may be at spot prices, forwards, options and futures (at a specified price to be delivered on a future date). Generally, the trades are in the form of future contracts to hedge against fluctuations in price at a later date.
Some traders also buy and sell futures contracts in order to make profit from the price fluctuations. However, due to the financial leverage provided to traders by the exchange, commodity futures traders face a substantial risk.