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Commodities Market For Beginners | Edelweiss Wealth Management - YouTube
Channel: Edelweiss Wealth Management
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we see commodities all around us
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prices of commodity is going up or down
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effects our day-to-day activities to put
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things in perspective anyone who drives
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a car would be impacted by the rising
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crude oil price of weather prediction of
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under average rainfall affects our crop
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production and thereby the price of our
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next meal
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hence commodity market is basically a
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place that facilitates training of such
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various commodities in India MC X
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trading is the exchange for commodity
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trading commodities in the market are
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largely divided into three groups metals
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agriculture produce and energy the
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metals are further classified into non
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precious metals like iron steel
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aluminium copper and precious metals
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such as gold silver platinum and
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palliative agriculture produce a cold
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soft commodities as the name suggests it
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includes coffee cocoa wheat corn and
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other things energy includes crude oil
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natural gas coal and other such energy
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resources the most direct and popular
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form of taking part in commodity trading
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is through the futures market an
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indirect way you can take part in
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commodity trading by buying or selling
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stocks that are related to commodity in
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some ways how can you trade in a futures
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market two types of investors
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participate in the futures market
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commercial or institutional investors of
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commodities speculators who hedge risk
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as well as hope to earn money commercial
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users of commodity take advantage of
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commodity trading for reducing their
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risk let us take an example a man runs a
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coffee shop currently he is purchasing
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coffee at 2000 rupees
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Keiji he is speculating coffee prices to
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go up in the next year to the peace 2300
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and now there's ramesh
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he owns a coffee plantation as well his
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cost of production is eighteen hundred
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piece per kg currently he's selling
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coffee at nineteen hundred per kg he
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fears that coffee prices may go down in
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the next year and he does not want to
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sell it at a price lower than his cost
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here both the parties have a price risk
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among fears that it will go up while
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ramesh fears that it will go down to
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reduce the risk faced by both parties
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they enter into a contract to sell
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coffee at 2100 rupees in the next year
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manufacturers and service providers use
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futures as a part of their budgeting
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process to normalize expenses and reduce
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cash flow related headaches in case of
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speculators they hope to earn a profit
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from the change in price of the futures
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contract speculators typically close out
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their position before the contract is
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due and never take the actual delivery
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of the commodity itself commodities
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depend on many external factors such as
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irregularity of monsoon domestic and
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international government policies
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technological advancements and many such
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more things hence it is advised a person
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should only invest a limited portion in
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commodities trading when managing their
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entire portfolio for investing in
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commodities you need to understand the
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factors impacting a particular
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commodities price if you liked the video
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give it a thumbs up and subscribe to our
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channel and visit our website
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www.fawziacademy.com
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