BASICS OF INVESTMENTS : Lesson no 3

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This lesson will deal with commodities market. 

Before we start with the lesson, let me tell you, while I was researching for the topic, I read an interview of " The Oracle Of Omaha " the topmost investor of this world, Mr. Warren Buffett,  in which he openly exclaimed how little faith he has on the commodities market due to its highly volatile nature and high conditions of the traders to loose money.

He states two must to do rules in order to win in a market .
Rule 1 : Never loose money
Rule 2 : Bdver forget rule 1

The commodities market doesn't enjoys a "very good investment option" reputation in the industry and is used by traders only, for speculation and gambling. 

Mr Buffett even says how predicting the growth of commodities while trading in this highly fluctuating market is close to impossible. 

What is commodities market?
Commodities market is a market where commodities are traded (bought and sold) in the same way as stocks are traded in a stock market.

The commodities traded are classified into two major heads.
1. Agricultural Commodities 
2. Non Agricultural Commodities 

Agricultural Commodities consists of :
* Wheat 
* Corn
* Barley
* Maize

Non Agricultural Commodities consists of :
* Bullion : Gold, Silver 
* Base Metals : Lead, Aluminum 
* Energy : Oil, Gas

There are two major exchanges in the commodities market,
1. MCX (Multi Commodity Exchange)
2. NCDEX ( National Commodities & Derivatives Exchange)

Commodities in the market are traded in the same way as stocks, using an account created from a broker dealing in the commodities market. 

Short selling is the thumb rule for booking profits in the commodities market.

SEBI (Securities & Exchange Board of India)
acts as a watchdog and regulates the market, just like the stock market. 
Therefore, chances of frauds are low.
However,  frauds don't form a major cause of losses faced by the traders. The highly fluctuating environment is it.

Regards,
Ankita Gupta ❤

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