Commodities Definition

The commodity markets by far are the oldest markets. Commodities are classified as either hard or soft. Soft commodities include coffee, sugar, cocoa, soybeans and even livestock—things that are grown.  Hard commodities are those which are mined or extracted from the earth, such as gold, silver and oil.

Commodities can be traded in many forms, in the cash market, in ETFs, in the stocks of firms that deal in those commodities, and in commodity futures contracts. Sometimes traders will physically exchange the commodity, but more often they will settle the trade for cash or another instrument.

On Nadex, there is no physical delivery on any of the products because you are not trading the commodities themselves, but a derivative based on the price of the commodity. Those derivative contracts are cash settled when the option expires using an approved calculation.

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