A commodity is something that can be bought or sold to meet needs in the market. Raw materials, such as oil, gas and minerals, are considered commodities.
Understanding the functioning of commodity market is very crucial as there are many factors that have an impact on the prices of commodities. Demand-supply forces result in the volatility of prices; the other major reasons for fluctuations in prices are government policies, currency prices, geopolitical concerns, etc.
Knowledge is the key. As the commodity market is highly volatile, you should always be in touch with whatever is happening in global and local commodity markets. One has to develop the habit of reading latest developments of the particular commodity in which he/ she wants to trade.
Before you know how to trade commodities, firstly have clear financial goals and do extensive research or take the support of research experts. Returns are high in case of commodity trading and at the same time risk involved is also high. One can gradually become an expert in commodity trading with patience and research.