Physical trading involves the buying and selling of commodities that are delivered physically from producers to processors or consumers. Such commodities could be blended, stored, or refined to meet specific customer needs which opens up the chance to maximize profit. It can sometimes employ derivatives like futures and options to hedge which makes it possible to speculate on the price movements of commodities. The major goal, however, is to profit from differences in prices (across different locations) or the quality of products.
While commodity trading used to involve a lot of different products in the past, nowadays, there is a streamlining of the products that traders are focused on. This is because it was realized that specialists are now required that will best utilize the knowledge, networks, and logistics available to ensure profitable trading. This is why firms involved in commodity trading tend to have specialist teams for each set of commodities rather than have a single team lump all the commodities together.
There are different groups of commodities but some of the most common ones are Agricultural commodities such as Grains, Coffee, Cocoa, Cotton, etc.; Energy commodities which consist of Coal, Natural Gas, Oil and Refined products; Metals such as Gold, Silver, Platinum, Copper, Lead, Aluminum just to mention a few. Each of these groups and sub-groups of commodities has different market structures which is why it is important to understand these structures before trading in any particular product. Also, it is advisable to start physical trading with two or three commodities before thinking of expanding the portfolio. This is why firms or companies involved tend to have specialist teams dedicated to a particular set of commodities.
Physical Trading Platforms
These refer to online platforms where the trading of commodities can be carried out. The world is now a digital space and holds a lot of potential for many businesses because it has become easier to reach a lot of people around the world without necessarily having to move from a particular location. And while commodity trading used to be done in person before, it has now caught up with the advancement in technology by going globally and giving people more access to its commodities. There are different physical trading platforms available today and traders are free to make a choice depending on what suits them and the kind of product they want to trade in.
A good commodity trading platform should be easy to use, scalable and customizable so that traders can experience a top-notch online user experience and this will also attract more traders. Also, such a physical trading platform should allow traders to easily view the portfolio of products available while also being stable and secure. Therefore, the private information of traders should be well-protected and traders should not be experiencing constant glitches when carrying out trading operations.
VertexFX Trading Platform
One of the best physical trading platforms is VertexFX and one unique feature of this platform is the way it has simplified physical trading. The platform focuses on precious metals such as Gold, Platinum, and Silver, yet it enables firms to add their own products other than precious metals. VertexFX physical trading platform identifies problems encountered by different traders so that an effective solution can be provided and invariably contribute to the growth of the precious metals trading volume. It also looks to promote savings and investment in precious metals by developing a system of impeccable trading, vaulting, investment, and electronic record-keeping.
Physical Trading Platforms in Dubai
Physical trading has quite a history in Dubai as the city has been an international hub for precious metals especially gold and other commodities as well which is why some of the best physical trading platforms are in Dubai. A good example of one of the physical trading platforms in Dubai is the Dubai Gold and Commodities Exchange (DGCX) which began operations in November 2005 and is now widely considered the leading derivatives exchange in the Middle East. DGCX has a range of futures contracts that provides stakeholders in the physical commodities markets, such as producers, manufacturers, and final consumers with a sophisticated way of hedging their exposure to price risk. Also, DCGX provides trading opportunities to people in the Middle East and even around the world who are interested in the growing asset class of commodities. And it constantly works in conjunction with its members and partners to make a unique and diverse product offering available to them.
Another commodity trading platform in Dubai is DMCC which brings together 19,000 businesses from all sectors and industries to connect them to the world. Members of this physical trading platform in Dubai have unrivaled access to major commodities markets in the world as well as a variety of trading opportunities across all industry sectors. DMCC also offers its clients many business benefits and competitive advantages with a major one being a secure trading environment that is reliable and can be trusted to adhere to the highest standards of international compliance. Clients of this physical trading platform in Dubai also have the opportunity to be connected with a highly cooperative network of contacts, expertise, and skills which is bound to support growth.
