Commodity Exchange III

Commerce SSS1 Third Term

WEEK  3

Commodity Exchange III

Performance Objectives

The student should be able to:

      1. State the methods of trading.

      2. Explain spot, forward futures and open outcry.

Content

Types of Commodity Exchange

The following are the types or forms of commodity exchange:

1. Spot Trading: It is a system or type of commodity trading or transaction on the spot where delivery takes place immediately as well as payment. The seller may receive part payment before the commodity is delivered or full payment after the commodity is received.

2. Forward Future: This can be regarded as a forward contract. It is a trading agreement between sellers and buyers to exchange a pre-determined quantity of the…