Who are the Commodity Trading Market Participants?

The list below explains the various commodity market participants who trade in the online commodity market.

About The Various Commodity Trading Market Participants

To know more about each of these Commodity Trading market trading participants we shall look at the various categories of those taking part in Commodity Trading and also discuss how each of these commodity market participants influence the commodities trading market.

• Banks - Commodity Market Participants

These large banks transact billions of dollars daily on behalf of commercial companies, commodity brokers, their commodity customers and retail commodities traders. Some of these commodity trading transaction activity is undertaken on behalf of corporate customers while some activity comes from the banks treasury room which also conducts a large amount of commodity transactions, where dealers are taking their own commodity positions to make profits.

• Liquidity Providers - Commodity Market Participants

These commodity trading dealers handle large amounts of business, facilitating online commodity trading transactions and matching anonymous counterparts for comparatively small fees. With the increased use of the Internet, a lot of this commodity trading business is conducted on electronic systems that are highly efficient in connecting many online commodities trading brokers.

These commodity trading dealers deal with financial firms or retail commodity brokers & provide institutional liquidity to these firms.

Commodity Trading Liquidity Providers are therefore major participants in Commodity Trading because all of the commodities trades of commodity investors & retail commodity traders are passed to these liquidity providers who then offset these commodity orders in the online exchange commodities market. Once traders places commodity orders with their commodity brokers who then pass these commodity orders to the liquidity providers who then place these commodity orders in the online commodity trading exchange market, in what is referred to as providing liquidity.

• Commercial Companies - Commodity Market Participants

Multinationals & commercial companies taking part in international in Commodity Trading for the purpose of commodity trading investing as part of their overall investment strategy.

Commercial companies take part so as to invest their money in these commodity markets.

• Retail Commodity Trading Brokers - Commodity Market Participants

Use of the internet has brought about retail commodity brokers. These offer commodity trading platforms, commodity trading analysis, and strategic advice to customers and will place commodities trades on behalf of their commodity trading clients and facilitate these retail commodity trading investors who do not have a lot of money. Commodity trading brokers will then provide capital to these retail commodity trading investors in the form of commodities trading leverage. This group only participates in as far as placing commodities trades on behalf of retail commodities traders.

The commodity brokers will provide bid and ask commodities quotes, depending on whether a retail commodity trading investor wants to buy or sell, the trader will then buy or sell at the current commodity price quotes (bid quote - buyer will buy at this commodity price, ask quote - the seller will sell at this commodity price).

The role of this commodity broker group is to only facilitate commodity trading transactions between the commodities trading market and the traders for a small markup called commodity trading spread. This group does not therefore hold any commodity orders of their own, they just facilitate the commodities trading.

• Hedge Funds

Hedge funds use aggressive commodity trading speculation methods to make profits. Hedge funds are commodity trading investments that are under the management of experts and professional money managers, the size and liquidity of commodity trading is very appealing and the commodity trading leverage available in these markets also allows such funds to invest in with billions of dollars at a time in the commodities trading market.