How is the commodity market different from the currency market?

01:39 Mins Read

Are the commodity and the currency market the same thing? Not at all. There are many differences between the two.

Transcript

How is the commodity market different from the currency market? The commodity market and the currency market are two major segments of the global financial markets. They differ from each other in many ways. The commodity market is a physical or virtual marketplace where you can trade in commodities like gold, crude oil, natural gas, rice, or wheat, among other things. The currency market, on the other hand, is a market where investors from around the globe buy and sell different currencies. The commodity market is a centralized market that operates through exchanges. This means that you can buy or sell commodities through a commodity exchange. The currency market, however, is a decentralized, over-the-counter market, where buyers and sellers trade directly with one another. The timings also differ for these two markets. The commodity market operates only during the hours specified by the exchange. But globally, the currency market operates round-the-clock, 24 by 7, from Monday to Friday. Lastly, some commodities traded in the commodity market may be highly liquid, while others may be less liquid. Broadly speaking, however, the currency market is more liquid than the commodity market. Alright then, now you know how the commodity market differs from the currency market. Interested in finding out how to trade in one such commodity? Then all you need to do is check out the next chapter in Smart Money.