Trading has been a part of the business world for many years. Commodities are an important part of life and are useful every single day. Trading of these commodities happens because a single region does not have everything. To fulfil the gaps, countries trade goods and services with each other in exchange for money or other goods and services. It is a cycle that makes an easy supply of different and innovative goods ranging in different regions of the world.
Types of trade
There are two types of trade-
- Internal trade
- External trade
Internal trade is concerned with buying and selling of goods and services between different regions and geographical locations of the same country. Internal trade is again categorised into two categories-
- Wholesale trade
- Retail trade
Wholesale trade is buying products in huge quantities from manufacturers and then distributing it to retailers so that they can sell them to the customers. Whereas retail trade is concerned with buying a small number of goods from wholesalers and then selling them to the end consumers. They act as a direct link between the wholesalers and consumers.
External trade is the importing and exporting of goods and services from one country to another. It is also known as foreign trade. External trade categorised into three parts-
- Export trade
- Import trade
- Entrepot trade
When trading occurs between traders of one country and traders of another country for selling any product. It is also known as export trade.
However when trading occurs between two countries for buying any product. It is known as import trade.
When the trader of one country purchases products from another country and makes some changes and customizations in it for reselling the product to another country, it is an entrepot trade.
Types of trading
Stock trading refers to buying and selling of shares in a specific company. If you own stock in the company it means that you own a piece of the company. Right from common people to large-scale investors, almost anyone can buy shares of any company and earn money without any valuable contribution to the company. There are various websites on which one can learn stock trading and also start investing at an early age.
Agricultural commodities trading
The next type of trading is buying and selling of agricultural commodities. These commodities are divided into two categories that include soft commodities and hard commodities. Traders buy or sell certain commodities from these categories. They have to follow the rules and regulations set by different governments.
A commodity consists of goods or assets which you can trade and hold a valuable position in the daily lives of people. This includes energy, metals, food items, etc. The various types of commodities that are popular and trading take place throughout the world are as follows:
Types of trading commodities
After understanding the types of trade, let us dive into the types of trading. Hence it is broadly classified into four categories-
Out of these, 7 commodities are popular for trading throughout the world. Hence they are hard commodities that are extracted or mined from the ground and consist of commodities like-
Crude oil is the most demanded commodity for trade-ins. It is a petroleum product that is unrefined and made of hydrocarbon deposits and other matter that can be refined to produce other usable commodities like diesel, gasoline, and other such petroleum products. The demand for crude oil is increasing highly. As it is useful for making other products such as fertilisers, plastics, and medicines. The highest consumers of crude oil are China and India.
Aluminium is a lightweight and versatile material and another trending commodity for trading. It is mostly obtained from bauxite and the country that is producing aluminium at a high rate in China. However It is beneficial in the manufacturing industry for making aerospace, automobile construction, electronic appliances, and many more. Aluminium is useful in many industries, and hence the demand for it is also ever-increasing.
It is a strong metal and is resistant to corrosion and has a high melting point with catalytic properties. Nickel is imported and exported on Indian exchanges like MCX, NMCE, and NCDEX. But it is mainly controlled at the London metals exchange and is traded in huge quantities that amount to almost 250 kilograms.
Copper is again one of the most widely famous metals on the earth. Hence It is useful in various industries like electrical, plumbing, utensils, roofing, etc. The price of copper fluctuates due to the world economy and is an essential way to measure the strength of the company. Trading of Copper generally takes place as a commodity to guess the industrial growth of the world. However it is sometimes risky to deal with it due to its close connection with the world economy,
Natural gas is environmentally friendly and is one of the cleanest fuels in the world. It is one of the top commodities to trade-in due to its users around the world.
Well, without any doubt gold is in a lot of demand around the world. It is one of the best choices for trading.
The bottom line
Trading of goods and services takes place both nationally as well as internationally and it makes human life much easier and fulfils all their needs and requirements. However there are various technologies and advanced products available for everyone now. It also helps to raise the economy of many countries and has a direct effect on GDP (Gross domestic product). So one has to understand the various types of trading and the commodities that are in demand currently.
A company that is working in the import-export field with more than 80 years of experience in PL Global Impex Pte Ltd. Their team consists of an experienced workforce of more than 1000 employees and has major expertise in the trading industry. Hence they tend to create a world that has an ample supply of resources that people want.