For those that are new to investing, or even for those already in the business of trading, it can be difficult to understand the difference between commodities trading and currency trading.
Those that are in the business of trading commodities are often exporting or importing their goods. Each country usually has its own commodities that may be in demand by other countries. For example, Mauritius commodities that are in demand are sugar cane, textiles and fish, just to name a few. The economy of the country is strengthened by the number of commodities it has to be able to create trade with.
Commodities are those physical items that the world has put a value on, such as precious metals and energy sources, including oil, natural gas and others, and even foodstuffs, like grains and other crops.
Foreign Currency Trading – Forex
Currency trading, on the other hand, does not trade in physical substances like the ones mentioned for commodities, but rather trades in the value of different world currencies in relation to each other.
Again, there are a variety of ways to trade in currencies that can produce a profit and it often depends on which way the trader believes the specific currency will go: up, or often, even down.
Traders can basically bet on whether a currency will rise or fall and then profit if they make the right decision.
The value of a country’s currency can and does fluctuate on a daily basis, depending on many factors, such as political strife, the breakout of conflict, social unbalance or unrest, and the occurrence of natural disasters, and sometimes even just the threat of such events.
Both types of trading can be exceptionally profitable, yet somewhat mysterious, and this is why it attracts so much of the public’s imagination.