Trading can be complicated if you don’t know all the terminology. You may hear the word “commodity” on a regular basis, but what is it a reference to? The definition of commodity is any basic good used in commerce that is interchangeable with other goods of the same type. There are several different goods, or commodities, on the market, but some of the most common include beef, gold, iron ore, silver, salt, sugar, coffee beans, rice, and copper. There are many more out there, and each commodity price varies based on grade.
Commodities are considered "basic" because the goods have been grown or extracted from their natural state and brought to the market for sale at a minimum grade. There is no extra value added to them, and similar commodities of the same type can be traded. The quality can slightly change based on the producer, but the grade ensures that the quality is very similar for each good.
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