"A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit, and sugar."
The study of how energy commodities are bought and sold in financial markets.
Energy Markets: Understanding the basics of energy markets, including the supply and demand dynamics, energy pricing, and trading mechanisms is critical for anyone starting to learn about energy trading.
Energy Consumption and Production: Understanding the energy consumption patterns and production sources of the industry is key when getting started with energy trading.
Fossil Fuels: Learning about fossil fuels, including coal, crude oil, and natural gas, and their significance in energy trading is also essential.
Renewable Energy Sources: Become familiar with renewable energy sources, including solar, wind, geothermal, and hydro energy, and their relevance to energy trading.
Energy Regulations: Learn about the regulations governing the energy industry, including government policies, regulations, and laws.
Energy Risk Management: Understanding the risks associated with energy trading, including price risk, credit risk, and operational risk, is a critical part of learning energy trading.
Emissions Trading: Emissions trading schemes are an important part of the energy trading landscape as they set limits on carbon dioxide and other pollutants. Understanding these schemes and how to trade them is crucial when starting to learn about energy trading.
Energy Trading Strategies: Learning about different energy trading strategies, including hedging, speculating, and arbitraging, is essential when getting started with energy trading.
Energy Derivatives: Understand the different types of energy derivatives, including futures, forwards, swaps, and options, and how to trade them in energy markets.
Market Structures: Learn about the organization and structure of energy markets, including the role of exchanges and brokers, as well as market participants such as producers, consumers, and traders.
Physical Energy Trading: Buying and selling actual physical energy commodities such as electricity, natural gas, coal, and crude oil.
Financial Energy Trading: Trading energy on financial markets through derivatives such as futures, options, swaps, and forwards.
Renewable Energy Trading: Buying and selling renewable energy certificates (RECs) that represent proof that a certain amount of renewable energy was produced and consumed.
Emissions Trading: Buying and selling permits to emit greenhouse gases or other pollutants, with the aim of reducing overall emissions.
Risk Management Trading: Trading energy products to mitigate price risk and manage exposure to market volatility.
Merchant Energy Trading: Trading energy products to generate profits through market arbitrage and price differences.
Structured Energy Trading: Creating complex financial products such as options and swaps to hedge against price fluctuations and manage risk.
Energy Commodities Trading: Trading physical commodities such as coal, oil, natural gas, and metals.
Energy Derivatives Trading: Trading financial derivatives such as futures, options, swaps, and forwards related to energy commodities.
Energy Investment Banking: Advising clients on mergers, acquisitions, and other financial transactions in the energy sector.
"Hard commodities are mined, such as gold and oil."
"Futures contracts are the oldest way of investing in commodities."
"Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures."
"Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management."
"A financial derivative is a financial instrument whose value is derived from a commodity termed an underlier."
"Derivatives are either exchange-traded or over-the-counter (OTC)."
"Clearing houses provide clearing and settlement services on a futures exchange, as well as off-exchange in the OTC market."
"Exchange-traded Commodities (ETC) (2003–) have become the primary trading instruments in commodity markets."
"Futures are traded on regulated commodities exchanges."
"Over-the-counter (OTC) contracts are 'privately negotiated bilateral contracts entered into between the contracting parties directly'."
"Exchange-traded funds (ETFs) began to feature commodities in 2003."
"Gold ETFs are based on 'electronic gold' that does not entail the ownership of physical bullion."
"According to the World Gold Council, ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity."
"ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity."
"Gold ETFs do not entail the ownership of physical bullion, with its added costs of insurance and storage in repositories such as the London bullion market."
"Derivatives such as futures contracts, Swaps (1970s–), and Exchange-traded Commodities (ETC) (2003–) have become the primary trading instruments in commodity markets."
"Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management."
"Derivatives are either exchange-traded or over-the-counter (OTC)."
"ETFs allow investors to be exposed to the gold market without the risk of price volatility associated with gold as a physical commodity."