The commodity market is attracting many investors lately because they see it as a good way to accumulate value over the long term. But before investing, you need to understand what commodities really are.

Commodities, or commodity, simply refer to basic raw materials used to produce other goods or for daily life, such as copper, crude oil, wheat, coffee beans, gold, and many more. Categorically, there are hard commodities (extracted from nature) and soft commodities (grown through agriculture).

In the commodity market, the most traded commodities are gold, silver, copper, platinum, coffee, sugar, crude oil, and natural gas. All of these are highly volatile and suitable for experienced traders.

Prices of commodities fluctuate based on many factors, such as supply and demand, demographic changes, consumer behavior, weather conditions, and general uncertainty. When demand increases or supply decreases, prices tend to surge.

The advantage of trading in the commodity market is that it can hedge against inflation because commodity prices often rise when the cost of living increases. It also helps diversify your portfolio since commodities have low correlation with stocks and bonds. During economic uncertainty, commodity prices may rise rapidly.

However, caution is needed because commodities are twice as volatile as stocks and four times as volatile as bonds. This volatility can lead traders to make poor decisions easily. Additionally, leverage must be handled carefully, as excessive leverage can wipe out your funds.

For beginners wanting to enter the commodity market, there are four trading methods. The first is commodity ETFs, suitable for those with limited capital and no worries about storage. The second is futures, which require margin and do not need full payment upfront. The third is commodity company stocks, such as BHP Group, Rio Tinto, or Vale SA, which are safer options. The fourth is CFDs, which are available 24 hours a day, five days a week, and allow profit from both rising and falling markets.

Trading in the commodity market is not 24/7; it depends on the type of commodity and region. Gold and silver are open from 06:00 to 24:00 (Thai time). WTI crude oil is open from 06:00 to 24:00, and coffee and sugar have different trading hours. Check with your broker for specific times.

The costs to consider when trading commodities include three types: spreads (the difference between buy and sell prices), swaps (overnight holding fees), and commissions, which are deducted from your profits.

In summary, the commodity market is a good opportunity for portfolio diversification, but you should choose a trading method that suits you. Remember, never invest solely in one asset class. Study the risks thoroughly before making real investments.